6 Proven Growth Strategies for Professional Services Firms
Discover proven growth strategies professional services firms can use to maximize profitability and systematically drive lasting growth.
Discover proven growth strategies professional services firms can use to maximize profitability and systematically drive lasting growth.
Table of Content
On the surface, many of the best professional services growth strategies seem more protective than proactive. That assessment isn’t entirely off-base.
Becoming adaptive, agile, and adept at infusing data into every process, phase, product, and touchpoint allows firms to brace for impact and emerge from the next round of disruptions, disasters, and black swan events fully-intact.
These passive protections are a critical lifeline. They offer resilience amid unexpected difficulties and many times, are the only way to ensure your firm hangs on long enough to watch things play out in real-time.
That said, the more interesting story is that becoming data-driven, adaptive, and agile also allows firms to take control of their own destiny. It allows them to focus valuable resources on high-impact areas, mitigate risks, and act on opportunities. And, in turn, actively drive lasting growth under any conditions.
In this piece, we’ll focus on a few proven growth strategies professional services firms can use to maximize profitability and systematically drive lasting growth — under any business conditions.
According to Forrester, customer obsession fuels growth. Analysts explain that understanding the “customer’s context” allows companies to differentiate and compete primarily on experience, as opposed to actual products.
Professional services firms have always operated this way because the “experience” they provide is the product. But – success hinges the ability to turn specialized knowledge into tangible outcomes – ideally, giving clients a competitive advantage they couldn’t achieve on their own.
According to McKinsey, organizations have largely embraced a customer-centric strategy that prioritizes high-impact interventions and uses an agile approach to quickly deliver solutions, support, and services to clients. And more recently, AI analytics and automation have become an essential part of business strategies across all industries, regardless of size or budgetary constraints.
What that means is, professional services firms may not be as client-centric as they think.
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For example, you might use predictive analytics to learn more about what makes clients tick. Those insights help you present information in a way that resonates and create relevant solutions to major pain points. The problem is, one-off improvements lead to fragmented experiences, and, in turn, limit growth potential.
McKinsey analysts report that what separates customer-experience leaders from everyone else is the ability to use customer journeys as a framework for transformation. Leaders focus driving on client outcomes by orchestrating holistic journeys – with every interaction contributing to a broader goal. And– as a result, those orgs can more reliably drive revenue and fuel growth than their peers.
As mentioned, adaptability plays a vital role in helping businesses survive disruption.
In a 2020 report, Boston Consulting Group (BCG) recommended that businesses focus on developing agile processes that would enable them to maintain business continuity, navigate surprise supply chain challenges, and meet new client needs.
Now, the “client needs” bit is especially important for professional services firms. Their primary challenge is responding to new challenges and expectations – as they’re happening. And, in many cases, as they’re dealing with those same disruptions themselves.
So, here, it’s going to be about creating an infrastructure that makes it easier to change course in real-time, spot trends on the horizon, and plan ahead with predictive modeling.
Performance hinges on building one cohesive stack (starting with the ERP) that serves as the single source of truth.
Composability is also key here. In one recent blog post, Microsoft explains that its system of modular, interoperable apps help users embrace an agile-like approach – making incremental improvements in short, rapid sprints.
Composable systems provide the end-to-end visibility you need to identify risks, opportunities, and emerging conditions hidden among expansive data ecosystems. They integrate seamlessly with existing systems and can easily be customized with low-code solutions like the Power Platform.
Composable apps can be swapped out and replaced with different modules as the business grows and evolves. And, when combined with AI, they help unlock actionable insights, automation capabilities, and innovation potential that drives growth.
Combining the deep subject matter and customer knowledge of your experts with real-time insights and AI-driven tools allows professional services firms to proactively drive growth on multiple fronts.
But – in order to evolve at the same pace as their clients, the market, and innovation, in general, firms must develop a forward-looking, data-informed culture that values learning, curiosity, and working together to solve problems.
Harvard Business School Professor Tsedal Neeley says that business leaders need to adopt a digital mindset to participate in the digital economy. She explains that we’ve entered an era where people should expect to learn something new every day and working with data is part of everyone’s daily routine.
A digital mindset is less about specific skills or technologies than it is about gaining a conceptual understanding of what technologies are currently available and how they might be used to solve real–world problems.
It’s learning to look at something like digital twins or robotic process automation or the metaverse and exploring potential use cases in context with your employees, clients, and processes.
At the same time, tools and training do matter. A lot.
In its 2022 Top IT Trends report, Salesforce research found that IT teams were hit especially hard by the “Great Resignation” – with skills shortages preventing many organizations from reaching transformation goals. Those companies that did manage to hit critical objectives took proactive measures to address new challenges – realigning resources, reprioritizing goals, and helping employees develop new skills.
Analysts advise organizations to put together an “innovation toolkit” that includes low-code, AI, and automation tools – tools that support fusion development and allow users to work with data in ways that maximize innovation and productivity.
Ultimately, though, it’s about creating a safe environment where people can ask questions, experiment with solutions, and collaborate without being called out as incompetent or redundant. It’s about providing the right tools, making sure people know how (and when) to use them, and giving people the space to explore possibilities.
Automation is well-known for allowing firms to save time, reduce operating costs, and outsource repetitive, manual tasks to bots better-suited to this kind of work. And, unfortunately, many still view it as a threat to human jobs.
More recently, automation has become a foundational tool for actively driving growth.
In a 2020 white paper, IBM’s Dominique Dubois says that there are far too many organizations out there that still view automation simply as a means for cutting costs and driving efficiencies.
“Smarter” organizations view digital transformation as an opportunity to reimagine processes and workflows through a “human-centric lens.”
Dubois goes on to explain that intelligent workflows deliver well-known benefits of automation – lower operating costs, productivity gains, fewer instances of human error. But – the primary purpose is improving the overall experience for human employees and the clients they serve.
When automation supports current and future needs, it becomes a competitive asset for sustainable, long-term growth. And it’s this specific capability that unlocks the agility, resilience, and adaptability firms need to compete under today’s complex business conditions.
Done right, it allows firms to do more with less.
Experts can provide personalized service at scale, bring innovative solutions to market faster, and automate a whole host of back-end processes that reinforce governance, protect client data, and ensure that all users can easily access the information they need.
QuoteWizard, a company that matches online customers with insurance quotes, realized it had outgrown its human-driven ticketing system; they set out to build an automated, AI-driven routing system that could match incoming tickets to the right engineers based on individual interests and skills.
The company used Microsoft Power Apps, Power Automate, plus a few services from the Azure stack to build a smart solution that could handle ticket routing and scheduling, as well as learn from the prior actions and inputs of human engineers.
Since implementing the solution, QuoteWizard’s insurance partners have been able to gain an edge on their competitors. Automated routing connects them with customers faster — allowing them to get more from their digital marketing investments. Meanwhile, engineers have more time to explore new ideas and experiment with potential solutions that bring even more value to the company and its partners.
According to McKinsey, the best way to maximize the value of your data is by managing it like traditional physical or digital products.
A “data product” provides end-users with ready-to-use, high-quality datasets they can then leverage to achieve a specific outcome. The idea is, firms can create reusable “data products” that can be monetized and repurposed across client projects and custom solutions – or packaged and sold as a product.
That might be a SaaS app that provides external market insights, ready-to-use digital twins that allow users to capture and work with data from physical assets, or AI-driven tools that guide sales and support teams through client interactions.
You might also try something like Mastercard’s recently-launched Digital Transaction Insights. It’s designed to address the growing threat of digital fraud and at the same time, remove friction from the online shopping experience — combining real-time decision intelligence with next-gen identity management capabilities.
What’s great about this type of data product is that it delivers value on every level.
It allows merchants to leverage Mastercard’s network insights with their own data to confirm shopper identities across a variety of checkout methods (in-app purchases, click-to-pay, digital wallets, etc.). Merchants can focus on pursuing new revenue opportunities and deliver convenient checkout experiences to shoppers on their preferred platforms without increasing the risk of fraud (and fraud-related losses).
Mastercard also provides intelligence to financial institutions so they can optimize the algorithms responsible for approving transactions and flagging fraud. And, of course, customers benefit from tighter protections without the burden of managing more passwords with more special characters.
Whether we’re talking about enterprise M&A or personal investment accounts, a diverse portfolio represents one of the most effective ways to defend against unexpected threats. Naturally, that logic extends to the professional services industry — and specifically, the pricing and service delivery models they provide.
According to the Financial Times, pro serv firms must work harder to attract and retain business in this environment – and, often, that means competing on price. But rather than discounting existing services, and as a result, lowering perceived value and profitability, firms are exploring new, budget-friendly ways to deliver their expertise.
One option is embracing a flexible consumption model. This approach requires firms to put together a catalog of reusable components clients can pick and choose from to “build” a custom solution. This model looks a lot like Microsoft’s modular ecosystem, where customers save money by paying only for what they need.
The benefit here is, it’s a cost-effective solution that allows clients to focus on top priorities before investing in additional capabilities/services. This gives you a chance to prove your value right off the bat – convincing customers to double down on their investment after some initial quick wins.
You might also offer services through a monthly subscription (SaaS-style). This gives clients access to expert insights at a lower price point – plus the flexibility to start, stop, or upgrade service as business needs evolve.
A joint research paper by Forrester and Salesforce found that professional services firms are increasingly focused on developing revenue operations (RevOps) capabilities. On average, firms utilize at least two revenue models and sell on at least three channels. And, as such, they’re investing in dedicated teams and high-tech solutions that help them manage more diverse portfolios with complex revenue models and align teams across departments and business lines.
But – tech is making things easier.
Even if you focus exclusively on D365 products, you’ll notice there’s a whole host of new features for managing pricing structures and delivery models.
For example, Dynamics 365 Finance just added new capabilities that make it easier to incorporate subscription-based business models into your existing strategy.
If you’re using D365 Project Operations, you can set up deal structures designed specifically for project-based work. The platform includes adaptable billing models that allow users to generate different types of contracts and model pricing variations on local economies, customer segments, and more.
When it comes down to it, growth hinges on a few key things: flexibility, speed, and the ability to effectively work with data. It’s these broader qualities that pave the way for everything else – upskilling, innovation, and the ability to elevate the client experience and evolve with the market.
Velosio experts have a deep understanding of the needs and nuances unique to the professional services space. While we also know that every firm is different, our 30+ years in the game means our experts have helped clients tackle the same challenges you’re dealing with right now.
Contact us today to learn more about our solutions, services, and how we can help you grow your firm to new heights.