High growth professional services firms lead in sales & marketing

Top-performing firms in the professional services industry spend more on sales & marketing than their underperforming peers and are more mature in business development practices, according to a new global benchmark.

For the 2023 edition of its High Growth Study, published in partnership with Deltek, Hinge Research Institute analysed the performance of over 700 professional services firms across all corners of the globe. The analysis covered multiple segments of the professional services landscape, including engineering, architecture, legal, government contracting, and management consulting.

One of the report’s key findings is that while the sector enjoyed robust growth over the past year (+12% on average), there are large variations between the growth rates of leaders and laggards in the industry. The discrepancy comes for a large part down to the way how firms organise key pillars of their commercial and operating model.

Notably, ‘high growth’ firms – players that achieved at least 20% compound annual growth over a three-year period – managed to book nearly 3x more revenue growth (+32% on average) and achieved 2.5x more profitability (+25% on average). Breaking down the secrets of their success, Hinge points at stand out performance in four key pillars of practice: strategy, business development & marketing, talent, and technology.

Business Development and Marketing

In the area of business development & marketing, the gap between ‘high growers’ and the rest follows from both investments made and the maturity of delivery.

With the onset of the global pandemic – and the resulting widespread investment in online – marketing spend has shifted upwards in recent years. On average, professional services firms dedicate between 8% and 15% of their revenue to marketing.

However, high growth firms tend to be in the upper echelon of the spend bandwidth, with more spend translating into more focus and better commercial results. “Top performers invest 25% more in marketing, which yields 40% more (digital) leads,” said Lee Frederiksen, lead author of the Hinge High Growth report.

In high growth firms, marketing functions also play a greater role. “Marketing teams are more likely to be involved in researching markets, implementing strategy, and evaluating campaigns. They also tend to be more involved in developing and pricing services and attracting and retaining talent. While this greater range of responsibility may be one of the reasons that marketing budgets are higher in high growth firms, the results speak for themselves,” said Frederiksen.

Further, high growth professional services firms will likely use more marketing techniques (such as lead generation) than their slower-growing competitors. Leaders are more likely to publish blog posts, use keyword research, and focus on search engine optimisation. They also are more effective on social media and use a somewhat broader range of social media platforms.

Across the palette of sales & marketing channels on offer, firm leaders are ‘smarter’ in the choices they make. According to Hinge’s report, they focus on ‘high-impact, low-effort techniques’, ensuring that they reap the “best return possible” for their efforts. Examples of high-impact techniques include live product demonstrations, speaking at industry events, search engine optimisation, and sought-after industry eminence such as awards.

The role of technology is another differentiator. High growth firms invest more in marketing technology & automation, which helps them optimise processes and boost the customer experience across the full journey. “High growth firms benefit from their greater digital maturity as they use increasingly more sophisticated and effective marketing technology,” explained Frederiksen.

The High Growth Study 2023 by Hinge was published in partnership with Deltek.