Professional services firms have, at times, had rocky relationships with their marketing functions. Too often, this has led to unrealistic expectations, disappointment and the marginalization of the marketing function.
This is a tragedy. An effective marketing team can have a profound impact on a modern professional services firm. When well staffed and well functioning, a marketing department can drive growth, profitability and a premium valuation. In short, the role of your marketing department in your firm’s success cannot be understated.
What’s the best way to build such a valuable function? We believe it’s built upon a clear understanding of what to expect from your marketing department and what resources and support it will require. But first, we need distinguish marketing from the sales function.
Marketing vs. Sales in Professional Services
One of the first steps is to be clear about the language we use to describe a marketing department and how it differs from a sales function. The reason that this distinction is so tricky is that many firms do not use traditional language to talk about these concepts. Sometimes the term business development is used to refer to the sales function. In other firms, business development refers to both the marketing and sales function. In this article, we are going to use the traditional definitions.
Marketing is the process of understanding your marketplace and competitors, defining your firm’s market positioning, pricing and services, promoting the firm to your target audience and explaining how they might benefit by working with you. Put another way, marketing is about offering the right services with the right benefits to the right prospects.
Sales is the process of qualifying your prospects and convincing the right ones to buy your services. It’s about turning business opportunities into clients.
While this difference seems pretty simple on the surface, there are a few areas that can cause confusion. In some organizations, for instance, the sales function is also responsible for generating and nurturing leads until they become viable business opportunities. As you will see below, we have some strong opinions about this practice.
Marketing Department Functions
So what exactly should be the role of your marketing department? What should you expect from your marketing team?
Whether your team is in-house, entirely outsourced or a combination of the two, your marketing team has five core functions.
1. AN UNDERSTANDING OF YOUR TARGET MARKET AND COMPETITORS
Marketing should always start with the market. You should expect Marketing to be able to give you detailed and specific descriptions of your target markets and your key competitors in those markets.
But you already know all about your competitors and clients, right? Wrong. Unless you are already doing systematic, structured research, you are kidding yourself. Anecdotal experiences can lead you astray.
Our research shows that internal staff almost always inaccurately perceive their market and their clients’ true feelings and priorities. In fact, firms that do objective research on their markets and clients grow faster and are more profitable.
A professional marketing function can commission this research and allow you to make decisions based on marketplace reality, rather than hunches and wishful thinking.
2. A STRATEGY TO DRIVE GROWTH AND PROFITABILITY
Once you have a research-based understanding of your firm and its place in the market, your marketing department should be able to help craft a compelling strategy to drive growth and profitability. That strategy may require adjustments in your target market, service offerings (see the next point, below) and marketing plans.
Your strategy should clearly identify compelling competitive advantages (your differentiators) and a clear market positioning (are you the premium-priced leader or a value-driven alternative?). Think of these as tools to describe your brand. How do you want to be known in the marketplace? As you wrestle with your options, expect to be challenged with new thinking and bold choices.
You will also need a marketing plan. This plan will map out exactly how you are going to build the visibility of your brand and generate the new opportunities your business development (sales) team will convert into new clients.
3. WHICH SERVICES TO OFFER AND HOW TO PRICE THEM
Historically, many firms have left the key decisions about what services to offer and how to price them to individual operating executives or the finance and accounting function.
Decisions about service lines and pricing are important elements of a growth plan. They should be informed by an overall research-based strategy, not individual client requests. Why? It is too easy to get over-extended trying to be everything to every client. You will soon lose focus and experience, increasing costs as you struggle to provide an ever-expanding array of services.
Innovation and client responsiveness can all too easily become undisciplined dabbling. A strong marketing department plays a leading role in maintaining that balance.
4. A STEADY FLOW OF NEW LEADS AND OPPORTUNITIES
More leads! Better opportunities! Who doesn’t want a steady flow of well-qualified new business prospects? Fortunately, that is exactly what you should expect from marketing. While some firms assign lead generation and nurturing to the sales (business development) function, we think that is a bad idea in most cases. The time horizon for lead generation and nurturing can be long. Nurturing leads can take months, even years. Sales are almost always placed on a much shorter operational cycle (“what can you close this month?”).
Your marketing team should turn your overall strategy into a formal plan to generate new leads and nurture your existing prospects until they become well-qualified opportunities. This plan should look ahead at least a year and be guided by clear, trackable metrics (more on this below).
Be careful that you do not continually add new “marketing ideas,” underfunding campaigns or other unplanned initiatives that may derail the plan. If you fall into any of these traps, you cannot expect the plan to work, nor can you hold your marketing team accountable.
Also, be patient. Lead nurturing can take time — sometimes a very long time. Don’t focus only on immediate results. You will need new clients next year, and the year after as well.
5. THE ABILITY TO MONITOR AND OPTIMIZE IMPLEMENTATION
This is the piece that makes everything else possible. If you can’t measure your results, you are likely to lose sight of your progress during the marketing process. Building a strong brand and full pipeline takes time.
With the appropriate tools and cooperation from the Business Development team, Marketing should be able to track lead generation, nurturing, opportunities, proposals and closes. The entire pipeline can then be optimized over time.
If you are not tracking results, it is too easy to continue unproductive programs or unwittingly discontinue efforts that are working. Tracking keeps you honest and allows you to make the most of your limited resources.
What you need to provide
At this point, we have identified what benefits Marketing can provide to your firm. But what do they need to be able to deliver these results? The answer is straightforward. They need four basic things:
- Talented people. Your marketing team must include people with the right skill sets and experience. If you don’t have these talents in house, you may need to outsource parts of the process or do some hiring. We’ll discuss these options when we cover how to structure your marketing department, below. A word of caution here: marketing professional services is its own specialty. Don’t expect someone with general marketing expertise to understand the unique rules and dynamics of the professional services marketplace.
- Adequate resources. Your team must have sufficient resources to do the job right. Underfund the effort and you will not get the results you deserve. The requirements are not excessive. Our research shows that high-growth firms spend no more than average on marketing — and yet they are still able to deliver outstanding results. But don’t expect superior results with stingy resources.
- A seat at the decision-maker’s table. The kiss of death is investing in your marketing then ignoring your team’s advice. It happens more often than you would think, especially in flat organizations, such as partnerships, where decision making is diffused over many people. If your decisions are broadly consensus-based, you may be better off delegating marketing decisions to a single partner or a small committee.
- Patience and cooperation. Once the previous three considerations are in place, you will see impressive progress. But there is a catch. Just like any other functional area of your organization, Marketing needs cooperation and a bit of patience from the firm. Support your marketing team’s efforts over time and you will reap the rewards.
These four basic requirements lay the foundation for marketing success. But what does an effective marketing department look like?
Marketing Department Structure
Structuring a modern professional services marketing team is not easy. At many firms, marketing is a relatively new function — one, regrettably, that is not always highly regarded. In addition, many firms are working in a very competitive and rapidly evolving marketplace. When they lack marketing agility, firms put themselves at risk.
To keep things simple, let’s focus on the three aspects of departmental structure that are most relevant to professional services firms: the Role of marketing, selecting the right Resources and Reporting Relationships.
ROLE OF MARKETING
At different firms, marketing comes in different guises — from a low-level support function charged with basic implementation responsibilities to a comprehensive team of specialists who deliver the full spectrum of strategic and operational skills. In our experience, the more comprehensive its marketing function, the more success a firm enjoys. (Keep in mind that marketing expertise does not necessarily need to reside in-house. See Resource Requirements below for the details.)
At many firms, a key decision revolves around lead generation and nurturing. Do these functions belong to marketing or sales? We believe that marketing is their proper home.
Why? Many, many firms today employ the Seller-Doer Strategy, so their busy professionals lack the time and focus to carry out a long-term program. Better to leave these tasks to individuals whose attention is not divided between business development and project delivery. Make lead generation and lead nurturing a prime role of the marketing department.
Where will you find the people with the specialized skill sets and experience needed to pull off the comprehensive vision we believe is so important? Well, you have two choices: staff up your in-house team or outsource the skills you need.
The in-house approach is appealing from an accessibility perspective. And if a person is fully utilized there can be some cost savings. Of course, no single person is likely to possess the full range of skills you need to implement a modern marketing program. So you are faced with the challenge of filling in the gaps. But how?
One avenue is training. This is, or should be, a given. Technology is always evolving and new research findings continually challenge our long-held beliefs and assumptions — what worked five years ago may not be what is most effective today. That means ongoing education is a must.
But even if you scrupulously train your marketing team, you’ll still need outside help on occasion. In fact, our recent research has shown that high-growth firms tend to spend more on outsourced resources than their slow-growth peers.
How do you decide whether to outsource a marketing function? Ask yourself a series of five questions about each function that is a candidate for potential outsourcing (see Figure 1).
A few firms outsource all of their marketing so that they can concentrate their internal resources on core functions only. However, most firms employ a mixed model in which some functions are handled internally and others are outsourced. Specialized services that are not used on a regular basis are often the best candidates for outsourcing. Examples include research, strategy development, analytics or the development of a new website.
Whom should the marketing department report to? Many firms struggle with this question. The answer may depend on the role and resources choices you make.
At firms with limited marketing personnel, it makes sense to have the department report to the head of Administration or Sales (Business Development). The latter situation works particularly well when Marketing’s primary role is to support Sales. In neither of these cases, however, is Marketing in a position to make a major contribution.
As the marketing Role increases in sophistication, it should be allowed to influence major strategic decisions. This can be accomplished by having Marketing report to a senior partner who has responsibility for both Marketing and Sales. Having a single point of decision making minimizes conflict and makes it easier to align goals and priorities. It also gives Marketing a seat at the table when major decisions are being made.
A variation on this theme is to have the Marketing leader report directly to the CEO or Managing Partner. This gives him or her visibility into the firm’s strategy, which can only make marketing more effective. This reporting relationship is also well suited to our vision of Marketing as a key function that can drive growth and profitability of the firm as a whole.
A Final Thought
In many consumer-facing industries, marketing is a core function that the rest of the organization is built around. These companies evolved in that direction because it gives them an advantage in financial performance. Perhaps there was a time when professional services firms did not need the perspective and discipline that marketing offers. No longer.
With the rise of digital communications, the collapse of geography and the proliferation of new competitors and business models the pressure is on. The advantage will go to the firm with the greatest marketplace visibility and the best value proposition. And that is exactly the promise that marketing can deliver.
What role is your marketing department playing in your firm’s success?