Drive Your Firm’s Growth with Market Research
How well do you know your clients? You might be surprised by the answer.
In almost every piece of market research we do, we uncover situations where professional service providers misjudged or misread their clients. But even we were surprised at the impact of market research on a firm’s bottom line.
Hinge Research Institute’s ongoing study of professional services firms found a clear and dramatic correlation between systemic research and firm growth and profitability. Professional service firms that conduct systematic research on current and prospective clients grow from 3 to 10 times faster and are up to 2 times more profitable.
The accounting industry is no exception. When CPA firms better understand their target audience and current clients, they can anticipate emerging needs and develop relevant, high-margin services.
Why is Market Research So Important?
Many senior executives underestimate the importance of market research in growing their organizations. They often brag that they know their clients’ needs better than the clients themselves.
But here’s what they might be missing:
1. Your clients are often subject to powerful market pressures they never discuss with you because they don’t think it’s relevant to your work with them.
2. It’s hard to see market patterns and trends when you are in the middle of day-to-day operations.
3.Your current clients may not represent the market as a whole, which can blind you to significant trends that would help you grow your pipeline.
4. In the rush of day-to-day client delivery, it’s easy to put off dealing with complex, hard-to-resolve issues. Comprehensive market research makes these issues hard to ignore.S
5. Staff can resist change. Data-driven decisions are easier for staff to understand and accept.It can be hard to decide what new services to offer clients and when. Market research can make these decisions more straightforward.
What kind of research will provide insight into these situations? It’s important to note that we aren’t talking about informal research, such as talking with clients, satisfaction surveys or keeping up with industry publications. Less formal kinds of research often lack rigor and are subject to distortions. Instead, we recommend systematic, structured analysis that helps firms understand and track their target market.
Is Researching Your Clients and Prospects Worth the Investment?
This question comes up frequently in our work with professional service firms. Concerns often arise around three main points.
1. “I already know my clients.” According to our research, firms don’t know their clients as well as they think.
When we ask a firm to identify their competitors—and subsequently ask their clients and prospects the same question—we find that the average overlap between the two groups was only about 20%. That means that professional services firms aren’t aware of 80% of their actual competitors. Our research also shows that about 65% of the time, a client admits they don’t know what services (beyond the one they are using) their firm offers. Even worse, over 85% of the time, clients wish their firm could perform services that they already offer.
2. “Don’t rock the boat.” Will talking to clients irritate them? While this is an understandable concern, it turns out to be not much of a problem. Clients who don’t want to be bothered won’t participate.
We find that most clients appreciate being asked for their perspective. And don’t worry about losing a client—it never happens. It’s more likely that the interview will uncover an existing need and lead to new business instead.
3. “What’s the return on investment?” Until recently, investing in research was a leap of faith.
We knew from direct experience that systematic research resulted in more innovative strategies and stronger competitive advantages, but we had no way of proving it. All that changed when we studied high-growth, high-value professional services firms.
How We Use Research to Grow Professional Service Firms
Still unconvinced? Here’s a case study from one of our clients.
A large, regional accounting firm had partly built its business by acquiring smaller businesses and rolling them into its family of companies. As the firm began an initiative to develop a national presence, it understood it needed a consolidated brand and messaging to reach a wider audience.
Hinge interviewed over 80 clients and key internal stakeholders, which produced insights we turned into a unified brand positioning statement. These findings also informed an all-new marketing strategy and messaging platform to move the firm from a regional player to national prominence.
Today, this firm uses its sharpened positioning to penetrate new markets and resonate with a far wider audience.
A Final Thought
Research has not always been a standard feature of professional services marketing strategy. Today, professionally conducted research should be a part of every modern firm’s marketing toolkit.
How do your buyers see you? How do you stack up against your competitors? It takes systemic research to answer these questions. Until market research becomes commonly used in the accounting industry, it provides a clear competitive advantage to those firms that invest in it.