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The
Marketplace MasterTM
is a monthly email publication on professional service
marketing from Expertise Marketing, LLC.
Investing in Longevity
I just got back from a significant 30th wedding anniversary
trip with my husband. Everyone I’ve told about
our trip has said, “Good for you for making the
effort to invest in your partnership!” Our time
away gave me a chance to reflect on the investments
that people make in order to increase the longevity
of their enterprises, whether they are marriages or
professional service firms (PSFs).
In
the past three years, we’ve seen most PSFs thriving,
and yes, investing in their future. But too often, PSFs
invest in marketplace longevity without a contextual
base upon which to move forward. Think about how your
PSF has invested in its longevity recently: by hiring
talent, buying new equipment or technologies, funding
the opening of new offices, or the like.
Shouldn't
measurement be considered an investment too? Doesn’t
it make sense to have a fact-based reflection of how
things are really going before plunging ahead? The evidence
is that PSFs don’t think of it this way. And that,
my friends, puts those enterprises at risk of not enjoying
a healthy and long marketplace life.
This
month's article provides some strong ammunition for
senior marketers who want to make the case that their
firm must make a formal commitment to measuring its
marketing and business development initiatives.
Suzanne
Lowe
Author, Marketplace Masters: How Professional Service
Firms Compete to Win
President, Expertise Marketing, LLC
Measuring Your Top Marketing Strategies
The
past three years have been good to professional service
firms. In fact, in the 2006 study I conducted with Larry
Bodine, “Increasing Marketing Effectiveness
at Professional Firms,” 75 percent of the respondents
said their firms grew in the last three years. And nearly
40 percent said they grew dramatically.
It
would be nice to sit back and enjoy the ride of a boom
period. But periods of dramatic growth aren’t
just good for the bottom line. They’re a good
opportunity for firms to evaluate their marketing strategies
and build competencies that will be highly desirable
if the economy tanks again.
Unfortunately,
strong economic times can tempt a firm to neglect self-evaluation.
The firms that understand the nuances that make them
successful can use that information to carry their success
through the ups and downs of the marketplace.
Knowing
Your Top Strategies Doesn’t Mean They’re
the Right Strategies
It’s
safe to say that virtually every professional service
firm has a list of top marketing strategies. Every year
they appear on the strategic plan, they drive activities
throughout the firm, and their progress is discussed
at the highest levels.
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"There’s only one way to know for sure
if your firm is directing its marketing efforts
wisely. And that is to measure." |
But
are the top strategies that firms identify really the
ones that they should be pursuing? How do they
know for sure? Perhaps they’re prioritizing activities
simply because they think they worked in the past. Or
because they know that competitors are doing them (yes,
the lemming principle is alive and well in PSFs!).
There’s
only one way to know for sure if your firm is directing
its marketing efforts wisely. And that is to measure.
In
our study, we asked respondents to list and then answer
questions about their top initiatives. It was less important
to know the measures they listed. Our true aim was to
see if respondents could credibly say why their top
initiatives were so highly regarded.
What
we learned was disconcerting, although not terribly
surprising. Although most respondents have no trouble
listing their top initiatives, their perceptions of
their effectiveness are highly anecdotal. Time and again,
when we asked, “How do you know
this initiative is so highly effective?” they
said, in effect, “We just think so.” Yikes!
Is this a way to run a successful business?
What’s
more, only 10 percent of respondents have a separate
budget line for evaluating the effectiveness of their
marketing programs. Here’s the real kicker: those
who do have a formal measurement budget are a whopping
240 percent more likely to say they are extremely effective
against competitors than those firms that don’t
have a formal measurement budget! This means there’s
a significant connection between formal measurement
and competing extremely effectively in the marketplace.
Now we can prove that anecdotes and intuition are simply
not enough.
Those
who formally commit money and resources to measure can
indeed teach us something about how to say authoritatively,
“These are in fact the initiatives that
give us the best results.”
Which
Marketing Strategies Should Your Firm Pursue? Or Discontinue?
Many
of our respondents told us that getting a measurement
program started seems daunting. It needn’t be.
Firms need to choose quantitative and qualitative methods
of measurement that are reasonable and repeatable.
|
"The sooner firms get serious about measurement,
and allocate resources to evaluate their progress
with effective assessment tools and techniques,
the more likely that they will make real gains against
their competitors." |
Our
study showed that three types of client-focused metrics
tend to work well when used in combination. (These three
metrics were first mentioned in our March
2006 Marketplace Master™ issue.) These metrics
are objective and obvious, clearly identified with clients,
and featured very tangible outcomes:
a)
Growing client revenue: “Did you grow revenue
with your client or not?”
b) Moving the phases of a sale through a pipeline: “Did
you close the sale or not?”
c) Listening to the client: “Did you listen to
your client or not?”
Effective
Marketing Strategies Require Effective Measurement
Study
respondents gave us some real-life examples of how they
are measuring their top marketing initiatives. The following
examples make it clear that not all measurement techniques
are equally effective. But, with the following examples,
we can begin to see that a firm can compete with the
right marketing strategies if it uses the most effective
measurement techniques.
I’ve
grouped their entries in two categories: whether they
were used by respondents who self-identified as “extremely
effective competitors” or those that self-identified
as “less effective competitors.” I’ve
included my commentary in italics:
Initiative:
Arranging business development appointments with clients
and prospects
Measurements
used by “extremely effective” respondents:
- Track telemarketing call metrics such as lead flow,
call volume, connection rate, conversion rate, meeting
cancellation rate, and project success. This measurement
and the next two use well-defined metrics in combination
with well-communicated expectations.
- Consolidate business development executives’
monthly performance statistics (meetings, proposals,
sales, etc.) for comparative analysis. Rate prospects
using formulas to predict their long-term worth to
the firm.
- Track number of engagements as a percentage of appointments.
This is easily documented and time-delimited.
Measurements
used by “less effective” respondents:
- Enter lead information in our database, but don’t
follow through. Good start, but no follow-through.
- Rely on anecdotal evidence to evaluate success.
This is too vague.
- Measure only our ability to get an initial meeting.
No further follow-up. This bar is set too low.
Initiative:
Differentiation, Positioning and Branding
Measurements used by “extremely effective”
respondents:
- After meeting with clients or prospects, attorneys
report back on how well they received our new tag
line and firm philosophy. This shows a repeated
use of an internally-accepted and well-known measurement
process.
- Perform client perception surveys at front- and
back-end of branding campaigns. This is well time-delimited.
- Conduct perception monitoring among target audiences
to measure how mature we are in demonstrating each
dimension of the positioning strategies we’ve
put into place. This is a savvy use of models
that are validated with clients.
- After differentiating and branding the firm for
environmental law, we measured revenue, workload,
and new hires. This measurement is tangible and
simple.
Measurements
used by “less effective” respondents:
- Determining whether clients “accept”
the firm or not. This is too vague.
- Use no formal tool, but say “that worked”
or “that didn’t work” after an interview.
There are no agreed-upon measurement parameters.
Initiative:
Targeting and Segmentation
Measurements
used by “extremely effective” respondents:
- Use a six-month segmentation process to compare
revenue from year to year. This method and the
next are quantifiable and well time-delimited.
- Use CRM to look at billing records and top revenue-generating
clients to establish a historical profile, which will
be placed in the context of the local, regional, and
national marketplace.
- Determine the penetration rate of target segmentation,
i.e. the number of customers obtained from a defined
target. This method and the next two are tangible
and simple.
- Analyze direct mail response rates.
- Track the revenues for each niche and the types
of activities that help increase those revenues.
Measurements
used by “less effective” respondents:
- Focus on the number of opportunities to present
the firm to prospects. These and the next two
examples are what I call “thinking you’re
measuring when you really aren’t.”
- Create sector working groups to share information.
- “Knowing” a firm’s clients, and
targeting them.
Do
You Really Know Your Top Marketing Initiatives?
Get Serious!
Most
marketing initiatives “work,” depending
on what’s happening with the economy, your business
cycle, and the forces at work in your own marketplace.
But don’t fool yourself with an unsubstantiated
listing of your firm’s top marketing initiatives.
Knowing which initiatives are factually the best comes
only after they are effectively measured.
The
sooner firms get serious about measurement, and allocate
resources to evaluate their progress with effective
assessment tools and techniques, the more likely that
they will make real gains against their competitors.
And increase the longevity of their enterprises.
Want
to see the results from our study on marketing effectiveness?
More
information on the complete 80-page study and its accompanying
68-page case studies report.
Take
the confidential, web-based Marketplace Masters professional
service firm differentiation assessment test for
instant feedback on whether your firm is doing differentiation
right.
If
you are interested in seeing the results of a small
study we recently conducted on measuring PR budgets
as a percentage of sales, please send mail to info@expertisemarketing.com.
Your
feedback is important to us. Please contact
us with your comments and questions.
©
2006 Expertise
Marketing, LLC All Rights Reserved |
