There are at least three reasons why professional services firms need to use more market research in making decisions. I am referring to research about their markets, clients, competitors, and staff.
Strategy
The first reason firms need more research is to inform the decisions that constitute their business strategy.
Countless hours will go into innumerable pages of analysis to support discussions at partners’ retreats. To what end? Decisions will be made–that’s the easy part. The saying that strategy is 10% inspiration (i.e., formulation) and 90% perspiration (i.e. implementation) is apt for partnership-based cultures. The problem is firms are all too frequently not very good at the first, formulation, or the second, implementation.
Why? The are several reasons. Partners tend to collude and thereby avoid tough issues. They are excessively internally focused (because they usually lack strategic benchmarks). They too often plan with the lowest common denominator (i.e., the weakest link) in mind. They have an aversion to saying no. They tend to follow the herd (believing it’s safer). They have a bias for intuition rather than factual evidence. And they focus on the short term.
So, what do savvy firms do to overcome these blockers? One of their solutions is to use hard evidence. Professional people are rational thinkers. Facts persuade, especially when they are independently sourced and on point.
Research gives leaders the data and mandate they need to effect material change in their firms.
Clients
The second reason firms need research is to understand their clients more deeply.
Listening to a recent presentation by an esteemed colleague reminded me just how wrong the conventional way of thinking about what clients really value can be. This colleague was quoting extensive beaton research conducted with thousands of clients of law, accountancy, and consulting engineering firms.
Our research demonstrates clients regard price and value as positively related, particularly for premium providers. That is, higher fees signal higher quality. Price is social proof of a firm’s market position and quality. Yet this doesn’t mean a firm can charge as much as it likes; there is another factor in the mix. This factor is cost consciousness.
A firm and its practitioners will be rated well on cost consciousness if clients believe their money is being spent, in clients’ words, “as though the money being spent was the firm’s own”. Yet our research consistently shows the weakest link in managing clients’ perceptions of value is poor cost consciousness.
This applies to all types of clients, all professions, and all work types.
Trends
And the third reason firms need more research is to understand trends in the market that pose both threats and opportunities, such as the online-enabled changes that are transforming clients’ buying behaviour, service delivery and the competitive landscape.
What will be left for firms to deliver in traditional ways? The answer is that it will be work of a trusted adviser nature, constituting probably no more than 20-30 per cent of work currently performed by conventional professional services firms. The result is equity partner profits will fall as online service delivery innovation takes hold and as new business model providers take market share from incumbents.
Scanning and sensing the environment–both are forms of research–prepares firms for the beneficial and adverse changes before they strike with full force. Surviving a tsunami requires preparation, early warning and determined action. It’s no different for professional services firms.
Preparation and early warning require sound intelligence and informed interpretation–exactly what good research delivers.
Market research arms firms with the information they need to develop strategies to navigate an increasingly complex buyers market.
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