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The Importance of Business Research for Your Firm: Top 10 Questions to Drive Growth & Profitability

In researching high growth professional services firms we made an eye-opening discovery. Those firms that did systematic business research on their target client group grew faster and were more profitable. Further, those that did more frequent business research (at least quarterly), grew the fastest and were most profitable.

The Impact of Research on Firm Growth and Profitability

Think about that for a minute. Faster growth and more profit. Sounds pretty appealing.

The first question is usually around what kind of research to do and how it might help grow your firm. I’ve reflected on the kinds of questions we’ve asked when doing research for our professional services clients and how the process has impacted their strategy and financial results. There are a number of types of research that your firm can use, including:

  • Brand research
  • Market research
  • Lost prospect analysis
  • Client satisfaction research
  • Benchmarking research
  • Employee surveys

The result is this list of the top 10 research questions that can drive firm growth and profitability:

1. Why do your best clients choose your firm?

Notice we are focusing on the best clients, not necessarily the average client. Understanding what they find appealing about your firm can help you find others just like them.

2. What are those same clients trying to avoid?

This is the flip side of the first question and offers a valuable perspective. As a practical matter, avoiding being ruled out during the early rounds of a prospect's selection process is pretty darned important. This is also important in helping shape your business practices and strategy.

In our research on professional services buyers and sellers, we've found that the top circumstances that buyers want to avoid in a service provider are broken promises and a firm that's indistinguishable from everyone else.

What Buyers Want to Avoid

3. Who are your real competitors?

Most firms aren't very good at identifying their true competitors. When we ask a firm to list their competitors and ask their clients to do the same, there is often only about a 25% overlap in their lists.

Why? Sometimes, it’s because you know too much about your industry and rule out competitors too easily. At other times, it’s because you are viewing a client's problems through your filter and overlook completely different categories of solutions that they are considering. In either case, ignorance of true competitors seldom helps you compete.

4. How do potential clients see their greatest challenges?

Free Professional Services Guide to Research

The answer to this question helps you understand what is on prospective clients' minds and how they are likely to describe and talk about those issues. The key here is that you may offer services that can be of great benefit to organizations, but they never consider you because they are thinking about their challenges through a different lens.

They may want cost reduction when you are offering process improvement (which, in fact, reduces cost). Someone needs to connect the dots or you will miss the opportunity.

5. What is the real benefit your firm provides?

Sure, you know your services and what they are intended to do for clients. But what do they actually do? Often, firms are surprised to learn the true benefit of their service. What might've attracted a client to your firm initially might not be what they end up valuing most when working with you. For example, you might have won the sale based on your good reputation, but after working with you, your client might value your specialized skills and expertise most.

When you understand what true value and benefit of your services, you're in a position to enhance it or even develop new services with other true benefits.

6. What are emerging trends and challenges?

Where is the market headed? Will it grow or contract? What services might be needed in the future? This is fairly common research fodder in large market-driven industries, but it's surprisingly rare among professional services firms.

Understanding emerging trends can help you conserve and better target limited marketing dollars. I’ve seen many firms add entire service lines, including new hires and big marketing budgets, based on little more than hunches and anecdotal observations. These decisions should be driven by research and data.

7. How strong is your brand?

What is your firm known for? How strong is your reputation? How visible are you in the marketplace? Answers to each of these questions can vary from market to market. Knowing where you stand can not only guide your overall strategy, it can have a profound impact on your marketing budget. An understanding of your brand's strengths and weaknesses can help you understand why you are getting traction in one segment and not another.

SEE ALSO: Why Brand Differentiation is Essential for Professional Services Firms to Succeed

8. What is the best way to market to your prime target clients?

Wouldn’t it be nice to know where your target clients go to get recommendations and referrals? Wouldn’t it be great if you knew how they want to be marketed to? These are all questions that can be answered through systematic business research.

9. How should you price your services?

This is often a huge stumbling block for professional services firms. In my experience, most firms overestimate the roll price plays in buying decisions. Perhaps it is because firms are told that the reason they don’t win an engagement is because of price. It is the easiest reason for a buyer to share when providing feedback.

However, if a firm hires an impartial third party to dig deeper into why it loses competitive bids, it often learns that what appears to be price may really be perceived level of expertise, lack of attention to detail or an impression of non-responsiveness. We’ve seen firms lose business because of typos in their proposal — while attributing the loss to their fees.

10. How do your current clients really feel about you?

How likely are clients to refer you to others? What would they change about your firm? How long are they likely to remain a client? These are the kinds of questions that can help you fine tune your procedures and get a more accurate feel for what the future holds. In some cases, we’ve seen clients reveal previously hidden strengths. In others, they have uncovered important vulnerabilities that need attention.

The tricky part here is that clients are rarely eager to tell you the truth directly. They may want to avoid an uncomfortable situation or are worried that they will make matters worse by sharing their true feelings. That’s why at Hinge, we've hired an outsider to conduct research on our own clients, even though research is one of our core services.

Additional Resources

How Hinge Can Help

Don't overlook the importance of business research for your firm. Research gets to the core of what will resonate with those audiences—and is an integral part of what Hinge does for clients. Learn more about our research services or contact us to learn whether research makes sense for your professional services firm.

Who wears the boots in our office? That would be Lee, our managing partner, who suits up in a pair of cowboy boots every day and drives strategy and research for our clients. With a Ph.D. in behavioral psychology, Lee is a former researcher and tenured professor at Virginia Tech, where he became a national authority on organizational behavior management and marketing. He left academia to start up and run three high-growth companies, including an $80 million runaway success story.

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Jim Bliwas:

An interesting item but it’s off-base in a few areas - especially on researching “best” clients.

While it is important to know what a firm’s Top 10 or 20 clients think and feel about the organization, there isn’t a lot of growth room with most of them. They are probably giving the firm all of their work already, or as much of it as they are willing to hand over. Yes, the firm needs to make sure they are happy and remain that way but if looking for growth there is a much better pool.

Those are the clients in the “Second 10 or 20” because they offer the opportunity for both high growth and profitability. In all likelihood, some good measure of their work is going elsewhere. Conducting research with them - what other firms do you use; why do you use them; what do you like/dislike about other firms you use - almost always turns up new business opportunities, as well as uncovering information that can be used to attract additional clients.

Many firms in all professional services sectors overlook opportunities for growth by focusing so much attention on what “best” clients are thinking, and not enough on what is going on in the minds of the next tier.

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Lee Frederiksen:

@Jim-thanks so much for your comment. I certainly agree with the point on the amount of opportunity available is limited within the current top clients. However that’s not quite the point we were trying to make. The point was to focus on adding new clients who fit the profile of the type of clients you want more of. Many firms make the mistake of researching clients that they do not want more of and base their marketing on that. Having said that, love your perspective on finding opportunity within existing clients. Regards…lwf

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