Unless you’ve been living under a rock for the past five years, you’ve probably noticed things are evolving pretty fast in the management consulting space. That shouldn’t come as a surprise since, according to a 2013 Harvard Business Review article, management consulting’s fundamental business model hasn’t really changed much in more than a century, and it’s bound to get disrupted at some point.
As my colleague Judy Caroll points out in a blog post last month, the tectonic shifts reshaping today’s management consulting industry are all signs of a major, long-overdue wave of “disruptive innovation.” After being largely undisturbed for a long time, the industry now finally faces a wide range of business challenges—including technological change, new business models, and fierce competition—that are all fundamentally transforming the entire sector as we speak.
But how does all this disruption affect the way that management consulting firms find and acquire new clients?
That’s what today’s post is all about. We’ll take a closer look at a few disruptive trends that specifically impact marketing for management consultancies, and then we’ll talk about some practical ideas to make sure your marketing strategy adapts to these changes.
Trends that Impact Marketing For Management Consulting Firms
Anyone in the industry understands that management consulting is a client-driven business, which means that consultancies’ business models and strategies evolve along with clients’ changing requirements. That’s why marketing is among the business areas that need to continuously keep up with industry developments.
The 2018 High-Growth Study: Consulting Firm Edition published by Hinge Research Institute sheds some light on the different industry trends that drive marketing strategies for management consultancies. According to the results from a survey of 309 rapidly-growing consulting firms, the trends with the biggest impact on marketing include:
More than 40% of respondents in the High-Growth Study rank increased competition as a top concern. Management consulting firms say they worry about facing mounting competition from both new entrants and well-established players.
Although management consulting has the second highest median growth rate (at 9.3% for 2017) among professional services sectors included in the survey, this actually marks the second consecutive year of slower growth for the industry.
This doesn’t bode well for smaller, less-established firms without a disruptive business model since they’ll most likely have a hard time gaining a competitive edge in the face of:
- Increased consolidation as the industry matures further
- Commoditization of core consultancy services
- Creation of new business models enabled by technology
Changing Purchase Process
The report also finds that as much as 38% of management consulting companies feel anxious about the changing ways that potential clients purchase services. Like buyers in almost all other B2B verticals, today’s consulting clients also follow a nonlinear, self-directed path to purchase with firms’ marketing and sales teams playing a lesser role in the process.
The High-Growth Study suggests that this shift is largely due to the bigger importance potential clients place on social media, online search, and other non-traditional channels for finding and evaluating consulting firms. In fact, a significant percentage of referrals now come from people who haven’t previously worked with a consulting company.
Consequently, the study also notes, an increasing number of consulting firms now build and boost their reputation through content marketing and thought leadership initiatives.
Five years after Clayton Christenson predicted management consulting was on the “cusp of disruption,” things have certainly picked up for the industry. The Hinge Research Institute cites a number of undercurrents that clearly mark these major transformations:
- Migration of client acquisition strategies from interpersonal contact (networking and referrals) to digital engagement
- M&A activity at a decade high, placing the industry as the leading driver of merger deals in the professional services sector
- Entry of well-funded consulting firms with brand new value propositions requiring different strategies and skill sets
Moody’s Analytics and Consultancy.uk also describe another key development that’s accelerating the industry’s evolution: multi-sourcing. Multi-sourcing involves firms working with other companies or organizations to tap into niche expertise, often requiring partnerships with specialists outside the consulting space.
As a result, large multilayered projects are no longer handled by a single provider and are instead distributed among different specialist firms.
The gig economy also holds a huge sway over the changing management consulting landscape. According to InfoDesk, “crowdsourced” and freelance consulting arrangements have deemphasized the need for clients to enter into long-term partnerships with firms. Today, clients choose only the services they require at exactly the time they need.
Around 36% of consulting firms surveyed in the High-Growth Study report facing increased downward price pressure. Much of the fee erosion comes as a result of the factors we’ve already seen earlier, but there are some other important points also worth mentioning.
Increased competition, continued commoditization of traditional consulting services, and the rise of disruptive business models have expanded the number of cheaper options available on the market. For that reason, expertise-focused differentiation no longer cuts it like it used to when it comes to consulting firms’ pricing power, especially under the traditional time-and-materials markup model.
Consultancy.uk echoes these findings by pointing out the widening division of management consulting into two distinct segments: a low-cost commoditized segment, and a high-value classic management consulting segment.
Rethinking Marketing Strategy for Management Consultancy
With business challenges come business opportunities. As the pace of change in the management consulting marketplace continues to gain momentum, firms need to rethink some key areas in their marketing strategy.
According to the High-Growth Study, the top five marketing priorities for management consulting companies include:
- Generating more leads (cited by 71% of management consulting companies)
- Increasing brand visibility (71% of firms)
- Standing out of the competition (67% of firms)
- Boosting digital presence (45% of firms)
- Refining target buyer personas (35% of firms)
Jason Mlicki, principal partner at Rattleback, names the core areas in your marketing strategy to focus on, so that your plan lets you achieve the above outcomes amid all the turbulence in today’s management consulting space:
A solid positioning strategy serves as your compass when navigating the choppy, uncharted waters of the current management consulting environment. While you most likely already have a positioning strategy in place, you need to make sure that it lets you concretely identify the following:
- Your target market and the reasons for choosing it
- Your expertise and the specific needs it solves
- Verifiable proof that shows the value of your expertise
We’ve already seen that simply relying on expertise to set your firm apart from the competition is no longer as effective as it once was. You need a fresh approach at differentiating your services in order to thrive in today’s management consulting ecosystem.
According to Jason Mlicki, a well-defined differentiation strategy combines the following:
- Unique process and methodology
- Proprietary technology and data
- Talent management strategy and practices
- Compatible company culture and mission-vision
- Effective branding, PR, and communications
As you very well know, knowledge and expertise are the main products of management consulting. That’s why showcasing what you have to offer through thought leadership initiatives forms the cornerstone of marketing for management consulting firms today.
But with the entire B2B marketing world still trying to contain the fallout from the massive explosion in content, it can be hard to rise above the noise and build an engaged audience.
There’s no magic formula or silver bullet to make your thought leadership program work as advertised. But, to ensure that you cover the bare essentials, you need to:
- Choose a set of related topics you want to own in your field
- Adopt and refine a unique perspective and voice
- Build a body of work around those topics
- Develop a clear editorial process for creating content
- Implement a plan for distributing and promoting content
Lead Generation and Lead Management
Top-performing management consulting firms understand that it takes the right combination of different channels and multiple touches to attract and convert new clients. That’s why today’s consultancies need an end-to-end lead generation plan as part of their client acquisition strategy.
In addition, management consulting’s complex buying cycle means that potential clients interact with your marketing initiatives at their own pace and in their own terms. For this, you’re going to need a robust lead management process to nurture prospects as they move along the purchase journey.
Conclusion: While it definitely looks stormy ahead for the management consulting industry, these uncertainties can be an excellent source of opportunities for consulting firms with the right strategy for navigating the choppy waters.
If your management consulting company needs a marketing partner to get the most out of the rapidly shifting industry, then Callbox’s lead generation services tailored for consultancies is what you’re looking for.