There’s a popular saying that “time waits for no one”—and that seems to be especially true for consulting firms. The obtrusive dynamics of yesterday have continued to evolve and opened up new challenges and opportunities.
Last year in 2021, when the Hinge Research Institute conducted our annual High Growth Study in partnership with Deltek, consulting firms—like all other professional services firms—were caught up in the monumental wave of uncertainty introduced by the COVID-19 pandemic. But in 2021 attention shifted. Concern from over 450 study participants demonstrated a change in sentiment away from concern about the future and toward a need to take action and implement new technological solutions to manage future growth.
It is for the purpose of identifying and reporting such wholesale changes that the Hinge Research Institute conducts this High Growth Study annually. Each year the study examines and reports on the specific strategies and tactics implemented by the fastest growing professional services firms. We call these firms the “High Growth Firms.”
In this article, we preview the 2022 High Growth Study: Consulting Edition by outlining the four key advantages high growth consulting firms realized on their path to growth and profitability. By comparing your firm’s marketing and operational practices to those of the high performers, you can start modeling your company after some of the fastest-growing firms in the world.
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Defining High Growth Consulting Firms
A firm is categorized as a “high growth” firm when it has a compound annual growth rate of 20% or greater over a three-year assessment period. What’s remarkable about high growth consulting firms is just how fast they are growing. In Figure 1 below, we see that high growth consulting firms grew three and a half times faster than their average growth peers.
Figure 1: Median Growth Rate of Consulting Firms in 2022 High Growth Study
Not only are the fastest growing firms far outpacing the no growth and average growing consulting firms, more than half of high growth consulting firms were also highly profitable.
Of course all firms want to be counted among those realizing this kind of growth and profitability. So what does the data reveal about these high growth firms?
Key Advantage 1: Technology
The data on high growth consulting firms revealed that they have a significant advantage with regard to their overall adoption and implementation of business software and automation products. We describe this in the survey as automation maturity and ask participants to rank their firms on a scale of 0 (no automation) to 5 (optimized).
Figure 2 shows that high growth consulting firms reported higher levels of automation maturity in all three categories we studied: general business software, core business software, and marketing/sales automation.
Figure 2: Automation Maturity (High Growth vs. No Growth)
High growth firms have the biggest advantage in core business software that is at the heart of supporting service delivery. Interestingly, workflow and process automation is the #1 topic that most firms want to learn about this year. The high growth firms are already there.
The technology and software industry was the only other segment we studied where high growth firms showed such an intense advantage in all three automation maturity categories. This is another indicator of the central role such software solutions play.
Key Advantage 2: Talent
Aside from the pandemic, another topic dominated headlines in 2021: The Great Resignation. This trend was reflected in this year’s High Growth Study. If there was a battle for finding and retaining top talent in the past, that battle intensified severely in recent months. Consulting firms are at the center of this war, but high growth firms have an advantage.
Participants in the 2022 High Growth Study rated their firm’s overall skill level on a scale of 1-10 in a variety of different skill sets. High growth firms consistently outperformed their no growth peers in key areas. Figure 3 shows the top 5 marketing techniques where high growth consulting firms have the largest advantage over their competitors.
Figure 3: Marketing Function Skill Rating
Key Advantage 3: Marketing
Discovering how high growth firms market themselves has always been at the heart of the High Growth Study—and this year’s study dives deeper than ever into uncovering the specifics.
One major change this year was how content creation returned to its top spot as the number one marketing priority of high growth firms. The fastest growing consulting firms have known for years the important role that content creation plays in marketing their expertise. They know that developing content that addresses clients’ top business challenges is key to being a thought leader in their industry.
Meanwhile, no growth firms are prioritizing investments to catch up on website performance, gathering the right analytics, and setting the right marketing mix. These are all worthy investments. But unless a fully automated marketing system is in place, many of these investments won’t pay off.
The high growth firms once again are ahead of the curve with a focus on creating high-quality content that helps bring organic visibility to their websites while also establishing them as a credible thought leader. Figure 4 showcases the top 5 marketing priorities of high growth firms.
Figure 4: Top Marketing Priorities of High Growth Firms
The High Growth Study also asked participants to measure their overall marketing effort and impact from the 25 marketing techniques they implement at their firm. When it comes specifically to marketing impact, once again we see some remarkable trends from high growth firms. Figure 5 shows the top 6 marketing techniques where high growth firms report seeing the most impact from their efforts
Figure 5: Top Most Impactful High Growth Marketing Techniques
Two techniques that stand out are keyword research/SEO and conducting and publishing original research. In the case of both of these techniques, no growth firms report significantly less impact from their efforts—an indicator that something is not working.
This year’s High Growth Study probed further on the topic of search engine optimization (SEO). We find that keyword research and SEO techniques are best used by consulting firms when they are set up as a tool to help prospective clients find their content. A mistake we encounter quite often is when firms describe SEO efforts as a one-time investment—a set it and forget it kind of model. Unfortunately, this does not yield great results. SEO requires ongoing focus to adjust to Google’s ever-changing algorithm.
And when it comes to the kind of content that high growth firms find the most impact, original research takes the top spot. This aligns with the story that the Hinge Research Institute’s data has been telling for years—in a world full of noise, original research is the most powerful mechanism for developing thought leadership content that cannot be found anywhere else.
Key Advantage 4: Strategy
The final advantage enjoyed by high growth firms is in the realm of strategy. The full report focuses on the role that M&A had on the consulting industry along with the top anticipated business challenges of high growth firms. But here we highlight what high growth firms are focused on next. In Figure 6 we show the top five topics and trends that high growth firms are thinking about.
Figure 6: What are High Growth Firms Focused on Next?
The top response from high growth firms was workflow and process automation—which makes sense, considering what we mentioned above about the war for top talent. High growth firms are fully aware of the ongoing battle to find and retain talented team members. So what role can technology play in filling the gap? How can current utilization rates be optimized? This is the focus of the high growth firms—and by a fairly significant margin.
Putting the Data to Work
After a year of turbulence and uncertainty, the new normal is taking shape. And the high growth consulting firms are not waiting for difficult marketplace conditions to pass before they implement change. Rather, they are working to stay ahead of the curve and utilize the power of technology and automation tools to help them achieve impressive growth rates without sacrificing profitability.
As we’ve learned from conducting this study for seven consecutive years, the marketplace moves fast. So keeping up with the best marketing and business development practices has never been more important. You can use this data to help your firm navigate the choices ahead. And if you need some support, be sure to reach out to us here at Hinge.
