There are at least three reasons why professional services firms need to use market research when making decisions. I am referring to research into their markets, clients, competitors, and staff.
1. Top market research informs company strategy
Professional services firms need market research to inform the decisions involving their business strategy.
Many firms will tell you they have a strategy. Countless hours and dollars go into creating innumerable pages of analysis – often to support discussions at principals’ offsite meetings. To what end? Decisions are made – that’s the easy part. But as the saying goes, strategy is 10 per cent inspiration (i.e. formulation) and 90 per cent perspiration (i.e. implementation).
The problem: professional services firms are not very good at (1) formulation or (2) implementation.
Why? There are several reasons.
Principals tend to silently collude and avoid tough issues. They may be excessively internally focused – often because they do not have the research, measurement and data to look at external benchmarks. They often plan with the lowest common denominator (the weakest link) in mind. They don’t like 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 via market research and competitor benchmarking. Professional people are rational thinkers. Facts are persuasive, 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.
2. Understanding clients through market research
Understanding clients more deeply is the second critical reason firms need market research.
Beaton 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: cost consciousness.
A firm and its practitioners rate well on cost consciousness if clients believe their money is being spent well. Or in clients’ words, “as though the money being spent was the firm’s own”. Yet our market research shows the weakest link in managing clients’ perceptions of value, all too often, is poor cost consciousness.
This applies to all types of clients, all professions, and all work types.
3. Identifying and understanding trends with market research
The third reason firms need research is to understand trends in the market. These trends may pose threats or opportunities. For example, the digitally enabled changes that are transforming clients’ buying behaviour, service delivery and the competitive landscape.
What will eventually be left for firms to deliver in traditional ways? Work that can only be done by a trusted adviser.
This type of work constitutes probably no more than 20-30 per cent of work currently performed by professional services firms. Equity partner profits will fall as online service delivery innovation takes hold, and new business model providers grab more market share.
Market research that scans and senses the environment prepares firms for such changes. Surviving a tsunami requires preparation, early warning and determined action. It’s no different for professional services firms.
That kind of preparation requires sound intelligence and informed interpretation – exactly what good market research delivers.
Market research arms firms with the information they need to develop strategies to navigate an increasingly complex buyers market.
To find out more about Beaton’s research services and how they can benefit your organisation please visit our market research page or contact us to discuss your options with a Beaton partner.