4 Business Growth Best Practices for Professional Service Companies

Highlights

  • Evidence-based best practices show how to grow a services company using repeatable methods. They shift unsupported ideas that lack measurable execution to prescriptive guidance that achieves forecasted results.
  • To be effective, each evidence-based best practice must be validated by professional services industry research, include a prescriptive framework, have a purpose-built measurement system (i.e., dashboard and predictive analytics) and leverage technology automation.
  • Four highly effective best practices to grow professional service companies include customer affinity, corporate culture, services innovation and growth analytics.
Johnny Grow Revenue Growth Consulting

Facts, not opinions

Business growth recommendations without supporting data are just somebody's opinion. The Johnny Grow Professional Services Growth Formula is built on evidence-based best practices backed by industry specific benchmark data that show what the highest performers do differently than their peers, and how they do it.

When you start with research-based findings that show what's possible, learn from service companies that have achieved extraordinary growth and repeat their performance using prescriptive methods, you eliminate trial and error and pursue the straightest and shortest route to success.

And because best practices are data driven, they can be modeled to show investment, cash flow impact, time to value and payback.

Professional Services Best Practices to Grow the Company

There is no single method to grow a services company. But there are services best practices that maximize top line revenue growth. Here are four of them.

Professional Services Growth Best Practices
1

Customer Affinity

Customer affinity is essential to services companies because strong customer relationships are a leading indicator of increased client purchases, referrals, client share and retention; all factors that deliver significant and sustained business growth.

Customer affinity is created by applying customer intelligence to better engage, serve and solve for customers. When done well, this turns first time clients into repeat clients and repeat clients into client advocates. And that makes customer affinity a valuable and durable asset.

Customer affinity is achieved with a customer strategy and enabling technology.

There are several commercial customer strategies to choose from. They include, but are not limited to, Customer Experience Management, Customer Relationship Management and omni-channel customer engagement. Each of these customer strategies has overlap but is unique and delivers unique benefits.

The chosen customer strategy must answer the question, how does the company systemically develop deeper customer relationships to acquire, grow and retain more customers? To answer that question, your customer strategy identifies your ideal customer profile (ICP) and target audiences, how you solve for the customer, deliver value for the customer, communicate and collaborate with the customer, and how each of your efforts contribute to building stronger customer relationships.

The customer affinity evidence-based best practice applies a 6-component model to bring structure, repeatability, measurability and automation to the goal.

Customer Affinity Framework

Technology is also needed.

CRM software organizes customer data for customer intelligence, applies automation for business process consistency, distributes customer insights to aid relevant and personalized customer engagement, and delivers information reporting to measure progress and quickly intervene to remedy deviations or apply course corrections.

Only with a synergistic combination of customer strategy and enabling technology can you systemically develop customer affinity and customer relationships at scale.

Customer affinity research shows that successful adopters achieve high double-digit ROI and downstream revenue and profit objectives.

And there's one more strategic benefit.

Customer affinity creates a protective barrier against competitors offering similar services and benefits. In fact, growing mutually rewarding customer relationships based on an emotional connection creates a competitive advantage that can withstand disruptive technologies, competitor encroachment and the erosion of other competitive advantages.

2

Corporate Culture

Service companies are uniquely people-driven companies.

For most service companies, company culture is the single biggest untapped asset to boost staff productivity, employee tenure and company growth. Culture is the human performance engine that enhances every business strategy, revenue initiative, operational performance and change transformation.

Corporate culture is the implicit shared values, unspoken behaviors and social norms that recognize what is encouraged, discouraged, rewarded and penalized. It's developed over time, either by design or happenstance.

Every service company has a culture. Most low performance cultures are a consequence of unplanned actions, unforeseen behaviors and random outcomes. In contrast, high-performance growth cultures are intentional, proactively designed and in a constant state of awareness and improvement.

A high-performance growth culture carefully defines, measures and reinforces shared company values that drive the behaviors which determine the quality and volume of employee effort, and which in turn determine staff productivity, and the quality and amount of work that gets done.

Culture Eats Strategy for Breakfast

The evidence-based best practice to achieve a high-performance growth culture applies a 5-step framework called Culture by Design. It defines the culture pillars (company identity, purpose, mission, vision and values), designs the employee experience, integrates the customer experience, and implements the business processes and information systems to bring consistency, measurement and automation.

High growth service companies don't rely on individual heroics, they rely on everybody doing their part.

Teams, not individuals, are required to achieve sustained service company growth.

Until you achieve a high performance growth culture, you will not achieve your company's growth potential. Your company strategies, operational execution, staff productivity and employee tenure will remain at comparatively lower levels and permit any competitor with a high performance growth culture to outperform your company. A high performance growth culture is not easy to achieve, which is why those who do outpace those who do not.

3

Services Innovation

Innovation is the process of converting a novel idea into a unique solution, service or experience that creates customer value. It may include new services, improved services, or new ways for customers to acquire, consume, use, experience, or benefit from services.

Service companies are incurring accelerated services commoditization that is putting a downward pressure on fees and margins. It's a touchy subject, but the truth is service buyers find most service providers to be largely undifferentiated. They offer similar services with similar benefits.

Services innovation is needed to avoid commoditization and create market differentiation.

Services innovation is a risk-reward company growth equation. When successful, innovative services create differentiation, accelerated revenue growth, high margins and customer affinity. Innovation is not easy, but it's also not optional for service companies seeking differentiation, accelerated revenue growth, high margins and customer affinity. Growth and comfort do not coexist.

It was the legendary Peter Drucker that said "because a business's purpose is to create a customer, it has two and only two functions, marketing and innovation. Marketing and innovation create value, all the rest are costs." Drucker’s words are heeded by the top performers in the services industry.

Services innovation is accelerating. Growth leaders view innovation as a strategic, non-negotiable imperative. Growth laggards view innovation as opportunistic and episodic.

Services innovation is not prescriptive but follows proven patterns that can be repeated. The innovation evidence-based best practice applies a 5-step Professional Services Innovation Framework to bring structure and measurability to an otherwise difficult to measure activity.

Johnny Grow Innovation Framework

Clients are the single greatest source of services improvement and innovation ideas. They will tell you want they want if you give them the forum and make it easy. Both CRM and Professional Service Automation (PSA) software can leverage online project portals or collaboration tools for staff and clients to share comments, complaints, ideas and other feedback during the course of a services project.

This innovation best practice applies an online ideation forum or community to proactively solicit ideas and recommendations from customers. This data can be automatically captured, ranked, tabulated and displayed in dashboards. We have worked with many clients where this data created new revenue streams such as ancillary services, specialty services, premium services, and elevated fee-based customer services backed with Service Level Agreements (SLAs).

Innovation research findings published in the Business Growth Report revealed that innovation is the single most effective business growth strategy to demonstrate differentiation and achieve increased client acquisitions, price premiums and a barrier to switching providers.

In fact, the highest growth companies used innovation to achieve price premiums 2.9 times more frequently than those without innovation programs. This cohort also incurred price decreases 2 times less than their peers.

4

Growth Analytics

Most service companies are data rich and information poor. Business Intelligence (BI) can fix that.

Succeeding with BI is a 5-part formula.

  1. Data transformation is needed to convert data from an unused byproduct to actionable information. When done at scale, this transforms data from a raw material to a service company's most valuable asset.
Data Transformation Pipeline
  1. BI starts with customer intelligence and customer intelligence starts with a 360-degree customer view. Every CRM software vendor claims to deliver a 360˚ customer view. But most don't. At least not for professional service firms.

What most deliver is a customer view with company firmographics and contact demographics. It's a start, but clients are far better defined by their behaviors than their demographics.

Demographics are explicit data while behaviors are implicit data. Explicit data such as company size and industry only indicate how interested the company is in the customer. Implicit data such as digital footprints, online behaviors, customer sentiment and social graph show how interested the customer is in the company.

To achieve a 360-degree customer view in the services industry you need 5 types of customer data, which include demographic, transactional, behavioral, environmental and social data.

360 Degree Customer View
  1. Dashboards are the most effective analytics tool to get the right information to the right person at the right time so that person can improve a client interaction or make a more informed decision.

Most dashboards display historical data. Better dashboards shift from lagging to leading indicators. And the best dashboards enable metrics to be interactive, so users can perform What-If modeling and scenario planning. They display forward looking information and show the financial impact of both action and inaction.

Professional Services Dashboard
  1. Predictive analytics enable service executives to engineer financial outcomes.

A recurring pattern among low growth service companies is that they don't know what actions deliver the biggest financial results, so they pursue hopeful explorations instead of what is most effective. This results in inconsistent results, multiple iterations, incremental growth and often temporary results.

A better approach is to apply data and predictive analytics to compare alternative growth strategies. This allows executives to perform pro forma modeling, compare alternatives, see the trade-offs and plot the shortest path to the maximum revenue.

The below predictive pyramid shows how data rolls up from lower level of execution to achieve the company's top priorities (i.e., revenue growth). Until there is holistic alignment from departmental execution to company results the company's top business priorities will be delayed, degraded or just not achieved.

Revenue Growth Predictive Model

Pretty much all CRM and PSA software out of the box reporting is static and historical. However, these systems leverage artificial intelligence (AI) to identify and model data into forward-looking and predictive analytics to flag contract deviations, identify at-risk projects and project pro-forma financial forecasts.

Shifting from historical reporting to predictive analytics elevates customer and project-based information reporting from hindsight to foresight. In fact, without predictive analytics, the view and information for every person in your company is entirely backward looking.

  1. Finally, a data driven culture is needed to deliver the last mile of business intelligence. Management must promote a corporate culture that shifts decision making from intuitive, gut-based and subjective decisions to data-driven, fact-based and objective decisions.

This is often done with what many analytics experts call at DDOM (data driven operating model). W. Edwards Deming's instruction to his management team, shown in the below quote, perfectly describes a data driven culture.

In God we trust William Edwards Deming

The most successful service companies are defined by their ability to collect and curate the right data, use data to create differentiating services and customer experiences, and apply analytics to make insights actionable at every customer engagement and decision point.

Business Intelligence is one of only four sustainable competitive advantages. That's in part because applying data-driven insights to improve service outcomes, customer interactions and business decisions never loses its value.

See the professional services industry best practices to accelerate revenues and maximize company growth.

Click to Tweet

The Point is This

Customer affinity, corporate culture, services innovation, and growth analytics are four of many evidence-based best practices that can be effectively used to grow a services company.

Other methods may include brand development, revenue engineering, strategic pricing, strategic alliances, white space mapping, revenue operations (RevOps), growth technology stacks and mergers and acquisitions to name only a few.

The most helpful growth methods for any given services company will depend upon the company's baseline performance and growth goals. Then goals can then be forecasted and validated with a predictive analytics model.

A single best practice will deliver incremental revenue growth. A collection will deliver exponentially more.

Certain practices have overlap, so doing them together will reduce time and increase the impact for both. And completing some will provide a jump start to others. So, logically sequencing them can further decrease time and investment and accelerate results.

The point is that evidence-based best practices show how to grow a services company most effectively. They provide prescriptive guidance to forecasted results and share lessons that save time, reduce investment and minimize risk.

Best Practices