This post looks at the pros and cons of your 3 sources of new leads and makes the case for why thought leadership is actually your best source of new business.
As I see it, there are really 3 ways a firm can land work from a new client — thought leadership, referrals, and business development. Conventional wisdom has always been that referrals are your best source of new client relationships. In fact, in our 2015 research study with AMCF, clients told us it was their #1 way to find a consulting firm. But, #2, #3 and #4 all involved thought leadership. For a whole lot of reasons, I think thought leadership is going to push its way to the top spot over the next decade. This article explains why by looking at the pros and cons of each lead source.
Referrals — The Slipping #1
Generally, most firms see a referral from an existing client, a business partner or a trusted advisor as their best source of new client work.
The rationale is pretty clear:
- Speed to Close — When a lead shows up as the result of a referral, the potential new client has already been through much of their buying journey. Often, they’ve researched their problem, they’ve resolved to fix it, they’ve allocated resources to do so, and they’ve asked a trusted colleague for advice on who can help which has led them to you. For those reasons, a referral can be the easiest and quickest new business to close. They’ve already done all the heavy lifting of their journey and now they’re simply asking you to bring all your expertise to bear to solve the problem they’ve self-diagnosed.
- Trust — Assuming the referral came from someone the client implicitly trusts, much of that trust is instantly transferred to you and your firm.
Now, let’s look at some of the downsides of a referral:
- Referral Mismatch — All referrals aren’t created equal are they? That referral from your best active client is generally phenomenal. That one from a client you did a small project for 5 years ago sometimes isn’t. While this isn’t necessarily the reason to bump referrals down from the #1 seed in your lead generation bracket, it’s definitely worth noting.
- You’re Not Guiding the Journey — In my experience, rarely does someone ask for a referral until they’ve done a reasonable amount of research to understand their problem. For instance, they don’t just wake up one morning and say, “Hey, we need to modify our production line! Let me ask…” No, they experience production mistakes over a course of months or years. They read up on what’s causing the problem. They ask a lot of questions. And, these days they find a lot of answers (online and through industry journals). But, often, the lead that arrives via the referral has done much of this heavy lifting without you. They’ve found answers to those questions (often, in your competitors’ thought leadership). Hence, you’re not really guiding that critical phase of their buying journey. And, someone else potentially is. These days, chances are good, a referral also led them to “that someone else.”
- You Have No Visibility — The ancillary problem to not guiding the journey is that you’re not gaining any visibility into that journey because you weren’t really there (either in-person or through your thought leadership). So, you don’t have as much insight into the dynamics of that problem as you might like. These days, good chunks of that journey can and do occur online. Tools like marketing automation can give you visibility into that journey if you know where to look. Your competitor that’s marketing with thought leadership and using marketing automation is both guiding the journey and has an “insider’s view” into the client’s challenges.
Thought Leadership — The Rising #2
Many of the cons of a lead generated by referral become pros of thought leadership marketing:
- You’re Driving the Client’s Journey — One of the compelling aspects of thought leadership is it enables you to establish the agenda much earlier in the client’s journey. In fact, the very idea of thought leadership marketing is to place high quality content (be it written or spoken) in the earliest possible path of the client’s research journey. With thought leadership marketing, you’re a voice in the room well before you’re actually in the room. If you pair thought leadership with marketing automation, you actually have the ability to nurture the client through that journey.
- You Have Visibility — If you’re wiling to invest in marketing automation, you have behavioral data to shape your business development decisions. When a lead actually becomes a meeting, you have a sense of what they’re struggling with and what interests them because the system tells you what they’ve been reading.
- You’re the Expert — It’s much easier to enter a relationship as the expert practitioner when the client came to you because of your high value expertise that’s been codified via your firm’s thought leadership. Because your firm has been the source of the client’s learning and inspiration they’re looking to your for guidance. You’re not the partner recommended by an expert advisor. Nor are you the vendor. You’re the expert advisor (at least within your sphere of influence).
But, of course, there are some cons to thought leadership marketing:
- It’s Hard — Anybody who tells you it’s easy to develop and implement a content marketing program in 2016 is lying to you. It takes a lot of thought and hard work to identify the right topics and develop high quality content. It also takes building some new muscles to get that thought leadership read, remembered and acted upon by executives.
- It Takes Time — Referrals are great because they’re often instantaneous. They just magically appear. But, thought leadership takes time on a lot of fronts. It takes time to develop high quality content. It takes a sustained commitment to the effort over a period of months and years to see results. And, it takes a regular push of marketing activities to build the same level of trust with a new lead that was otherwise instantly imparted to you by your referral partner.
Business Development — The Steady and Reliable #3
While most firms rely heavily on business development — networking, relationship-building, attending events and warm or cold calling — in our experience it’s actually the least effective way to attract new clients. Now, that’s not to say that it doesn’t drive a lot of business. In fact, most firms rely heavily on talented principals to go open doors and build relationships with new clients. So much so that the bulk of new client revenue probably comes from traditional business development activities in a lot of firms. But, if you stop and think about it, your best client relationships probably didn’t start this way.
To start, let’s look at the pros:
- It’s Known — Most firms have been investing in business development for decades. Whether they’re using dedicated people or the selling time of principals, it’s something they’ve done for quite a long time and it’s worked fairly reliably for years.
- It’s Logical — Clients are people. They hire people at your firm (or someone else’s) to help them solve problems or capitalize on opportunities. Relational business development activities make the people in your firm available and accessible.
But, there are a whole host of cons, in my opinion:
- It Sets You as the Vendor — The inherent problem with business development as your primary source of new client business is the nature of the relationship that is to follow. A traditional business development effort often puts you in chase mode and the client in retreat mode. You’re pursuing the client in an effort to get in the door and help them both identify and solve a problem that’s yet to be defined. You’re asking them to open the door and let you into the conversation. They’re, logically, hesitant to do so and frequently are pulling away from you. While a talented business developer has the ability to influence this dynamic, it lingers inside the client relationship after you’re hired. In the client’s eyes you started as a vendor looking to help with a project. Hence, no matter how effective you are at navigating the delicate push-pull of a new client relationship, it’s very difficult to become a client’s expert advisor when you entered the door through a pursuit strategy.
- People Leave — Just like thought leadership marketing, it takes a lot of time for a capable principal or business development person to build relationships and create a healthy new business pipeline. In most cases, I’d argue it takes at least 1 year. But, the real problem isn’t the time it takes to be successful. It’s the fact that all that effort is instantly lost the moment that key person leaves. And, you’re left starting all over again. Unlike, a thought leadership marketing effort, when a key principal leaves you don’t really get to keep all the conversations and interactions they had. You’re left with some activity logs in a CRM if you’re really diligent but the “goodwill” of the meetings doesn’t transfer back to the firm, really. By contrast, the “conversations” your prospective client had with your firm’s thought leadership are still yours.
- It’s Getting Harder — Clients don’t really have time for relationship building anymore. They don’t want to go out to lunch. They don’t want to have exploratory meetings. They’re busy. They’re taking a “don’t call us, we’ll call you” mentality that’s making it harder and harder to build that rapport you need to have success as a relationship builder.
Suggested Action Items
My hope with this article was simply to get you thinking a bit about your lead generation strategy. I am not suggesting that your firm should stop considering referral strategies or abandon business development efforts in lieu of a “build [content] and they will come” strategy. That would be folly. My goal was just to get you thinking and talking about where leads come from in your firm and how you can get better.
Some recommended next steps:
- If yours is an architecture or engineering firm, stop and think about the dollars you invest in business development. If your firm is of reasonable scale, it’s surely in the millions of dollars alone just for the people resources of the effort. What might happen if you carved off 10% of that and put it towards thought leadership? Sit down with your partners and talk about.
- If yours is a consulting firm, stop and think about your referral strategy. Is there a chance that you could make it even more effective by improving your thought leadership marketing? Think about the likelihood of close on a potential client that’s both been referred to you and has been an avid consumer of your firm’s thought leadership for some time? Sit down with your leadership team and talk about marketing automation as a tool to help you get visibility into the buying journey and attribute the impact of both your marketing and business development efforts on new client attraction.