It gives me great pleasure to release this year’s High Growth Study. Covering the entire professional services marketplace, it is the largest and most comprehensive study of its kind.
From a global pandemic to waves of social change, 2020 was a year that challenged long-held assumptions and caused many firms to reexamine every aspect of their business. It seems that 2021 will continue this theme of uncertainty.
During this interval, some firms have thrived beyond their wildest expectations, while others have struggled to survive. This year’s study provides an in-depth look at the major trends impacting professional services. It also explores how these trends have played out in each of six industry segments.
But perhaps most insightful of all is our in-depth look at the firms that grew the fastest and were the most profitable. This high growth analysis explores the specific strategies and techniques that have worked for the most successful firms in each of the professional services industry segments.
About the study
More than a decade ago, Hinge set out on a mission to understand what drives extraordinary growth in professional services. This year’s study is the largest and most comprehensive to date.
About the Study Sample
- 1,293 firms participated
- $270 billion combined revenue
- Almost 1 million employees
Participating firms represented all major professional services industries
and came in all sizes.
Many firms provide services to government entities. About one in ten firms (9%) in our sample generates 50% or more of revenue from government contracts. The distribution of government contractors across industries is shown in the accompanying graph.
1. Unpredictability in the marketplace is the top business challenge facing professional services firms today.
In a year of unprecedented challenges, the sheer unpredictability of it all stands out. The accompanying chart shows the top business concerns reported by at least a third of participants.
Firms reported a 25% increase in concern around unpredictability in the marketplace.
Not surprisingly, concerns around managing a remote workforce also increased sharply. Finally, concerns about automation and artificial intelligence also intensified, although at a lower level than marketplace unpredictability. As we will soon see, some firms are finding effective strategies to meet these challenges.
2. High Growth firms have found a way to thrive, even in this challenging environment.
Among the uncertainty and chaos, some firms have found a path to prosperity. We call this group High Growth firms and define them as having a compound annual growth rate of 20% or greater over a three-year assessment period. About one in four firms in our sample earned that distinction.
High Growth firms had a median growth rate of 31%. Average Growth firms expanded at a median rate of 11.5%. No Growth firms languished at a median growth rate of –6.7%.
Not only do High Growth firms grow faster, they also tend to be highly profitable. When it comes to the high-profit category (25% or greater profit), High Growth firms are over 70% more likely to bring it to the bottom line. No Growth firms are almost three times more likely to be in the low-profitability category. In short, growth does not have to come at the expense of profitability.
3. High Growth firms reduce risk and uncertainty by conducting more research on their target audiences.
The cure for unpredictability in the marketplace is to conduct frequent research on your target audiences, such as potential clients or referral sources. High Growth firms are almost three times more likely to conduct research on their target audiences than No Growth firms.
They are also more likely to do the research more frequently than their slow-growing peers.
This greater level of timely insight seems to give them more certainty in a rapidly changing and unstable marketplace.
4. High Growth firms leverage their more sophisticated approach to technology and automation.
High Growth firms have more mature automation strategies across multiple business processes. We investigated three domains of automation: general business software, core business processes automation, and marketing and sales automation.
Firms were compared on a six-point automation maturity scale. The top two levels (4 and 5) are considered highly automated. The accompanying chart shows that High Growth firms are more sophisticated or mature in their approaches to all three domains.
Compared to No Growth firms, High Growth firms are about 31% more likely to rank 4 or 5 in general business software automation, 61% more likely in core business processes automation, and 58% more likely in marketing and sales automation.
Firms with a more mature approach to automation have a real advantage. Automation allows them to better leverage their expertise and make their highly compensated talent more productive. Remember that High Growth firms are also more profitable, so the case is a strong one.
5. High Growth firms are more likely to get greater impact from the marketing techniques they do employ.
The chart below shows the top 10 most impactful marketing techniques used by the High Growth firms. When comparing the impact High Growth and No Growth firms receive from the same marketing techniques the difference is apparent. In each instance, the High Growth firms enjoy more impact from the technique. Why?
First, frequent research gives them deeper insight into their target audiences and allows them to select the marketing channels that their audiences turn to most often when seeking information on business topics. Research can also reveal which topics are most relevant to potential clients.
Second, High Growth firms invest more in marketing. When High Growth firms use a technique, they tend to put more time and money into it (about 12% more). Also, this is another place where their greater use of automation gives them an advantage. High Growth firms are much more likely (26.2% vs. 16.6%) to have a highly mature marketing and sales automation strategy in place. No Growth firms are much more likely to have little or no automation strategy and few tools at their disposal.
Third, High Growth firms have access to more highly skilled talent than their No Growth competitors. The chart below shows the skills rating for each of nine critical marketing skills. In each of these critical skillsets the High Growth firms enjoy an advantage.
Next, we investigate how these insights and marketing investments translate into new business.
6. High Growth firms excel at generating digital leads, the key to growth and profitability in this digitally dominated marketplace.
As firms have had to scrap face-to-face networking and events, the pressure is on to generate more digital leads. And while the marketplace has responded, High Growth firms have responded better. High Growth firms now generate almost half of their leads (46.1%) from digital sources. This is substantially more digital leads than their No Growth peers.
In fact, the average proportion of online leads across all growth categories is 39.6%. But High Growth firms lead the way, generating digital leads at a rate of over 46%— a signature strength.
In this new turbulent marketplace, High Growth firms have found ways to succeed. They use research to reduce unpredictability and risk. They have selected and skillfully applied relevant marketing techniques. And they make the most of their resources with sophisticated automation.
The result? They lead the industry in digitally driven growth.
A Final Thought
Doing it right makes a difference.
Focus, effort, and talent matter. Marketing professional services has become a more complex task that requires focused effort, true insight, and the right skillsets. Buying the newest tool is pointless unless you are using it correctly. Guessing at a strategy rarely produces a good one. And faithfully executing a flawed strategy does not help you grow faster.
The data clearly show that High Growth firms devote more resources to marketing, research their target audiences more frequently, and bring higher skill levels to the party. Their reward for this increased investment? Faster growth and greater profits.
It’s a step you may want to consider.