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5 Profit Growth Strategies of Successful Professional Firms

WHEN IT COMES TO statistics about the performance of firms, here are some well accepted numbers:

  • 1% are super achievers

  • 4% are running a great business

  • 15% are getting there

  • 60% are getting by

  • 20% are struggling

Which section do you fit in. The 20% who are winning or the 80% that could do much better? In the current climate it hugely important to empower, equip and motivate those who deliver the client service in your organisation. Remember, clients will not fall in love with your firm until the staff do! Here are 5 key areas to consider:

 

Where to play and how to win.

‘Strategy is not complex. But it IS hard. It’s hard because it forces people and organizations to make specific choices about their future, something that doesn’t happen in most firms’. This is a quote from A.G. Lafley, the ex CEO of Procter & Gamble in his book, ‘Playing to Win’ and is very relevant to many professional firms, particularly those wishing to be ‘full service’ or who list 20 plus special areas of focus on the home page of their website. In the modern world, people choose experts over generalists all the time. Experts also don’t charge low fees. Legal futurist Richard Susskind is often quoted as saying dominate a market, not THE market. What do you want to be famous for? How will you make the money?

 

Succession and human capital management. Focus on the rising stars.

The war for talent is real. Your ability to recruit and retain quality personnel is paramount to your success. Finding the next generation of partners/directors to take on the capital of those wishing to exit may prove more difficult than you think. Culture will be key. Placing a table tennis/pool table in the staff room and having a few bean bags to sit on does not turn you into Google. You may need to consider some non-financial incentives such as extra holidays, free meals, gym memberships, free services for family members, discounts at shops/bars/restaurants or wellness schemes such as weight loss or smoking cessation programmes. The opportunity list is endless.

The rising stars will want to see an investment being made in both the firm and them personally as individuals. Technology and their working environment is only one part of the equation. They will want to see training and coaching to demonstrate that you have their best interests at heart. Too many firms concentrate on bringing underperforming individuals and try and get them to become average performers. Exponential growth comes when you make your good performers outstanding!

 

No over reliance on referrals or too narrow a route to market.

Referrals are great because they are free and usually have win rates superior to other marketing functions. However, you can only grow your practice at the rate that others are prepared to talk about you which takes away all of your power as you can only grow at the rate that others are prepared to talk about you which is dangerous. 

Not to mention the fact that hardly any professionals actively ask for a referral. Don’t believe me? Go and ask the fee earners in your team how many clients they have asked for a referral from this calendar year.  Or alternatively, how many referrals have they given to others remembering that givers gain?

When 95% of professionals tell me that word of mouth is the way they grow their practice, you can see why I worry for their future. Winning firms/fee earners will have up to 20 ways of generating inbound leads via speaking, writing and networking both on and off line and therefore so should you and your organisation. 

 

Overcoming the inability to get partners/directors to ‘Cross Sell’. 

Cross selling is often the path of least resistance to new revenues.

It regularly fails because the process is not undertaken properly as the focus is put on the selfish professional rather than the needy client. When done effectively it allows professionals to use their expertise to broker resources appropriate for each client by helping buyers gain insight into:

  • Problems of which their clients may be unaware.

  • Opportunities that clients probably haven’t considered.

  • Solutions that clients have not anticipated on their own.

Whoever ‘sells’ is therefore an integral part of the value creation and delivery team.

Four levels of opportunity exist:

  1.  New service to current client by existing contact

  2.  New service to current client by new contact

  3.  Existing service to new person in client organisation

  4.  New service to new person in client organisation

To succeed there needs to be a culture of ‘Firm First’ and undoubtedly significant training to overcome the following performance killers:

  • Inept selling skills due to lack of knowledge or time.

  • Poor understanding of other partners/Directors and their practices/skillsets.

  • No incentives or recognition for doing it or consequences for non-achievement.

  • Fear of losing client to poor service or losing ‘control’ of client relationship.

  • Fear of competing with incumbent firms.

  • Reluctance to impose on other partners/Directors.

  • Career competition issues.

These concerns are responsible for the fact that only 4% of professional firms consider themselves highly effective at this elusive discipline, whilst 77% consider themselves ineffective. What an opportunity!

 

Converting meetings into billable work.

Today, like many other days, there will be flat white meetings held by professionals in the central business districts of towns and cities all over the country. Most will end without an instruction leading to billable work. I have huge empathy with professionals here. Why? In most cases professionals have never been taught what to say when they get there. You don’t learn this stuff at university/law school/ accountancy school/engineering college or anywhere else. Many will provide a history lesson and explain about how many staff they have in how many offices and so on. All fairly irrelevant to a potential client or referral partner.

How about how you open a business discussion, draw out the needs and wants of a prospect, present the significant advantages of using your organisation over another, overcome the inevitable hurdles around incumbents and pricing and close to an action point? These skills don’t come natural to professionals. Whether you play golf, sing, dance, sail or a hundred other things, you get better by learning from others. Even Tiger Woods and Novak Djokovic have a coach.

To enter the Top 20% of achievers in growing profits  of a professional practice, you need to increase your sophistication and effectiveness in the areas of strategy & plans, dedicated time & resources, measurement & KPI’s, skills training and culture.

Did you know 48% of firms DO NOT have a specific marketing and business development plan. 63% of firms DO NOT have BD targets/KPI’s and 56% of firms DO NOT provide any training for their key staff.

If you would like to learn how your organisation compares with 150 other firms in Australia & New Zealand, you can request a briefing based on the research to learn how you compare versus contemporary best practice. 

To see how you compare to similar firms and learn what the most successful firms are doing to successfully grow their profits, request a free, one hour briefing here. 

 

Credit to Author: Alistair Marshall, Director, Professional Services Business Development (PSBD)

Original source material: https://www.professionalservicesbd.com.au/blogs-articles/2019/8/29/5-profit-growth-strategies-of-successful-professional-firms