Our latest consulting firm marketing research indicates that 2023 might be a record year for many middle market firms.
Despite all the concerns of a possible recession, 2023 is turning out to be a very good year for most U.S.-based consulting firms. Our 3rd annual study into consulting firms’ marketing and business development performance reveals robust results. Performance appears to exceed the prior two years’ (see 2022 findings here). In this year’s study of 269 firms, 91% of them told us their overall business performance has improved this year relative to last year.
Maybe to underline the point, that same percentage (91%) grew revenue in the first 6 months of this year relative to the same time last year. The median growth rate for all firms was 11.5%. This is a fabulous number that’s on par with the broader U.S. middle market. Notably, like the overall U.S. economy, a good chunk of this growth is coming from technology with IT services firms representing a large portion of the fastest growing firms (more on that in a future post).
Lead Generation Programs Are Performing Well
How are firms driving this growth? For starters, many generated an abundance of leads in the first half of 2023. Regardless of whether those leads are coming inbound or outbound, most firms are experiencing a groundswell of activity at the top of their funnel. For the third year in a row, firms say they generated more leads in the 1H of this year than they did in the 2H of the prior year. In fact, the percentage stating this is up over 15% relative to the last few years. In sum, it appears interest in consulting services has been steadily accelerating over the last 3 years. So much so that 19% of firms tell us they are generating “far more leads” this year than last.
Consulting Firms Have Cultivated Even Healthier New Business Pipelines
Also, for the third year in a row, firms are successfully growing their new business pipelines. 67% of firms tell us their pipeline is bigger half-way through this year than it was at the end of last year. Again, this percentage is up nearly 20 points relative to the last two years – indicating that new business pipelines are likely healthier than they’ve been at any point since 2019.
Most Consulting Firms Are Growing Deal Value
New business pipelines aren’t just growing due to an increase in lead volume and opportunity flow. Most firms are growing the value of the deals in their pipelines as well. In fact, 66% of firms told us their deal value is growing – this is nearly 25 points higher than the last two years. Whether driven by simple inflation or adoption of value-based pricing approaches, most consulting firms are finding ways to increase the fees they’re charging, expand the scope of services delivered, or perhaps some combination of the two.
FIRMS ARE effectively MANAGING at THE INTERSECTION OF BUSINESS DEVELOPMENT AND CLIENT SERVICE
We designed this year’s study to take a deeper dive into how firms manage at the unique intersection of business development and client service. Specifically, we were curious to find out how firms effectively balance the conflicting pressures of attracting new clients while delighting existing ones. As it turns out, most firms feel they’re managing this tension well with nearly 60% saying they do so “very” or “extremely” effectively. With robust growth in leads, deal value, and pipelines the data seems to support this belief.
WHAT’S AHEAD IN OUR LATEST Consulting Firm Marketing RESEARCH
Over the next few weeks, we’ll unpack our research findings further. We’ll feature articles on:
- The most pressing challenges firms face in balancing business development and client service (Hint: talent is definitely an issue, but not all of it).
- How the most effective firms overcome those challenges.
- Characteristics of the fastest growing firms.
In the meantime, I encourage you to use this data to talk with your leadership team about your own firm’s performance. Some questions for discussion:
- Are you generating more leads this year than last? Are they the right leads? What’s working well now? What could you do differently?
- Are you growing deal value as much as you’d like? Have you kept pace with inflation? How could you create more value such that you could propose on larger, more strategic engagements?
- Is your pipeline growing and healthy? If not, here are some suggestions of things you could be doing today to “right the business development ship” before this year slips away.
Appendix: Survey Firmographics and Demographics
This research of 269, U.S. based consulting firms was fielded online between 7/24/23 – 7/27/23. Respondents consisted of a relatively equal mix of CEOs, firm, practice, business development, and marketing leaders. Firms ranged in revenue from $5M to over $100M. And, primarily included a mix of IT services, strategy, operations, and HR consulting firms.