Marketing choices in the fastest growing firms
When it comes to marketing, what do the fastest growing service businesses do? How do their marketing practices compare with their slower growth peers?
Every year for the past 10 years our friends at Hinge Marketing in the US have published independent research on professional service firms, exploring the marketing performance and choices of high growth organisations around the world.
It’s been fascinating to watch the results come in from Hinge year on year. In 2018 over 1000 companies participated from across the world – from small micro businesses to global mega firms – a goodly mix of knowledge-based businesses including agencies, tech, architecture, accounting, legal and consulting firms.
Here are our highlights from this year’s High Growth Survey, to help you see what’s working. There are some seriously useful lessons here to help you build a business that is more visible and grows faster.
It’s equally useful even if you’re not aiming for growth, but instead aiming to maintain your position and get better at what you do. The lessons here are valid for anyone selling services – whether you’re a micro-business, a large corporate or a change-making organisation – we can all learn from the practices high growth professional service firms employ to achieve their success.
What constitutes a ‘high growth’ firm?
Hinge classifies high growth firms as those that experience 20% or greater compound annual growth in revenue over a 3 year period.
Interestingly, growth slowed across all professional services surveyed in 2017. After remaining steady for two years, the median growth rate dropped a full % point in 2017 (from 10.1% in 2015, 10.2% in 2016 to 9.1% in 2017). Technology firms grew faster than other sectors in the last year, followed by consultancy. Legal, accounting and financial services grew more slowly.
High growth firms grew nearly 4X more rapidly than the average firm. So what exactly are they doing with their marketing to drive these results?
What high growth businesses do differently
All those surveyed are in the business of selling knowledge and expertise. Hinge’s survey paints a picture of an industry in transition – increasing competition, commoditisation, worries about technology taking over routine services.
Against this backdrop everyone is trying to work out how best to connect with clients and add real value. High growth firms seem to have worked out how to do that. So what action do they take in order to address future threats?
High growth firms make a commitment to client research
High growth firms do more research. They focus their efforts into finding out what’s going on in their clients’ world. How do they buy? How do they perceive the firm? What opportunities are there here? This brings them much closer to their audience so they can anticipate how to add value.
“Client research is a way of reducing your marketing risks and dialing into your audience.” – Lee Frederiksen, Managing Partner, Hinge Marketing
Fast growing firms conduct this research regularly – 43% of high growth firms conduct client research at least once a year, compared to only 16% of no growth firms.
High growth firms are specialists not generalists
High growth firms have a clear way of differentiating themselves. They are much more likely to be highly specialised – in 4 key areas:
- They offer more specialised services
- They solve specific problems
- They serve a specific role
- They specialise in the use of technology.
High growth businesses offer fewer services at a more specialised level. Interestingly, they were less focused on industry specialisation, which is a tactic embraced by no-growth firms. (This might surprise you – more on this below in my conclusions).
High growth firms invest more in marketing
Firms growing fastest are spending more in marketing – more money, more time.
20% of high growth firms are spending 20% of revenue to the marketing budget (less than 5% of no growth firms make that commitment).
This is the first time in 10 years that high growth firms have outspent low growth firms in marketing according to Hinge’s research. It seems that the marketing game has changed up. So where’s that investment going?
High growth firms invest in digital and content marketing
They devote much of their marketing budget and time to digital marketing practices. No growth firms are more likely to employ cold calls, networking and industry awards. High growth firms use more digital and content marketing techniques more intensely, as well as investing in PR.
High growth firms see much greater impact from their digital efforts too. They were at least 50% more likely to realise results from digital marketing techniques such as social networking, promoting their thought leadership on guest blogs, social media, video blogging, developing case studies and from online advertising too. They are far more likely to invest in video as a way to give potential clients a sense of a firm and its experts fast.
High growth firms invest in training, in a variety of skills
From business development, communication and client management skills, as well as technical skills – high growth firms invest more in training. When asked to rate their subject matter experts based on their ability to demonstrate their expertise, high growth firms showed an advantage in multiple channels, including creating content (writing articles, blog posts and videos), and networking (both in person and online).
What these findings mean for your marketing
So what can we as business owners, leaders and marketers take from the 2018 High Growth Survey findings?
1. Invest in and value your marketing
The difference in terms of investment between high and no growth firms in this study is stark, with many of the fastest growing spending 20% of their revenue on marketing. This may surprise you, but it fits what we’re seeing on the ground with clients who see marketing in its widest sense and take into account the time and effort put into relationship building and business development. A good rule of thumb for a micro-business like ours is one day a week on marketing. Scale this up and Hinge’s findings make good sense.
Marketing isn’t just advertising – it’s the work you put into building relationships, getting the right people to know, like and trust you, and remember you when the time comes to buy. This survey shows that the more you invest, the faster you grow.
2. Invest in the right things – digital and content are key
Over the last 10 years Hinge’s research has tracked the move to digital and a fundamental shift in buyer behaviour and expectations – how people look for suppliers, what they’re looking for, how they make their selection.
The buyer journey has definitely changed over that time. Relying on referrals alone is just not enough to sustain a business. No one takes a referral on face value these days. They will ask their friends, but then hop straight to your website, and most likely to your social media channels as well. If the story doesn’t stack up there they may well rule you out straight off the bat. If they can’t see how you’ll help them, you risk losing them for good. Your website and digital presence has never mattered more.
Buyers have more choice and more control than ever, and the survey shows that high growth firms recognise this shift in power. They know the value of visibility and specialisation. Creating content and upgrading their websites top of their list of marketing priorities for the year.
The quality of the content you share matters. While the choice of channels and formats is expanding, and the production of content has expanded exponentially, the benefit in sharing your expertise in customer focused written and visual content still remains. It’s fascinating to see the difference in the value high growth firms put on video compared to their no growth peers. That’s something we all need to invest more in.
Easy to say what needs to happen, but like any change, difficult to put into practice. It’s good to see the investment in training in fast growing firms. Marketing success in today’s fragmented and competitive environment needs a new mindset and a new set of skills. Get your people to understand the new world, why digital matters, the new buyer journey – and motivate them to contribute to the organisation’s future success.
3. Regular research
I’m particularly delighted to see the findings about client research. Seeking regular feedback from your clients is a powerful and flexible business practice. It’s fundamental to the positioning and marketing approach we recommend and to the brand and content projects we undertake for our clients.
You might expect me to say this but I mean it – client research is transformative. It gives a clear and powerful ‘outside in’ view of the value you deliver and of your customer’s world. It helps unlock the answers to the perennial positioning problem that all businesses face from time to time. It highlights opportunities for growth, and forms the basis of a strategic customer-focused marketing and communication plan.
High growth firms recognise this and that’s fantastic to see.
Positioning is key – it all starts here.
At first glance I was surprised to see industry specialisation classed as a tactic employed by lower growth firms. But look deeper. High growth firms certainly opt for specialisation – they take it even further than industry specialisation – they become known for solving specific problems for specific types of clients – a true niche focus.
Why do specialist firms grow faster? There’s an easier path to accessing a target audience and communicating with them with messaging and language that resonates. Specialist areas have their own industry associations, blogs, networks, where you can make yourself known. If you’re a generalist, you’re harder to find, harder to recommend. If you have a smaller, clearly defined niche target audience it’s much easier to be relevant. You can show understand the industry AND you can solve my problem. You can demonstrate better solutions, more specialised knowledge, superior case studies. It all gets easier.
Are we witnessing the death of generalist firm? It might be premature to say that, but it’s certainly harder to grow this way, and I predict it will get tougher to be a ‘high growth generalist’. Niche is the aim.
Inject some high growth practices into your organisation
It’s heartening to see the valuable content marketing principles we believe in reflected in the practices of high growth firms.
If you were looking to inject some high growth practices into your organisation, the place to start is with some research into the needs and beliefs of your target audience. The insight you’ll gain from this underpins so much else on Hinge’s high growth-checklist, and will help you set your compass for success .
There’s a lot to digest in Hinge’s report, and I’d welcome your views on how it lands with you.
Congratulations team Hinge – it’s a fascinating and very valuable study. Thank you for the food for thought.