How Professional Service Companies Achieve Best-in-Class Sales Growth

What does it mean for a professional services company to achieve Best-in-Class sales growth? And what is the financial upside to achieve this level of performance?

Research performed for the Sales Excellence Report surfaced the data that answered these questions.

A survey was used to acquire sales data from professional services firms. The data was used to rank respondents into one of three performance archetypes:

  • The top 15% were designated the Best-in-Class
  • The next 50% were designated Medians
  • The lower 35% were designated Laggards

The respondents business performance results were then correlated with business development strategies, processes and technologies. This allowed us to understand what methods most impacted revenue results, and what the Best in Class archetype did differently than their lower performing peers.

Measuring Professional Services Sales Growth

The initial data set was organized to measure revenue growth and the factors that most impact that result.

Sales Growth

Based on the most recent three-year average, the Best-in-Class archetype achieved an average 12.7 percent annual sales growth. That was an impressive 120 percent higher than the combined average of the Laggard and Median archetypes.

Professional Services Sales Growth Rate

The data in the above column chart consists of professional service firms in NAICS 541. This industry code defines the category as “Professional, Scientific, and Technical Services” and includes sectors that sell expertise and rely on skilled workers for delivery.

For some additional perspective we delineated the figures for each of the below four sectors.

Professional Services Growth by Sector

To understand how the Best in Class achieved such significantly higher sales growth, we compared business development methods and results among archetypes.

Several methods delivered disproportional impact to revenue results. For example, one method that closely correlated with the highest results was the sale opportunity win rate, illustrated below.

Salesforce Opportunity Win Rate

The sale opportunity win rate shows the percentage of opportunities won. It's an efficiency metric that measures sale closures relative to pursuits.

The top performers achieved an average 14 percent higher win rate than the combined average of the Medians and Laggards. That's a significant factor that delivers a linear impact to revenue growth.

However, one factor that should be noted is that most professional services sales pipelines consist largely of opportunities to existing customers. That inflates the overall win rate, as on average, sales conversions to existing customers were 5.7 percent higher than to net new customers.

Professional Services Sales Win Rate

The opportunity win rate is a powerful measure because increasing conversions immediately improves short term revenues and creates a multiplier impact to long term revenue growth.

Even small improvements to the sale win rate deliver large increases to top line revenue. Improving the win rate is also far more effective and less costly than just playing the numbers game of increasing the volume of selling pursuits.

For most service companies, increasing the salesforce win rate is the fastest path to significant and sustained revenue growth.

Professional Services Sales Growth Best Practices

Now that you know what best-in-class sales performance looks like, the next question may be how to achieve these results for your company.

The research answered this question by analyzing data that measured corporate strategies, selling processes and technology effectiveness. That analysis identified 9 business development programs that delivered the most significant revenue impact to sales performance and most separated the Best In Class archetype from the others.

These 9 growth programs are referred to as evidence-based best practices and shown below.

1

Predictable Sales Process

Most service companies have a defined selling process. However, the research found that most of those processes do not deliver predictable results.

The research found overwhelming evidence that sellers who use optimized selling processes outperform those who don't.

Two sales process adoption performance results stood out.

Sellers who used formal and optimized processes achieved 10% higher sales win rates than those who did not.

Sales teams with formal and optimized processes were 47% more likely to achieve their quotas.

Optimized processes accelerate staff onboarding time, improve productivity, focus limited time on the best opportunities, accelerate velocity, lower cost per customer acquisition, improve forecasting and most importantly, increase opportunity conversions.

2

Sale Methodology

A sale methodology advances your selling strategy from what you sell to how you sell. It defines the specific methods and actions that most influence sales outcomes.

Respondents with actively used sale methodologies earned an average 5 percent higher sales win rate than those without. They were also 1.8 times more likely to achieve year over year revenue growth and 1.6 times more likely to achieve their annual revenue target.

The most cited sale methodology among the Best in Class archetype was The Challenger Sale model.

3

Strategic Account Management

Strategic Account Management is a systemic approach to increase customer share and profits over extended periods. This selling method uses strategic account plans as the blueprints for planned customer expansion and future sales.

The research found that only 23 percent of companies have adopted formal or defined Strategic Account Management programs. But those adopters achieved 26 percent higher revenue growth with existing customers than sellers without these programs.

4

Annual Sales Plan

The annual sales plan defines the specific actions to achieve the company revenue goal. For most companies, it's a roadmap that plots the most direct route to achieving the annual revenue target.

The data found that almost all respondents created annual sales plans. However, for most laggards and medians it was a one-and-done exercise. That was different than the Best in Class who advised they used the plan as an active operating tool throughout the period. For example, the plan was integrated with the CRM system and used to measure progress, identify variances in real-time, and implement swift course corrections as needed.

5

Sale Opportunity Win Plans

The average sale opportunity win rate was 51 percent. The average opportunity win rate for sellers that consistently used win plans was 56 percent.

The research found that only 17 percent of sellers consistently develop sale opportunity win plans. However, that minority achieved a 5 percent higher win rate and 16 percent higher quota attainment. The Best-in-Class archetype consistently prepared win plans about twice as frequently as Medians.

6

Client Retention

Managing client retention is an imperative to achieve a sustainable service business. In fact, for many companies, customer retention has become a top business growth strategy.

The research found that that the top performers achieved 97 percent customer retention. That was 4 points higher than Medians and 7 points higher than Laggards.

It also found that many companies reduced churn by identifying customers at risk and injecting some type of save procedure. However, many of the top performers went a step further and identified the root causes of churn. That permitted them to fix these causes at the source and proactively eliminate much of that attrition.

7

Strategic Pricing

While only 9 percent of companies routinely calculated price elasticity for a majority of their services, 84 percent of that group were Best-in-Class leaders.

The combination of a formal price strategy and active price optimization program increased revenue growth an average of 3.1 percent. Respondents with active price optimization programs were also 32 percent more likely to achieve year over year revenue growth.

8

Coaching

The goals of staff coaching are to develop each seller's potential and grow the cumulative revenue impact of the salesforce. Staff coaching was the single greatest contributing factor to improved productivity.

However, not all coaching programs delivered a payback. Only 19 percent of participants with informal and irregular sales coaching reported a positive ROI. But that figure jumped to 79 percent for participants that brought structure and regular cadence to their programs.

9

Performance Analytics

Pretty much all respondents used some form of analytics. But while most relied on static reporting built on historical data, the Best in Class more often used dynamic data and shifted their information from hindsight to foresight.

They were 2.3 times more likely to use interactive reporting, 2.7 times more likely to use predictive analytics, and 3.3 times more likely to integrate AI into their decision support.

Professional Services Sales Best Practices

Successfully replicating any one of these evidence-based best practices will deliver an incremental uplift. That may be sufficient for some.

Others may seek transformational or order of magnitude improvements to deliver more significant and sustained company growth.

That requires a more holistic approach which can be achieved by replicating a mix of the best practices.

The research was conclusive in showing the leaders excelled in at least five, and on average, 7.5 of the nine best practices.

Professional Services Best Practices

Lets Get Growing

Sales performance recommendations without supporting data are just opinions. The 9 evidence-based best practices herein are sourced from field research and show what the top performing companies do differently than their lower performing peers.

When you start with data-driven findings, learn from the top performers and replicate their methods to repeat that performance, you eliminate guesswork and pursue the straightest and shortest route to targeted outcomes.

One more thing.

Most survey respondents indicated they adopted all or most of the 9 best practices.

However, survey questions that drilled into operational processes suggested otherwise. The research found there is a big difference between adoption, which is often a casual participation and disciplined execution, which creates expertise.

Disciplined execution requires focused programs with executive sponsorship, budgeted resources, supporting technology, performance analytics and continuous process improvements.

And when the criteria for disciplined execution was considered, only the Best in Class archetype engaged in 7 or more of the best practices.