Grow your pipeline and boost sales by targeting your existing clients with additional services. Your clients will thank and reward you for it.
Many firms may find this surprising, as conventional wisdom says buyers of professional services purchase specific service lines from one particular firm.
This “horses for courses” theory suggests clients want the most specialist firms for their particular needs. The assumption has always been that most clients don’t want a “one-stop-shop” professional services provider.
Beaton data, however, tells us that clients are happier and say they receive better service when they consolidate their procurement of services and engage a firm for multiple service lines.
This post investigates our client data on cross-buying and shares with you our insights on developing an effective cross-selling strategy, based on over 35 years’ experience working with professional services firms. Our data shows that creating situations where clients want to buy from you, and therefore reducing your need to sell, is highly achievable. If, like many professional services practitioners, you need to sell to be successful but selling is not your first love, then these insights are for you.
What are cross-selling and cross-buying?
Cross-selling is widely used to describe the proactive efforts one part of a firm that delivers, for example, risk analysis and advice to a client, selling in another section of the firm to the same client, for example, transaction services. Cross-selling is provider-led. It is “inside out’”
Cross-buying on the other is not widely understood or used. Cross-buying occurs when a firm’s client takes the initiative to seek one or services from different parts of the firm. Cross-buying is client-led. Therefore “outside in”.
Research shows clients prefer to receive multiple service lines from a single professional services firm.
Research identifies cross-selling as key growth opportunity for professional services
Every year, Beaton Benchmarks surveys thousands of clients of legal, accounting, IP specialist and built and natural environment consulting services providers.
We ask clients of Australia and New Zealand’s largest professional services firms to rate their experience with their providers. Respondents represent a mix of public organisations’ and public and private companies’ leaders including c-suites, senior, general and functional management.
Respondents score the firms’ performance on a scale from 0 to 10, 0 being poor and 10 being excellent. They also indicate their usage of service lines or practices within the firm.
Combining the results from these questions generates insight into how client experience varies with the number of services used. This analysis of 36,000 client responses reveals a link between client happiness and a higher number of service lines or practice groups used. That is, the more services used, the higher the client rated the firm’s performance.
Results show loyal clients are happy customers
The following chart maps overall client service scores for firms in three professions on the vertical axis and the horizontal axis shows the number of practice groups or service lines used in the previous 12 months. It shows that the perceived performance of a law firm increased 1.6% for every additional practice group used. This trend is similarly positive for accounting (2.5%) and built and natural environment consulting (1.9%).
The results are conclusive: there is a very high correlation between the number of services used and the clients’ level of satisfaction. Put simply, the more they buy, the happier they get and also the happier they get, the more they buy.
Understanding cross-buying behaviour in professional services: What’s in it for the buyer?
Our data shows clients find it beneficial and prefer sourcing services from one provider for several reasons:
- Managing one provider simplifies the procurement process. Managing multiple relationships across different providers, negotiating separate contracts, and coordinating with different parties is much more challenging. Fewer communication channels to manage means smoother, more efficient operations.
- Buying services from one provider can been more financially attractive. Buying power can lead to cost savings with lower prices and reduction of administrative and transaction costs.
- A single firm is better positioned to provide better service delivery. As a firm becomes familiar with the specific needs of the client, they can tailor their services accordingly. This results in more consistent quality, processes, and service levels.
- Most importantly, it enables stronger relationships to develop between the client and a single firm. Other Beaton research shows that one of the biggest drivers of client choice is whether the firm ‘understands the client’s business’.
How to develop an effective cross-selling strategy
The truth is clients cross-buy when service is outstanding. For firms, that means an audience that is receptive to firms’ cross-selling. Our CX in Professional Services report found that clients providing excellent experience scores are 3.4x more likely than those with poor experience scores to consider the same firm for additional services.
If you don’t act on this you risk missing out. Our numbers show 48% of clients proactively cross-buy or have been persuaded by their firms to do so.
The following are some key tips for maximising the ROI of your cross-selling strategy.
1. Measure service line use by client organisation
To identify gaps and cross-selling opportunities, firms first need to understand how clients are currently using different services. Identifying and tracking key metrics that measure this generates useful insights. Establishing a regular reporting mechanism to monitor and analyse these metrics enables proactive action to optimise client engagement and satisfaction.
The following chart illustrates the power of having metrics. It shows the percentage of clients in accounting firms who have engaged more than one service line in each firm. A majority, that is, 11 of 16 firms, has a majority of clients who cross-buy from them. One lucky firm (A) has 88% of its clients cross-buying from them.
In this chart there is no pattern in terms of the size of firm (for instance, there are Big 4 firms at both the top and bottom ends of the chart), type of firm (single firm vs. network) or client type.
2. Develop an internal referral policy and monitor compliance
Encourage your people to refer different practice areas and service line teams to clients. Develop a comprehensive policy that helps drive internal referrals within the firm. This should include:
- Regular inspections to ensure adherence to the policy
- Recognising and rewarding compliance to encourage desired behaviours
- Discouraging and establishing sanctions for behaviours such as “hugging and grabbing” that hinder effective referral practices.
3. Improve core service performance
A firm should not be considering cross-selling if it does not have the fundamentals right. Do you know if your clients are satisfied? Through data, not anecdote. It is also not enough to just have high levels of service performance; our benchmarking data shows that firms that are not improving over time are falling behind.
4. Consider your brand
As you cross-sell and as you grow, there will be implications on client perceptions of your firm’s brand. For instance, if your firm is known as being highly specialised and if that is where you want to position your brand, care will need to be taken so clients do not begin to perceive you as more of a generalist. Read more about perceptions of complex and routine work.
Your firm should also consider whether you have “brand permission” to move into new spaces. This refers to whether the market considers the services and practices you want to grow and logically aligned with your existing brand and capabilities. For instance, a civil engineering firm may find little success growing a digital or artificial intelligence practice if it has little-to-no experience working with new technologies.
Cross-selling has implications on client perceptions of your firm’s brand, which are important to consider.
5. Routinely survey your clients
Segment your results by your practices and service lines to identify where there may be new cross-selling opportunities. High performing areas are prime opportunities for promotion to existing clients, provided they align with those clients’ needs.
6. Carefully grow your capabilities to meet market needs
Identify the services that current and prospective clients are looking for. Consolidate your client conversations and feedback to uncover the trends in the market. If there are gaps between their needs and your capabilities, assess the gap and evaluate the resources required to bridge it. Establish criteria to determine the optimal ratio between breadth and depth of services.
7. Know your competitors
Understanding what your competitors are doing can help identify unique opportunities for you to offer. It can also provide insights on your clients’ expectations of service providers as well as what works and doesn’t for your profession.
By focusing on these tips, a firm can develop a strategy to encourage cross-buying and therefore boost sales via cross-selling. To do this, firms first need the right insights and data.
Insights for business growth strategy
Beaton Benchmarks provides client feedback and benchmarking data to help your firm grow. Monitor client usage, get competitive insights to broaden offerings and optimise the range of service lines the right way. Navigate the complexities of a competitive marketplace and identify your biggest opportunities.
Beaton Benchmarks research is now open. Don’t miss out on your opportunity to participate in the world’s largest professional services firms client feedback study. Find out more about Beaton Benchmarks and download a sample report or sign up here.
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Jon’s passion is in helping Beaton’s clients deliver profitable growth for their businesses. He is a recognised client specialist and adviser to professional services and works with a wide range of businesses from small to large. His focus is helping his clients to delight their clients. Jon’s clients describe him as relaxed and easy to work with, highly collaborative and very outcomes focused.Full bio
George has guided Beaton’s clients through a wide variety of strategic decisions in his 30+ years as an adviser and researcher. His background in business school teaching combined with his work in professional services firms, public and private companies, universities and governments gives him deep insights into the challenges and opportunities that leaders and their organisations face.Full bio