Hinge Research Institute, of Reston, Va., recently published “2018 High Growth Study: All Professional Services Edition,” an exhaustive study of the professional services marketplace in the public and private sectors. More than 1,000 firms, representing more than $176 billion in combined revenues and exceeding 1 million employees, participated in the study.
For the study’s purposes, high-growth firms are those that experienced 20% or greater compound annual growth in revenue during a three-year period. These firms grew at a rate nearly four times more rapidly than the average firms.
The range of professional services included health care, legal, consulting, accounting, technology and marketing/communications. Study results indicated that technology firms grew faster, at 11.4%, than professional services firms as a whole, followed by consulting at 9.3% and architecture/engineering/construction services at 9.1%.
Legal service firms grew at 8.3% and accounting/financial services firms grew at 6.1%, more slowly than the 9.1% professional services median rate.
For those companies involved in 2017 in government contracting, a significant finding is growth at firms selling primarily to the government outpaced those selling to non-government buyers, with a median annual growth jump of 87% from the previous year. By contrast, firms that did not sell to government buyers experienced less rapid growth.
The study states that respondents were asked to look forward three to five years and identify what factors were expected to impact or threaten their industry or individual firm. The top four answers included increased competition, price pressure, shortages of top talent and marketplace unpredictability. Other perceived threats include automation or artificial intelligence, as well as generational changes in the workforce.
However, according to Hinge Research, high-growth firms see future threats very differently than the no-growth firms. No-growth firms focused on competition, downward price pressure, the commoditization of services and a shortage of top talent. Conversely, high-growth firms were concerned with marketplace unpredictability, threats from automation and managing a remote workforce.
In addressing these threats, high-growth study respondents stated that doing more research on target clients, better business development, communication and skills training, as well as focus on core competencies, were high on their list. Low-growth companies tended to focus on hiring new talent, entering new markets and changing their pricing.
The study explained that high-growth firms are more specialized in four key areas — offering specialized services, solving specific problems, serving a specific role and specializing in the use of technology —while low-growth firms embraced industry specialization.
A key finding was how growth relates to marketing budgets. “Respondents were asked to identify the proportion of annual firm revenue devoted to marketing budgets, excluding marketing department compensation or salaries,” the Hinge Research study said. “High-growth firms are investing more in marketing — in some cases, dramatically more. One in five high-growth firms is directing a whopping 20% of revenue to the marketing budget. Less than 5% of no-growth firms are making that kind of commitment.”
Dramatic differences were also apparent in marketing strategies and tactics. High-growth firms tended to use personal phone contact, public relations and marketing partnerships with other organizations, as well as consistent digital and content marketing techniques.
The impact of digital and content marketing was measurable for high-growth firms, which were 50% more likely to acknowledge positive impact from thought leadership on social media, video blogging, publishing to external sites and purchasing online advertising.
The Hinge study also identified seven critical business development skills areas. Both high- and low-growth firms equally rated speaking in front of a live audience highly, with high-growth firms also preferring networking face-to-face with industry peers and prospects, writing in-depth technical content and blog posts, as well as speaking on video and networking on social media.
Looking forward for the rest of 2018, respondents identified their top marketing priorities as increasing visibility, attracting new business or generating more leads and differentiating themselves from competition. Digital strategies such as creating content and upgrading websites were also top priorities.
Professional services companies looking to increase revenues in both the public and private sectors are exploring a number of strategies and tactics to jumpstart growth in 2018. The results of this unique study may be used by well-established and newer companies in the government and private sectors.
For a complimentary copy of the 44-page Hinge Research executive summary, visit https://hingemarketing.com.
Gloria Larkin is president and CEO of TargetGov, in Linthicum, and is a national expert in business development in the government markets. Email [email protected], visit www.targetgov.com or call 866-579-1346, ext. 325, toll-free for more information.