For most professional services firms, the pandemic will push 2020 revenue down. Recapturing growth will require being more purposeful about where and how future growth will be delivered.
In early October we began running a short survey, just seven questions, to gauge the impact of COVID-19 on professional service firm revenues. With just 50 responses in so far, the findings are far from complete. But it’s giving us an interesting sense of how the pandemic has affected consulting, accounting and legal firms, and how they’ve responded. In fact, 54% of the firms who’ve responded have stated that they will experience some amount of revenue loss in 2020. And 16% say that revenue loss will be substantial (more than 30%). While 20% of responding firms have actually grown revenues this year, the vast majority of firms (80%) are expecting either a sideways or down year.
As we sit squarely in the 2021 planning window, I imagine the central question most firm leaders are asking themselves right now is, “How do we get back on a growth trajectory?” As I see it, firms need to be more purposeful about growth than ever before. There are three key steps firms need to take right now to get back on the path to growth in 2021:
- Fully Assess the Impact on Your Clients
- Realign Growth Targets
- Isolate Growth Strategies
#1 – Fully Assess the Impact on Your Clients
There’s a standard marketing statement that professional service firms often fall back on, “We truly understand our clients’ businesses.” But do you really? Over the years, I’ve found many firms think they know what’s happening but they really don’t. Accounting firms see tax issues. Legal firms discuss risks and contracts. Even many consulting firms are often only privy to one narrow slice of what’s happening—leadership dynamics or operational challenges. But do you really know how a client’s revenue and profit has been affected by the pandemic? Do you understand what strategic or operational changes they’ve had to make to pivot their business right now? Do you fully understand and empathize with the stress your client executives have been managing through?
If you’re looking to unlock 2021 growth the best place to start is with your active client base. You need to build a comprehensive picture of how this pandemic is affecting their business and what it means to your relationship going forward. You need answers to at least a handful of key questions:
- How has their revenue changed?
- How has it impacted their strategies and plans going forward?
- What new problems have emerged or become exacerbated?
- What problems that seemed big before the pandemic have slipped in priority?
- What is the emotional context around those issues within the client’s leadership team?
- Heading into 2021, how would they most like your help?
This process should help you identify possible opportunities within your client base and establish a revenue retention target for 2021. Maybe much of your revenue growth can be found within your existing client base. If not, you’ll have a better sense of how much revenue will you have to replace in 2021 just to be on par with 2020.
#2 – Realign Growth Targets
By this point, you surely have a sense of the revenue impact on each of your markets and practices in 2020. But what will 2021 look like? Depending on the size of your client base, your client outreach and analysis may give you a good sense of what’s happening within the broader markets you serve. If not, reach out to other industry influencers to gauge what they’re seeing or conduct some research of your own. Even a simple survey, like the one I outlined above, can help you get a better sense of which markets continue to face significant headwinds and how leaders are responding accordingly. If you want to look further out (2-3 years) consider tapping into secondary research sources or commissioning a larger study. Do whatever amount of research you deem appropriate to make informed business decisions about where to allocate your resources in 2021 and beyond. If you need to make a pivot into new markets or new offerings now is the time to get things headed in the right direction. Also, use this as an opportunity to identify macro marketplace issues you should be addressing with your thought leadership plan in the coming year.
Now, of course, is the time for firm leadership to step back and make some choices to get marketing efforts back on track. Firms need to formulate answers to a number of key questions:
- How have our ideal clients changed, if at all?
- Where are the biggest growth opportunities for the firm in the next 12 months?
- What big marketplace issues and client problems do we need to own?
- How do we want to allocate marketing resources based on growth priorities now?
Between now and January, firms have to get back to setting purposeful growth targets again. Establish revenue growth targets for the firm and its key markets and practices. Translate those back into the number and value of opportunities you need to deliver that revenue growth. And identify the number of quality leads you need to drive into the system to make it happen.
#3 – Isolate Your Growth Strategy Going Forward
Through the second and third quarters of the year, many firms were just focused on how to survive and operate in a highly confusing and disrupted environment. Many senior leadership and delivery teams were working from home; trying to manage and drive collaboration within a distributed workforce was a new thing. Many marketing plans were tossed aside as partners and consultants from across the firm overwhelmed marketing teams with requests for new thought leadership and digital campaigns. Most marketing units responded—putting in lots of extra time and energy to make it happen. But many marketing teams became largely reactive; playing a game of proverbial whack-a-mole to keep up with the requests coming from all around them.
As we approach a new year, now is a critical time to make sure marketing strategies are aligned with your firm’s desired growth goals—especially if the firm is expecting a much different growth trajectory than it’s historically experienced. Over the years many firms have fallen into a simple and predictable marketing model—relational business development supported by a broad mix of self-published, perspective articles. Maybe that model has successfully delivered 8-10% annual growth. But half of that strategy has become incredibly difficult in a pandemic. And firm leadership is targeting 20% growth in the year ahead. With the goal posts moved, the strategy has to change. Now might be a good time to look at developing research-based thought leadership, developing external publishing relationships, or considering paid content promotion. Regardless, firms need to develop answers to a few key questions:
- Will the strategies we’ve used in the past achieve the growth targets the firm has going forward?
- What other “new channels” could we begin developing?
- What new strategies should we be considering?
- What level of marketing investment will be required to hit those growth targets, especially if those targets have become more aggressive?
Closing Thoughts—Get Purposeful About Growth Again
With what’s increasingly looking like a “K-shaped” recovery, now more than ever it’s critical to be purposeful about how much your firm wants to grow, how and where it sees growth opportunities, and the strategies you plan to use to get there.