Applied Reading: Marketing the Professional Services Firm by Laurie Young (2005)
Laurie Young's book is a fundamental marketing text in the professional services space. If you work in the area and haven't read it then I suggest you correct that immediately. Those who have read it may find this a useful opportunity to go back to fundamentals and revitalise your practice - this is the reason I re-read the book.
What are professional services?
Professional services is a market that is valued at up to $700 billion worldwide and ranges from IT & Telecoms through management and recruitment consultancy. Its particular challenge is that you are not selling products, you are selling people's minds and skillsets. These companies can have 100s, if not 1000s of minds to sell. It's very difficult to get 100s or 1000s of people to behave consistently in line with the brand and deliver a consistent quality of work that also plays to their particular knowledge and experience. It's much easier to get 1000s of cars to behave consistently. Marketing in professional services is essentially personal branding en masse in a way that marries personal and corporate brand.
Professional services industry is in many ways a maturing market and professional marketing in professional services is even earlier on the maturity curve. Most professional services professionals are used to doing their own marketing and business development - and their skills in this function vary from independent rainmaker to shouldn't-be-allowed-out. It the role of the marketing function to create consistency and empower professionals to market themselves more effectively.
This book also contains my favourite definition of marketing:
Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.
Philip Kotler (Kotler and Armstrong, 2003)
I have always thought of marketing as the social psychology of the commercial world. This is why I believe that there is an upper limit to the effectiveness of automation in marketing. In case you're wondering, I have Kotler's book too.
PART I: Strategic Issues
- Building the right strategy: Professional services firms come in all sizes and service all industries. This means that you will need to research your market, who do you service, who are the leaders, competitive positioning, what are your differentiating factor - you need to have an answer to all these fundamental questions.
- Gaining market perspective: you need to clearly define your market as a starting point and understand how mature the market is. Professional services markets often have large information asymmetry and marketing needs to be understood through the lens of networks and relationships (called Relationship Marketing Theory). Then you can use various tools to gain perspective, these include: Market Research, Market Audit, Scenario Planning, Competitor Positioning Maps (in Law we often use Acritas' work), Porters Five Forces, Actors-Activities-Resources Model (AAR). Then you can review specific opportunities using the following tools: SWOT analyses, Ansoff matrix and a Directional Policy Matrix. So there are loads of tools available and each provides a useful perspective.
- Client Segmentation: This is a very useful marketing tool, but is often done wrong. Either it is done by "gut feel" or it is done by segments that don't help. The key to this is that in professional services, people buy people, so your segmentation must be done around core human behaviour and activity. You can sometimes use lists that act proxies for human behaviour as well, e.g. a key client list is a proxy for "trusted relationship" and the associated behaviours. Read more in my post on client segmentation here.
- Creating and managing the brand:One of the least tangible assets, but most valuable in the long term. For services, this means creating a branded proposition and then consistently delivering on that. However, this is particularly difficult in professional services as, mechanically speaking, it means each employee has to fully embrace the brand values and operate according to them at every stage. Also, there are often "brand stars", individual employees who are respected in the market and bring cache to the brand, and their sometimes tense relationship with the brand that grew them. Tools used in brand management include: Brand Values, Brand Development Models, Measurement Techniques and Financial Tools.
- Competitive strategy: Professional services firms often fall into the trap of judging their performance based on their level of expertise, rather than based on the competition they face (ie. absolutely rather than relatively). As the maturity of the market has grown, so too has the need to build a strategy in relation to competitors. There are three basic strategies: Overall cost leadership, differentiation and focus. Then you can take the following positions: Market leader, market challenger, Premium supplier, niche or least-cost provider. Quality of service should reflect the market position and is a key factor in conveying the brand. By using a Value Chain Analysis, you can see additional places you can add value. Sources of the competitive advantage include: Core Competence, Corporate Brand, Client Relationships and Distribution.
- Handling international operations and cultural differences: Most companies may deal with issues where their organisation has people worldwide interacting between cultures and where they may be servicing one market from another. In professional services, this is exacerbated by the fact that the product is the people and the people usually deliver their work through project management and written reports. Business can adopt various international models: Exporter, Network, Multinational, and Global firm. Cultural differences affect people's expectations of other people, and this in business, this means their expectations about business interactions. I've been on many a phone call with a forthright Australian and a polite Japanese lawyer and sometimes a cultural translator is needed ("I'd like to just add to my colleague's comments by saying that..."). Clients are also ruthless if a firm fails to meet the unwritten rules of cultural conduct. In marketing, the main challenge is communicating with people not just across cultures, but when the group makes up lots of different cultures. I had this challenge most extremely when I managed social media marketing at Baker McKenzie Asia, which has many languages and platforms (like WeChat, LINE, and Facebook was used in a wide variety of ways). It can also be very difficult to manage client accounts across cultures. Innovation usually happens at the local level, on the front line, but then individuals may struggle to get the message out and others may find that the innovation doesn't translate to other markets. It's hardest to create consistency in firms with national profit pools.
Part II: Making Marketing and Business Development Work
- The organisation and management of marketing in professional services firms: It's often been said about personal branding that everyone has one, but the question is whether or not you manage it. The same is true of marketing. Everyone markets themselves, whether we're talking job interviews or a credentials list for a consulting project, the question is whether you do it well or poorly. In professional services, improving marketing is about improving marketing skills for your professionals and supporting them with marketing collateral and tasks - they are going out to sell themselves. This has to become more sophisticated as the firm grows as in professional services there are so many touch points between employees and clients and everyone is trying to maximise billable hours. This is such a big area that it probably needs its own post, so stay tuned. In short, the best way is to use work by Denvir et al (1998) which suggests that there are three levels of marketing activities to organise: Contact marketing (e.g. email, events etc), Capability marketing (e.g. industry or specialist expertise) and Corporate marketing (e.g. brand and reputation).
- Personal business generation: Each professional is responsible for their own book of work and will be asked to leave the firm if they can't generate one. There are standard processes that can be followed. Pipeline management, relationship marketing, client account management, anticipating buying regret, negotiation and sales techniques all help with personal business generation. Most personal sales are generated through repeat business and referrals based on excellent work. This means that marketing is often about making sure that the professional's reputation is known in the market. Professionals who embrace sales and marketing skills often become rainmakers and will lead practices, but they tend to be naturals and don't like explaining themselves. Building trust is essential for the professional (Maister et al, 2001) and the "trusted advisor" is still the holy grail of professional status. It's important to know that the last decade has seen a rise in buying departments., but the individual relationship with the buying decision maker is still key. Update from Young's book: increasingly, the professional must create content online that helps the decision maker diagnose the problem themselves and then reach out to professionals. The sales process involves targeting prospects, pre-sales, proposal and post-sales. Finding influencers who are loyal customers is very helpful. This is where social selling comes in. I will do a post on this too as it really is complex, essential and not just about blogs.
- Creating or relaunching services: This is about taking expertise and turning it into a service offering. So IP expertise can be turned into a trademarks retainer, or tax, compliance and employment expertise can be turned into a post-M&A cleanup service. Common mistakes in service design include: a lack of differentiation, allowing the service to become a commodity, a poor understanding of buyer needs, over-reliance on industry reports, the one-off service, overclaiming, lack of a proposition, a product-led approach and servility rather than service. Your service must provide an integrated experience for the client. I think this one needs it's own post too as this is an area where professional services are innovating.
- Communicating with markets: This where the idea of marketing channels and techniques come in, from email direct marketing, social media and events. This is one of the most visible parts of marketing and is what many people think of when you talk about being a marketer. Key styles include promotion or mass marketing (e.g. ads), response models (e.g. AIDA in user journeys), integrated marketing and communications (e.g. multi-channel campaigns), brand communications (e.g. values), relationship communications touchpoints (e.g. call and email responsiveness), data-driven marketing comms (e.g. digital marketing). Professional services firms have to particularly look at reputation enhancement activities, creating stars and gurus with personal branding, thought leadership, collateral supporting presentations and conversations. The campaign has to also be designed to reach the right target market in the right way with the right message. The marketing is executed through a campaign, with a strategy, a plan, and creative collaterals - these should map the overall strategy. plan and collaterals, but at a smaller scale. Comms is important here, it's about getting material into the press, but also about managing negative stories, creating spokespeople (who may or may not be your stars) and rehearsing everyone ad nauseum.
- Client service: Client service issues are particularly acute for professional services firms because of the way reputation and word of mouth affect personal business generation. It's important that expectations match up and that visible work is done to rectify the issue when they haven't. People are now very vocal online when service fails them (e.g. United Breaks Guitars song). Style and ambience of service should reflect the firm brand (e.g. friendly, responsive, formal) and should be deliverable. Customer loyalty and advocacy relates closely to service quality. When planning service improvements, you can break service down into components to perform a gap analysis. Clients general judge these components in 5 general areas: Reliability, Tangibles, Responsiveness, Assurance/Competency and Empathy. Remember that your client may well perceive the transaction period to last after the work is done - I often see software developers go wrong on this one. Professionals often have tension between short-term capital generation (billable hours) and long-term service investment. There is a cost/benefit analysis that has to go in to make sure that the opportunity cost is appropriate. To improve service, you can use the Gap Model, the Contact Audit, Zones of Tolerance between adequate and desired levels of service, Annual Account Benchmarking and Service Breakdown Processes.
- Marketing and human capital: Marketing can contribute enormously to employee satisfaction, especially in professional services brands. The personal brand that we need to build for individual professionals can go with them anywhere, We can also apply our skills to internal comms issues and touchpoints to manage employee satisfaction with the firm. Employees who identify with the service and culture of the organisation are more likely to do well from a marketing perspective. Marketing can help to manage boundary roles effectively - roles where the person interacts with the outside environment. Boundary roles are the canary in the coal mine - they are the first to start underperforming if there is a disconnect between firm deliverables and client issues. Empowerment of employees in professional services is so important because so many individuals have boundary roles. Human capital is the embodiment of the firms brand, which is why internal comms is so crucial - you need to keep people bought into the brand they deliver on.
Part III: The Marketer's Toolkit
This section of the book has the page turned down so I can find it quickly in my copy! I have bolded the tools I use the most in my work. I intend to drill deeper into these in upcoming posts. I'll update this list with the relevant links as they come out.
- AIDA: use for Advertising Planning
- Ansoff's Matrix: use for strategy development
- AAR Model: use for relationship marketing
- Blueprinting: use for service design
- The Boston Matrix: use for analysis of business portfolios
- Contact Audit: use for client service and communication
- Cultural Web: use for change management
- Directional Policy Matrix: use for business portfolios
- Experience Curves: use for new service development and competitive strategy
- Features Analysis: use for service design
- Gap Model: use for the diagnosis of client service issues and development of service strategy
- Hofstede's Cultural Dimensions for Management and Planning: use for international marketing
- Industry Maturity Curve: use for strategic insight into market development
- Marketing Mix: use for planning and influence
- Molecular Modelling: use for service design
- Perceptual Maps: use for positioning and competitive strategy
- Porters Five Forces: use for competitive analysis, market analysis and strategy development
- Research: use for client, competitor or market insight
- SWOT Analysis: use for strategy development
Apply the knowledge in this book
One of the most useful parts of this book for me is the understanding it brings about the unique aspects of working in professional services. Let me bring those together and go over them for you.
- People are central to a professional service brand, client service delivery, business generation and marketing strategy. You need to take care of them and make sure that they are trained and empowered however they need to be.
- Professional services markets often have large information asymmetry and marketing needs to be understood through the lens of networks and relationships (called Relationship Marketing Theory).
- Marketing in professional services has several unique aspects: reputation enhancement activities, creating stars and gurus with personal branding, thought leadership, collateral supporting presentations and conversations.
- Personal business generation is a result of personal branding, sales techniques, social selling and the ability to access key client programmes.
- Expert professionals in professional services need to be trained in sales because they need to develop their own book of work.
- Creating and relaunching services is an area of innovation in professional services that marketers can support because they often collect client feedback and have a keen understanding of the competitor landscape. It would be interesting to explore this more by introducing different innovation models.
- Professionals often have tension between short-term capital generation (billable hours) and long-term service investment. There is a cost/benefit analysis that has to go in to make sure that the opportunity cost is appropriate
I think that's most of it for now. There's lots of extra detail to add here in subsequent posts.
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