Is your business focused around your clients? While some readers may be quick to answer ‘yes’, and others quick to answer ‘no’, the truth likely remains somewhere in-between. Foster more meaningful client connections by understanding client expectations or concerns. Watch the video below to see how your firm can create a unique client experience to differentiate yourself from the competition.
Full Sail Partners Blog | Jeff Robers
Posts by Jeff Robers:
Consumers. Buyers. Clients. Users. Customers. You want ‘em, you need ‘em! and it doesn’t matter what kind of business you own. Or does it? Marketing services based businesses can be a tricky task.
Identifying and marketing to your consumers
is both formulaic and highly individual,
because what you’re marketing makes all the difference.
In other words, if you’re a product based firm or a services based firm, your marketing efforts will certainly have some similarities but marketing to each of these audiences will also have their own needs.
Let’s first start with definitions.
Product based firm – you’re an organization with a solid, tangible product to offer its customers: you can package it and put it on a “shelf.” Marketing is pretty easy – you might even say it’s “textbook” (taught in every marketing class across the country).
Services based firm – an organization that has people as its primary offering, i.e. a process or an expertise. And since you can’t package people or put a process on a shelf, you have to market differently.
A bit of both – Sometimes you’re some sort of hybrid between a products business and services firm. Maybe you sell a product and offer services to back up that product. Maybe you offer services with some ancillary products. Whatever your mix of products and services, your marketing efforts will have to vary depending on your target market for each.
Who says it best?
So let’s get down to business and start marketing.
When you’re marketing a product, you let your product speak for itself, tell its own story of how buying the product will solve the customers’ problems. You can do things like show your product in action - think cars careening down the highway or a newly cleaned floor.
With marketing services based businesses, it’s a bit different. Yet still much the same.
Like products, services solve problems. Marketing your services business will still show problems being solved but as told by the current clients of your services: as the old adage says, people buy from people. Think of a company like “Angie’s List” which sells services of professionals as told by the users of those services. With services, your biggest marketing tool is your clients. In services, you can’t parade your product for your potential customers, but you can show those who have successfully used your services.
Client Feedback Tool. The key to marketing services based businesses.
But how do you know the stories of your clients? You ask them. And in the services world, your best friend is client surveys, specifically, a Client Feedback Tool which companies like Full Sail Partners use to periodically and regularly gather information from clients about engagements.
Sometimes customers need a voice (other than just talking with a project manager) through which to offer their feedback. A Client Feedback Tool offers survey questions which your clients can use to offer their thoughts on the engagement: these can either be constructive points as to areas for improvement or compliments on the engagement which are really helping their work lives. And, with the right marketing professional, both can be used to your services business’ advantage, because once you know how your customers are feeling, you can take action. In marketing, no news is not necessarily good news; the more information you are armed with, the better marketing can do its job.
Never underestimate the value of retention
Marketing your services business is a bit different but can be better once you find your audience because of one word – RETENTION. If you have happy customers, not only can they contribute to your marketing efforts, but keeping these same happy customers is the real boon to your bottom line. According to Forbes.com “Five Customer Retention Tips for Entrepreneurs”
For those who feel that customer retention plays a relatively minor role in helping a company grow a healthy bottom line, here are a few statistics you might be interested in. According to Bain and Co., a 5% increase in customer retention can increase a company’s profitability by 75%. And if those numbers don’t impress you, Gartner Group statistics tell us that 80% of your company’s future revenue will come from just 20% of your existing customers. Still not sold on customer retention? One final statistic provided by Lee Resource Inc. should give you plenty to think about: Attracting new customers will cost your company 5 times more than keeping an existing customer.
When it comes to marketing services based businesses, happy clients are your secret weapon
Marketing your services business requires some tweaks to your marketing that differ slightly from product businesses. Your chief marketing tool is your current customers as they proselytize your message. Not only are they reaching new customers, but if they are happy enough to share your good work, it looks like you will have a long-term relationship making your bottom line even that much happier.
Yes, it may be a bit daunting to come up with different marketing styles for your potentially varied target audiences. To accomplish this, check out the Client Feedback Tool - a tool designed to help you target your marketing efforts.
Like the beloved Sesame Street Count Von Count character, your project accounting should be just as obsessive about tracking numbers – project management numbers that is. Many companies are very good about ensuring that their general accounting functions (things like their A/P and A/R balances, for example) are consistently maintained and reported to those who need this data. But when it comes to project accounting, too many companies fall short.
But first – what is project accounting?
Let’s start by comparing it to standard accounting, which most of us know. Standard accounting manages the financials using a company’s organizational structure – how divisions or departments are tracking (like their G&A, labor, etc.) compared to their budgeted amounts on a periodic basis. For those who embrace their arithmomania (a compulsive love of counting) and for those companies where growth is a key component of their future, there is another layer which is a must. Project accounting looks closely at the projects a company has undertaken most of which regularly cross departments and might last months or even years.
Let’s say, for example, company X wants to undergo a new green initiative in their office. Our standard accounting will keep good track of costs for things like the smart electronics to manage lighting and HVAC or the newly hired “Green Officer.” What standard accounting doesn’t do is manage the costs for the actual project, i.e. how much did it cost you to achieve your final goal. Things like:
- The project manager’s time to create and manage the project plan: the work breakdown structure and project hierarchies.
- Were deadlines met? If not, what the cost of missing those deadlines? If so, how did meeting those deadlines translate into cost savings?
- How is percentage of completion managed and tracked to budget?
- What long or short-term investments will need to be managed on an on-going basis once this project is complete?
But let’s take this a step further. Let’s say you need to perform a customer project – you’re going to implement that same green initiative in your customer’s office. You probably have access to someone who is really good at estimating the costs of a project, so you have this first step covered. You may not, though, have a good system for tracking those project costs to the actual costs which means for the entire project, you’re working with blinders and hoping that at end of the project, you’re not bankrupt. That’s where a good project accounting system will save you. Forbes.com contributor, Bill Connerly’s piece, “Businesses Lose Money From Bad Accounting,” says he’s surprised at “how many businesses do not know the profitability of each customer or project or order they have. For instance, a sign company could not tell … how much it cost them for a particular job they undertook. Their financial statements told them whether the entire business made money in the month” or not but there was no accounting in place to determine to which project the gain or loss was attributed.
Now, SOLUTIONS, please.
When you’re a small company doing your best to manage your business day-to-day, a smaller accounting solution, like Quick Books, serves your needs … for a while. J. Carlton Collins, CPA details those limitations in his piece “Practical Advice for Companies That Have Outgrown QuickBooks” (http://www.iyoungland.com/_pdfs/outgrown_quickbooks.pdf)
QuickBooks has two basic limitations:
• Limited accounting system features
• Limited database performance
If you run a smaller operation, these product characteristics are actually appealing … If your organization is rapidly expanding, however, you will eventually outgrow the QuickBooks feature set and database performance … growing companies often find they need more sophisticated features that aren’t offered by QuickBooks.
And therein lies the rub. Growth.
For companies who have “growth” as part of their future – and “growth” can be defined any number of ways like increase in revenues, employees or customers, higher profits, greater market share, etc. – they will outgrow these types of small accounting solutions and have to take the leap to accounting sophistication by finding a solution that manages both their standard accounting as well as their project accounting.
But before you take that leap alone, let’s get you a partner. As much as we all love Count Von Count, you should look to a partner who is just as obsessive about numbers, but without the funny accent. Your friends at Full Sail Partners are just what the Count ordered. Take, for example, this piece by Mark Lovstrom with Full Sail. He writes that growth is a KPI which should be analyzed with “a project KPI dashboard [that] can examine some simple indicators [to] allow a project manager to gauge which project(s) need more attention.” He goes on to list those items which should be closely examined in order to manage your project costs. Things like:
- Accounts Receivable
- Unbilled Labor
- Estimated to Complete (ETC) and/or Estimate at Completion (EAC)
In the end, we are all working toward success for our business. And to most of us, success means growth which then means managing every minute and every dollar – through project accounting – to achieve your success. Click to view this webinar by Full Sail Partners to learn more about how your particular style of growth can be achieved.
Count Von Count and all his Sesame Street friends will be proud of how much your project accounting has allowed your business to grow!
At its most basic level, the practice of benchmarking provides perspective into why some companies perform better than others. As a result, it helps business leaders find and exploit opportunities for improving operations and results.
Another aspect of the importance of benchmarking is that it can stamp out incorrect assumptions that lead to complacency. For example, for some business owners, the easy (and convenient) takeaway from the recent Great Recession is that its pain was spread more or less evenly within each industry sector.
The problem is, this often wasn’t the case. In fact, in almost every sector you examine, there was a small group of firms that made it through the recession in better shape than their peers, as measured by the most relevant metrics.
Was it just luck, or were they doing things differently? This is where effective benchmarking can really pay off.
How to get started
A good place to begin is understanding the most relevant key performance indicators (KPIs) in one’s industry. For example, our work with clients in project-based industries has put a spotlight on the importance of benchmarking such metrics as:
- Utilization Rate
- Net Labor Multiplier
- Operating Profit
- Current Ratio
- Employee Turnover
- And various others
The next step is to systematically track and monitor these KPIs. Hopefully, you’re already doing this; but if not, there are a number of financial/accounting software packages that can do so. (At Full Sail Partners, we offer an alternative solution that tracks this data: Deltek Vision. It also streamlines project management, improves visibility throughout the project life cycle, and … okay, that’s a topic for another blog!)
Finding a good yardstick
Once you have sufficient data on your KPIs, the next step is to find external data to compare it to. This is not easy or simple — but still very doable.
Of course, one solution is to hire a consultant to analyze the relevant competitors and metrics. But a far less expensive approach is to find the data you need on the web — preferably in the form of third-party studies of your industry.
As a case in point, Deltek publishes an annual performance study of firms in the architecture and engineering field that examines all of the most relevant KPIs for that industry. More importantly, the study mines through the data to isolate some very interesting differences between the highest performing firms and the rest.
Among other observations, the most recent study found that overhead and utilization rates were basically the same at all the firms studied. But the high performing firms were unique in sharing several key characteristics, including that they had improved efficiencies in their project lifecycle and had developed a defined set of company standards.
Other types of freely available studies can inform the benchmarking process as well. For instance, the marketing firm Hinge has produced a series of reports that examine high-growth firms in a variety of professional services industries. Like the Deltek study, Hinge’s study found interesting lessons in how the most successful firms are doing things differently. It also exploded some myths along the way — like the widely-held belief that a tendency toward high growth among certain smaller firms is a statistical fluke.
The key is, do a little digging, and you can readily find some metrics of the top-performing firms to compare your firm to — and more importantly, take lessons from.
Add benchmarking to your management mix
Of course, the importance of benchmarking is not that it’s a silver bullet for growth. It’s more of a management philosophy and commitment that emphasizes keeping an eye on the most important KPIs within one’s firm and industry, finding meaningful comparisons among top-performing competitors, and adopting proven strategies for improving growth and financial performance.
Interested to learn how Professional Services firms position themselves for future growth and meet the challenges of potential ownership transitions? Read expert opinions from Deltek, Rusk O’Brien Gido + Partners and DiCicco Gulman and Company (DCG).
Recognizing the need for an ERP system and searching out the correct solution can be a daunting task for any size firm. Those investing in an ERP realize it takes significant time and money and is a decision that will impact your firm for many years. However, the following five mistakes made during an ERP search might be less obvious:
1. Not evaluating your company’s overall processes.
Ideally, ERP will have a positive impact on every aspect of your firm, from business development to project tracking to forecasting to billing. Ask yourself these questions:
- How many disparate systems do you have?
- Do you have a CRM system?
- If not, how are you currently tracking leads, creating proposals, forecasting sales and winning new business?
- Does your time keeping system talk to your payroll system or your billing system?
- How do all your disparate systems create your current overall process?
- Where do you need improvement?
- What results are you looking for from those improvements?
Your firm needs to understand how all of your current processes operate as a whole and the results you’re after.
2. Not matching an ERP system to your business.
If your firm is project-oriented, make sure your ERP is also project-oriented. Many ERP systems are generic, meaning they are not purpose-built. Recently, I had a prospect circle back with me. They went with the lower cost system. Less than a year later, they realized the mistake they had made. They knew they had to bite the bullet and do now what they knew they should have done the first go around. Just like when purchasing a car, you have to look under the hood and understand the capabilities or lack thereof with an ERP.
Make sure the ERP match your business needs now and will it continue to grow with you.
3. Not having executive support.
In our previous article, 8 Reasons an ERP System Implementation Succeeds, we discussed the importance of having executive support during an implementation. This role must understand the benefits the ERP will bring to the company and be an advocate supporting the implementation team. In addition to being the cheerleader for the implementation, the C-level executive needs to be involved in the search and selection of the ERP.
If the C-Suite lends their strategic vision and expectations at the beginning, it will set the tone for the rest of the implementation.
4. Not understanding the time and resource commitment.
When conducting an ERP search, have in mind who will be the champions of the implementation. Identify a strong Project Coordinator and an individual that will be the super user. Depending upon the size of your firm and the number of disparate systems you’re replacing, the Project Coordinator could ultimately spend a great deal of their time on the implementation project. In addition, the super user will need to coordinate training for employees. Training doesn’t end when you go-live. You need to anticipate some on-going training and periodic refreshing.
The goal of any implementation of an ERP system is to increase efficiencies, so make sure you dedicate strong resources and allow adequate time for training to ensure the implementation is a success.
5. Not investing in ERP for the long term.
In addition to choosing an ERP with a high return on investment as well as a suitable total cost of ownership, you need to consider your ERP system and your ERP vendor as a long-term partner. ERP is a significant investment that you will live with for years, if not decades. Make sure the ERP will grow with your firm and you have established a strong relationship with the firm and consultants that will implement your software.
- How long has the ERP provider been in business?
- Is ERP their primary focus?
- Does your vendor understand your business?
- Does the firm have references?
- Are their user groups to obtain and unvarnished opinion of the system and the provider?
If something sounds too good to be true, it probably is. If you hear “we’re just as good as X, but cheaper”, steer clear.
By avoiding these common ERP search mistakes, your choice will result in a comprehensive firm management solution specifically designed for the unique needs of your firm. Let us know if you have any other tips, by leaving a comment. Thinking about migrating to an ERP system today? Make sure to familiarize yourself with these six data migration considerations.