How Professional Services Analytics Create a Sustainable Competitive Advantage

Highlights

  • Analytics research shows that the three most effective revenue analytics tools are digital dashboards, predictive analytics and artificial intelligence.
  • Additional research performed for the Business Growth Report found that the highest growth service companies made extensive use of revenue analytics to develop company growth plans, measure progress and swiftly intervene when revenue performance fell short of those plans.
  • Most service companies are data rich and information poor. Data is an under-capitalized asset. Data transformation can fix this situation and make data the company's most valuable asset. Data transformation directly contributes to improved business intelligence, which is a sustainable competitive advantage. Making better business decisions never loses its value.
Johnny Grow Revenue Growth Consulting

The More You Know the Faster You Grow

Data and analytics make professional service companies smarter. They show how the brand impacts buyer decisions, which campaigns acquire the best leads, how the salesforce accelerates revenue, and how project performance impacts financial margins and client expansion.

They also show when things aren't working. Analytics convert raw data into actionable insights and route those insights to the people that can use them to remedy a variance, implement a course correction, make a timely decision, or take some other informed action.

But for data to improve marketing offers, sales conversions, project deliveries, customer experiences and similar factors that drive service company business growth you need technology to harvest, convert and forward data to the person or place it can be applied.

Here's how to leverage data and create a sustainable competitive advantage.

1

Start with Data Transformation

There's an interesting thing about data, a data paradox really. Virtually every marketing decision, sales win plan, and project plan benefits from more data. Most service companies have large, vast amounts of data, but it often languishes and goes unused.

Data offers a use it or lose it proposition. It is a powerful asset if converted to information and made actionable. Alternatively, it is a cost without benefit if left idle. And for the most part, it doesn't get better with age.

To make data an asset it must be converted from a raw material to a finished product of information or insight. That's best done with a data transformation process, and can be automated with what is sometimes called a data transformation pipeline.

Data Transformation Pipeline

When data is converted to insights it answers import questions, such as:

  • What are the optimal fees I should be charging for my services (price elasticity)?
  • Which of my services are declining in customer value, or what services would my clients buy if I offered them? Or put another way, what new services should be created, and which should be retired?
  • What 20% of customers generate ~65-70% of my margins and profits? And why? And how do I elevate other customers to this segment?
  • What 5-10% of customers contribute negative profits, and how do I reduce cost to serve this segment, or reduce the financial losses?
  • What types of clients put the most downward drag on margins, and how do we restructure activities and processes to lessen that drag?

Many CRM and Professional Services Automation (PSA) systems have the data transformation tools but much of the time they go unused. But for those that step up to convert data into insights, it's likely the data will become their company's most valuable asset. It's a complex undertaking for sure, which is why those who succeed will achieve competitive advantage over those who don't.

The most successful professional services companies are defined by their ability to collect and curate the right data, convert it into actionable insights and use those insights to improve project outcomes, customer engagement, business performance and revenue growth.

2

Use Professional Services Dashboards

Good service dashboards deliver the right information to the right person at the right time. They focus on the most essential key performance indicators and prioritize information based on what's most important to each person.

They show what should be done, in a sequenced order, to aid time management, create a work rhythm cadence and maximize productivity.

But most CRM and PSA packaged dashboards display what is easy instead of what is most important.

To a first-time observer these business intelligence tools looks good. But if good looks were the factors for success my first marriage would have made it, and services dashboards would get much more utilization.

Analytics Research shows that dashboards achieve up to 30 percent utilization immediately following an implementation go-live, but within 3 weeks that utilization falls to 9 percent. Over time it falls further. The decline is due to these visual displays not providing real help to users.

The key to analytics is to link project and service activities into business outcomes and measure what matters. Defining the right metrics to track progress and prompt real-time corrective action is an essential best practice for achieving a professional services dashboard that get used.

Professional Services Dashboard
3

Apply Predictive Analytics

Data becomes much more actionable when it advances from historical to predictive. In fact, without predictive analytics, the view and information for every person in your service company is entirely backward looking.

A recurring pattern among low growth services companies is that they don't know what activities or methods deliver the biggest financial returns, so they pursue what they know instead of what is most effective. This results in a best-case scenario of low, incremental and often temporary revenue growth, or a much more likely scenario of preserving the status quo.

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

Revenue engineering is a process, not an event. So, to visualize that process we use a proprietary model we call the Predictive Pyramid. It's part of our professional services growth formula. It's also an interactive dashboard that shows how lower-level execution rolls up to achieve the company's top priorities.

Sales Growth Predictive Pyramid

The revenue engineering pyramid is helpful because no growth program or activity operates in a vacuum. Each has cascading effects that impact many areas and those impacts must be considered when making trade-offs. This visualization is helpful in determining where to invest your limited time and money to achieve the biggest uplift.

The data that drives the calculations is sourced from company history if its available or industry benchmarks if it's not. In working with clients to populate the predictive pyramid, we find that most believe they don't have the needed data. But quite often we find they have more data than they think, it's just fragmented and decentralized in siloes.

Professional services analytics must induce action. If your information reporting is not causing course corrections and shifting tactics, you're doing it wrong.

Every person, process, project and decision in your company is improved with more relevant data.

But to realize the value of data and analytics you need one more thing – a data driven culture. That is a corporate culture that discourages intuitive, gut-based, trial and error, and subjective decision making and rewards data-driven, fact-based and objective decision making.

About 100 years ago, a smart man named William Edwards Deming advised his management team, "In God we trust, all others must bring data." That statement perfectly describes a data driven operating culture.

In God we trust William Edwards Deming