10 Consulting Trends: 2024 Edition

Welcome to the 2024 edition of Consulting Trends – a yearly summary of what I observe happening in the consulting industry, focusing on mid-sized, boutique consultancies.

The trends I discuss here are not based on scientific research or a single study. Rather, they are a culmination of what I’ve observed over the past year 2023 and the conclusions from these observations.

This overview of the state of the market and consulting industry is based on three main sources:

• My project work with my consultancy clients – the consultancy business audits and the advisory work that I complete;
• The discussions and interactions I’ve had with more than 100 consultancy owners and leaders over the last year;
• My industry research: various studies by companies like Grist and Source Global Research, 1,000+ articles from various experts, hundreds of podcasts, and hundreds of social media interactions with my followers (I publish daily on LinkedIn).

All of this information and data points allow me to not only keep my finger on the pulse of the industry but also notice patterns forming over time. And that’s what this yearly overview is about – patterns that boutique consultancy owners and leaders should be aware of and actively incorporate into their business thinking.

1. Uncertainty will continue to dominate the market

We had 2 years of almost unlimited post-pandemic growth in consulting – in 2021 and 2022. I consider these two years to be ‘outlier years’ as they were not exactly a regular revenue growth continuation from the 2018-2019 years. 

However, since late 2022, the consulting business has been facing economic uncertainty – brought about by fluctuations in the global economy, geopolitical tensions, and cost inflation (to name a few). Grist’s 2023 edition of its annual Value of B2B Thought Leadership study reveals that 52% of decision-makers expect the economy to worsen (as opposed to only 29% that expect improvements).

Some of the most common challenges I have since noticed consultancies bring up in our conversations are: losing out on work due to reduced client budgets, project indecisiveness, and lack of consultancy revenue reliability. All of this indicates that clients’ budgets, needs and expectations have evolved rapidly, which, in turn, requires consultancies to be more agile, innovative, and client-centric than ever before.

What consultancies can do in 2024

• Consultancies that strive to deepen existing client relationships tend to have stronger financial stability. My consultancy clients were more keen than ever to forge closer relationships with their existing clients. This included regular check-ins, feedback sessions, educational interventions, open round table discussions, private webinars on hot topics (e.g. market trends, new tech), co-creating upcoming projects, and a pro-active client success program.
  
  
• Service design should accommodate deeper relationships with clients. There are many ways to extend a consultancy’s services to extend the engagement with clients and increase the value provided to them. For example, ongoing adoption monitoring, introducing subscription-based support models, vertical service integration, implementing managed services, strategic CXO guidance, platform or programmatic delivery (automation, monitoring, analysis,...), scheduled service reviews, ongoing data analysis & reporting, or budget planning support.
  
  
• Consultancy leaders could consider redefining client engagement entry points. I've assisted in several service entry-point redesigns to lower the decision-making bar for new clients. Here are some examples: developing (self) assessment tools for better initial engagement, the development of paid discovery services (e.g. feasibility study), simplification of client onboarding processes, or breaking down large projects into smaller, manageable parts to ease client decision-making.

2. Clients will expect authoritative, authentic points of view from their consultancies more than ever before

More than ever, B2B clients look to work with consultancies that they perceive as top experts. 

This is both my observation and is backed up by Grist’s study, according to which, 60% of executives report an increase in their demand for thought leadership content to support their business. 50% attest to the critical importance of such content in their decision-making process when selecting an advisor.

Consultancies that will continue to win the battles for the budgets of these prospects are the ones that create authoritative, highly educational content that addresses the most pressing pain points of prospects.

Consultancies that are not expanding their reputational footprint through a thought leadership strategy are not likely to be considered for transformational projects.

Here are a few pieces of research data that should both scare and inspire consultancy leaders:

• 73% of executives say they will look at competitors if their advisory company is not producing thought leadership content
• 60% of executives report increased demand for thought leadership content to support their business.
• 50% attest to the critical importance of such content in their decision-making process when selecting an advisor.

This shows both the opportunity for boutique consultancies to stand out and the risks they will face if they don’t prioritize thought leadership.

So what are decision-makers looking for in thought leadership pieces? According to Grist’s study:

• 51% want action-oriented content that helps make more informed decisions
• 50% want content that shows fresh thinking and explores new or different perspectives
• 48% want authentic content that puts existing expertise into practice.

What consultancies can do in 2024

• I urge consultancy leaders to rethink their approach to LinkedIn. 95% of consultancy owners have nothing to say. Their LinkedIn is ‘empty’. Growing a consultancy business is rooted in educating the target audience. And for those consultancy owners and leaders who think they can get away with doing a few quick and dirty chatGPT posts – welcome to the noise! This type of content will never accomplish meaningful results.
  
  
• It’s time to stop appointing partners without a voice. A silent majority is rising to power, a cohort of newly appointed partners who, perplexingly, have no discernible voice in their market. Their LinkedIn profiles are eerily quiet, their expertise domains, if detectable, are not connected to any leading voice, and their authority seems invisible to the naked eye. 
  
  I encourage consultancies to instead foster the growth of real champions in 2024 – someone who not only possesses deep expertise in their know-how domain, industry, or market but also actively contributes to the discourse, influences trends and shapes the future of their field. These are the experts that clients want to work with. These are the leading thinkers who get invited by prospects and can deliver a steady flow of premium-fee projects.
  
  
• It's worth for consultancy leaders to get strategic about creating thought leadership content. Not every piece of content a consulting leader puts out is thought leadership. And not every piece of thought leadership delivers equal results. Education-driven authoritative content can be a powerful business development tool IF it is thought-out and consistent. It requires a strategy. Based on the many success stories I’ve witnessed from high-performing consultancies, as well as based on my own experience, winning audience education and prospects activation strategies are based on a gradual, 4-step thought leadership journey:
  
  
  • Step 1: Inspiring the audience through awareness content. At this initial stage, consultancies' goal is to maximize the level of market awareness of their expertise. In practice, this means producing thought leadership content that gets the target audience’s attention.
    
    
  • Step 2: Educating the audience through demand content. Once a consultancy acquires some regular readers through its inspirational content in Step 1 and builds that initial level of trust from the audience, it’s time to back up the transformational potential of content pieces with practical suggestions. Thought leadership pieces at this stage should offer problem-resolution advice.
    
    
  • Step 3: Motivating the audience through conversion content. Thought leadership pieces at this stage show the risk/cost of inaction. They make a strong business case for investing. They show why deep expertise within a certain field is required to address the most crucial pain points of the target audience.
    
    
  • Step 4: Activating the audience through onboarding content. This is the ultimate step – signing up prospects. Thought leadership pieces that will deliver stronger results are the ones that make it easy to get started and help reduce the fear of failure.

Recommended reading:

• Why Are Consultancies Appointing New Partners Without a Voice?
• How Consultancies Can Reach the Unconverted Audience in 4 Steps

3. Consultancies that center their marketing around audience education will dominate in client acquisition

Sales and marketing success is a side effect of education-driven expertise sharing done right. “What? A side effect? Luk, are you kidding?” a boutique consultancy owner told me during a project sprint.  

I am not kidding. Sales is not what consultancies should strive to do “on top”. Rather, they should aim to reach a stage where consistent high-value sales are just a side effect of doing education-driven marketing extremely well. 

I believe that marketing in a consulting business should be circular. Blog posts on the consultancy’s page can be broken down into smaller pieces of actionable advice on LinkedIn. The response rate and engagements on LinkedIn can be used to inform the thought leader and marketers what resonates with the target audience and why. This is then used to dive deeper into certain topics. 

The content that is shared and re-shared through channels that have the highest concentration of the target audience will have the most impact. I encourage consultancies to also incorporate sharing expertise through guest posts and guest appearances at online and offline events (e.g., podcasts) into the marketing strategy. Feedback from those guest engagements can then be utilized for future content.

What consultancies can do in 2024

• I strongly encourage consultancy owners and leaders to engage in conversations with the target audience and set up feedback loops. So much marketing that I come across from my clients and my target audience, in general, feels stale. There is no conversation. No valuable engagement. One of the main reasons I love LinkedIn so much is that, for me, it’s a live conference room. I use it to be constantly plugged into the conversation within my niche. I source feedback, I engage with the posts of others, and I incorporate feedback into my content strategy.
  
  
• Marketing efforts will deliver exponentially stronger results if consultancy owners and leaders are the main drivers of marketing activities. I’ve seen it with the consultancies I’ve assessed in 2023. Their marketing executive makes a few meaningless posts (because they are disconnected from the problem-resolution expertise), put out a report on engagement, tracks metrics, and make a few tweaks, and that’s about as far as it gets. Consultancy owners are minimally involved or not at all. Individual consultants and consulting leaders contribute the bare minimum. Education-driven marketing will never work in 2024 without the heavy involvement of the top voices and experts of the consultancy – its leaders and owners.
  
  
• Consultancy owners and leaders that are generous about knowledge-sharing will stand out. Generously sharing my knowledge has been the key to my consultancy's success. There are a ton of reasons why I advocate that boutique consultancies make education-driven marketing their priority. Here are just a few:
  
  
  • Educating the target audience is the best possible way to build a strong and credible reputation as a consultancy. Without trust in their expertise, consulting firms won’t get that call to meet.
    
    
  • Content builds visibility. As Google’s SEO Starter Guide puts it, “Creating compelling and useful content will likely influence your website more than any of the other factors discussed here.”
    
    
  • The more a consultancy writes about how THEY have solved the problems of their clients - backed up with research and data - the more clients will relate to them and build a mental connection with them over time.
    
    
  • There's no better way for consulting firms to deepen their expertise than writing about it, sharing it and stimulating discussion.
    
    
  • And here’s the biggest reason of all – clients want to work with leaders. Nothing communicates leadership better than being generous with sharing knowledge!
    
    
• Marketing efforts are enhanced with a value-driven email strategy. Despite all sorts of new marketing channels popping up over the years, email remains unchallenged in its effectiveness. Even in 2024. Not only is email cost-effective, but it’s the ultimate trust weapon for consultancies. When a prospect reads a piece of thought leadership content and feels compelled to sign up for the newsletter, that’s a massive green flag that consultancies should pay attention to. 
  
  I urge consultancies to treat this trust with utmost care. Consultancies should strive to deepen the relationship with this prospect by identifying other value-driven resources that they can provide him/her with. 

Recommended reading:

• How I Share My Expertise with My Audience of Consultancy Owners
• Why You Should Share Your Expertise To Grow Your Consulting Business
• Building an Email List Is Consultancies' Ultimate Trust Weapon

4. Clients’ buying journey will be almost exclusively based on independent online research

Business development has been shifting from network-first to digitally-driven approaches for years now.

Gone are the days when most new consulting businesses got won by taking prospects out for dinner. In 2024, just like in 2023, it’s all about showcasing deep expertise by demonstrating an outstanding level of understanding of buyers’ pain points and the consultancy’s ability to resolve these pain points at scale. 

Cold pitching in consulting has close to zero effect. At least as far as the prospects’ expectations go. Nobody wants to be called up out of nowhere, in the middle of the daily hassle and offered a bunch of services the prospect may or may not need. 

We are in 2024! Prospects do their own research on how their problems might get solved when determining which consultancies to reach out to or to invite to bid. 

Furthermore, cold pitching is simply a waste of resources. Most buyers are looking for partners they can trust. And trust can’t be built during a cold pitch. Forget it. You don't like those calls yourself, as a consultancy owner. So don't do it, even if you are under revenue pressure. 

What consultancies can do in 2024

Buyers do their homework, so consultancies should too.

I always remind consultancies of the 90-80 rule. 90 out of 100 service buyers will actively do their own research on a consultancy and its consultants. Unfortunately, 80 out of 100 firms automatically get rejected because their digital footprint does not point to a desired level of expertise and/or problem-resolution case.

Where are the clients searching? In short – anywhere and everywhere:

• They Google prospective consultancies and consultants to get a better understanding of their expertise;
• They Google questions related to their pain points and read authoritative content on the subject;
• They receive emails and WhatsApp messages from colleagues and other network members with links to interesting articles/studies/newsletters produced by consultancies. Also known as the 'dark social', it is a massive source of referral traffic. Some studies suggest it may account for 84% of referral traffic;
• They listen to presentations at conferences;
• They attend webinars and listen to podcasts;
• The consult Gartner-type comparisons posts;
• They look up consultancies and individual consultants on LinkedIn; and
• They source recommendations in-person and via social media platforms like LinkedIn.

Consultancies that neglect the need to meet buyers where they are at – the digital? Well, they will struggle to get out of the vicious downward spiral, always trying to play catch-up, desperately offering discounts, cold-calling prospects, and struggling to build a reliable pipeline of work.

I urge consultancies to become acutely aware of what their digital presence – or lack thereof – tells their target audience: does it help prospects understand the depth and relevance of the firm’s expertise and/or does it encourage prospects to continue reading/listening/watching the advice or makes them close the tab in 5 seconds? 

5. Positioning will make or break a consulting business

95% of potential consulting projects don’t make it out the client’s door, and with all the digital noise in 2024, things will get more difficult.

We know there is enormous demand for external expertise. For example, according to a report from Allied Market Research, the global market for management consulting services will reach more than $800 billion by 2031, up from $300 billion in 2021.

So what’s going on?

Increasingly, consultancies that beat out their competitors are the ones that differentiate themselves through laser-sharp positioning. 

The 2024 consulting market is just too crowded with generic noise for consultancies that do not have a differentiating positioning to succeed. Buyers are bombarded with these generic messages – the “We serve at the intersection of digital transformation and client excellence” types of meaningless statements – that they just phase out 99% of it.

I’ve worked with consultancies in the past few years that boast gross margins as high as 80%! For most consultancies, this seems like something out of a fairy tale – it just doesn’t happen, right?

Except it does. I’ve seen the numbers. 

While these consultancies have a mix of drivers that enable them to achieve such levels of success, with almost no exception, they all excel in the following three aspects:

• Narrow expertise focus, deep specialisation, crystal clear value proposition;
• Repetition of similar projects (process standardization, uniform data gathering, reducing variability in project management)
• Pattern recognition & project outcomes prediction

Specificity is at the center of their way of thinking and performing. The leaders of these consultancies set up a very limited number of services in a way that allows them to maintain a narrow focus. They are the go-to experts in a very specific field.

What consultancies can do in 2024

• Consultancies that make value proposition design a priority are more likely to succeed. Whether it’s creating one from scratch or reevaluating and redesigning an existing one, value proposition design is a mandatory exercise. 
  
  Value proposition design is one of the most crucial aspects of establishing the growth parameters of a consultancy. It impacts everything: how the consultancy is perceived in the market, how it pitches its services, how it is managed internally, what types of clients it takes on, and what kind of prospects to confidently say no to. It’s a compass that consultancy owners use in their decision-making. 
  
  
• Consultancies could consider narrowing down who they help and how they help. If a patient requires open-heart surgery, given the choice, who do you think this patient would pick to perform the surgery: a cardiac surgeon who spent the last 20 years performing this and similar surgeries every day or a general surgeon? 
  
  This is what clients also want – someone who can deliver outstanding results because of their incredible depth of expertise. That’s why it’s time for consultancies to narrow down their target market (who they help) and their services (what they solve and how they help). And that time is now. Because the results are not going to be instant. 
  
  
• Using laser-sharp positioning, I recommend that consultancies try to standardize and productize their services. Standardization and productization are the backbone of efficiency. “But Luk, you can’t standardize consulting services – each client’s needs are unique!” I’ve heard this oh so many times. Here’s the thing – the challenges clients face are not unique. Sure, there is slight variation as it depends on the specific context of the client. However, years of in-depth analysis revealed to me that most hurdles in their business journeys are mere variations of common themes. So why should boutique consultancies bend over backwards to create fully tailored solutions? Leave that to the big consulting firms with infinite resources. 
  
  More than ever before, in 2024, I believe that clients are (much) better served when the consultancy has the expertise and depth that allows them to productize and standardize services. The ability to do so speaks to the consultancy’s repetition of projects, which, as I already covered earlier, means the ability to spot patterns and deliver transformational, predictable outcomes.

Is the client telling they need a fully customized approach? Consultancies should consider telling these clients that they have a proven methodology and process that they will tailor to the client's context. Unless a boutique consultancy can get 2x or 3x the market rates, it's best to carefully think of accepting customized projects. If not, narrowing down and building proven methodologies/processes is a strong way forward.

Recommended reading:

• How Consultancies Can Get Started With Value Proposition Design (Without Getting Overwhelmed)
• Why Repetition Is the Path to Becoming a High-Performance Consultancy
• Mapping the Journey: The Consultancy Specificity Quadrant
• Why A Boutique Consultancy Should Productize Its Expertise

6. Linear growth is out. Smart service design-based growth is in

The linear growth model is one where revenue growth is directly proportional to headcount growth.

It’s the traditional consulting growth model that, in the 2024 reality, has become an unsustainable relic for small and mid-sized consultancies. There are two main reasons for that:

1. Hiring top-tier talent has become extremely difficult. Especially these days, when so many firms are taking advantage of hiring remotely. Recruiting and retaining the right consulting experts is no easy task for consultancies that do not have a strong reputational footprint in a niche field.
   
   
2. Profitability challenges. Linear growth also challenges profitability for boutique consultancies. Scaling operations to match revenue directly increases people cost before these investments yield financial returns, leading to diminishing profitability. A linear growth model necessitates higher rates to sustain margins, a tough ask in an extremely competitive and economically strained 2024. 

I’ve spoken to several consultancies who underwent the painful exercise of rightsizing their staff in 2023. They simply didn’t have enough projects to justify having teams in those sizes. Their revenue plateaued or decreased in 2023, but the hiring and staffing were still based on the golden consulting years 2021-2022. Their profit projections didn't look good.  

On the other hand, some of the most successful boutique consultancies that I’ve talked to in 2023 were the ones who paid special attention to their service design. They grew through, e.g. vertical service integration (see further), one of the most powerful methodologies to avoid the ‘hire to scale’ battle.

What consultancies can do in 2024

• I discourage consultancies from thoughtless service diversification and trying to repair legacy services debt. It's a common phenomenon: boutique consultancies are often tempted to add new services to their portfolio continuously. Service diversification comes with two major risks: (1) it dilutes the positioning of a consultancy, and (2) it takes 2-3 years for a new service offering to mature. 
  
  In my experience, a lot of the diversification hassle in consultancies is legacy debt because the owners kept adding new services in the past because they believed in ‘more services = more money’ OR the owners couldn’t agree on the expertise direction amongst each other, so they ended up with ‘a little bit for everybody’. 
  
  Improving the non-linear growth capacity? Time to trim the service offerings that are bringing the entire consultancy's efficiency down and focus on the core competencies.
  
  
• Service and client journey design is a foundational, strategic activity to improve non-linear growth. Service and client journey design is a strategic exercise. How a consultancy maps out various interactions with prospects and clients and the (standardized) methodologies it establishes through service and client journey design can make or break a consultancy's non-linearity. I worked with a sales forecasting boutique consultancy. They doubled the revenue in 2021 with only a 15% headcount increase. The reason? Vertically integrated service design, allowing to grow without adding a lot of new people (see their case study in the article about vertical integration in the recommended reading list, below).

Recommended reading:

• Why 'Hiring to Scale' Is a Losing Battle for Mid-sized Consultancies
• Why Vertical Service Integration Is the Future of Growth for Boutique Consultancies
• [Case Study] Why Offering Too Many Services Destroyed This Boutique Consultancy
• The 4 I’s of Service Design for Boutique Consultancies
• How to Balance Hunting and Farming for Sustainable Consulting Growth

7. Consultancy owners may face well-being challenges in 2024

As mentioned earlier, 2023 was a tough year for many consultancies (see Trend #1). A large percentage of consultancy owners that I spoke to in 2023 reported feeling overwhelmed. They are finding themselves sucked into the never-ending spin of daily hassles, constantly under pressure to keep the business afloat and growing, especially in light of the challenges that 2023 has brought.

It saddened me just how many boutique consultancy owners confided that their quality of life was poor. 

A common denominator I found in many of these conversations is that most of these struggling founders have created 'the founder-dependent consultancy'.

As a result, two, three, or even five years down the line, they still find themselves managing the daily grind instead of working on the strategic priorities of the business. And they feel they can't win this battle, they don’t know a viable way forward. And the 2023 (and going forward in 2024) economic uncertainty that I discussed earlier sure doesn’t help ease the pressure.

What consultancies can do in 2024

• Consultancy owners will continue to struggle unless they create and execute a strategy for reclaiming their quality of life. In my journey as a performance advisor to boutique consultancies, I've seen it all too often: brilliant minds and gifted consultancy owners being totally consumed by the very businesses they've built. The allure of chasing every opportunity, the thrill of diverse projects, and the pressure to satisfy an ever-growing roster of clients can be intoxicating. But at what cost? At the cost of their own mental and psychological well-being.
  
  It's a trap many fall into and a painful one. My advice to boutique consultancy owners is twofold:
   
  1. Recognize the trap. It’s crucial to understand what habits and mindsets are leading to these patterns.
     
     
  2. Next is to embrace a narrow consultancy positioning. This is one of my most important messages to consultancies that I bring up often: deep expertise in a narrow field is a boutique consultancy’s superpower. Focusing on what the consultancy does best allows its founders, leaders, and consultants to develop deep expertise, differentiate their value, command premium pricing, and ultimately improve their quality of life. It’s not about working less. It's about working smarter.
     
     
• Consultancy owners that eliminate their egos from the decision-making process will be able to rip the rewards. The ego is the enemy. Now, a healthy amount of ego is good. In fact, when in the form of confidence it's often the prerequisite to building and growing successful consultancies, especially in the hypercompetitive 2024 consulting world. However, confidence should never cross into the territory of arrogance. 
  
  I believe that egos in consultancies must always be kept in check. Instead, decisions should be made based on: data, target audience’s feedback, internal feedback, long-term vision, and feedback from external advisors and mentors.

Recommended reading:

• How Boutique Consultancy Owners Can Reclaim Their Quality of Life
• How a Consultancy Can Get Crushed by the Ego of Its Owners
  

8. Market challenges require disciplined internal alignment

Throughout my years advising consultancy owners, I've observed this recurring theme that threatens the long-term sustainability of boutique consultancy businesses: I call it 'the illusion of internal alignment'. 

In the meeting room, agreements are made, nods are shared, and a sense of unified direction amongst the owners is seemingly reached. However, once the meeting ends, each owner often reverts to their individual path, driven by their own interpretation of the strategy, leading to disjointed actions that dilute the consultancy's coherence and impact.

The 2023 market difficulties caused many of the consultancy ownership/partner groups to make difficult decisions, putting the internal alignment under severe pressure. Leaders had different fictions of their 2023 struggles and were sometimes pretty brutally out of alignment. I've been in the middle of several such troublesome meetings. 

This lack of genuine internal alignment among owners doesn't only limit growth and undermine stability; it poses a serious risk to team morale and cohesion. And it’s not only an internal concern; it's a stain that might also bleed outward, tainting a consultancy's reliability. 

Whether it’s due to ego-driven decision-making of leaders or because they never made an effort to truly get on the same page, I urge consultancy owners to face the problem and get rid of 'the illusion of internal alignment'.

What consultancies can do in 2024

I recommend doing two things in 2024 to avoid owner/partner misalignment. 

• Create a crystal clear value proposition & connected services
  Consultancies will benefit from going back to the drawing board on the foundational elements. Here, I’m talking about two foundational elements: value proposition and service offering design. Until all partners/owners fully agree on a unified deep-expertise-based value proposition and then strategically design services around this deep expertise, nothing else will matter. 
  
  
• Make internal alignment a KPI
  Ensuring internal alignment is not a one-time exercise. It should be made a key priority, and consultancy owners and leaders need to sit down and review the alignment once a quarter. And why not give a score on their alignment and openly discuss it? External guidance and moderation during such alignment meetings could greatly benefit boutique consultancies as the expert outside perspective will help protect against tunnel vision.

9. A challenging 2024 requires performance indicators at the fingertips

There are dozens of KPIs that consultancy owners could keep track of to get a picture of how their business is performing.

Unfortunately, I’ve noticed that too often, consultancy leaders either over-track (and get lost) or stop at a few basic KPIs and don’t worry about the rest. Too much or not enough. 

A recent Deltek study in Europe reported that 60% of professional service firms didn't really use KPIs to manage their business. I was flabbergasted. A challenging economy requires greater agility, which involves having the core performance indicators 'at the fingertips’, as I always say.

Unfortunately, consultancy performance is often assessed solely through financial metrics, primarily the P&L statement (from the books from 2 months ago?). However, this traditional P&L approach has serious limitations as it relies on lagging indicators and overlooks critical consulting-specific aspects that define excellence.

What consultancies can do in 2024

Here's what I advise consultancies as the absolute minimum to track and measure. Yes, this is a somewhat uncommon way of tracking and explaining. Why uncommon? Because I look at tracking from the backside: what is it that we need to do to achieve a better performance? 

• We need new clients coming to us (instead of chasing new clients)
• We need to retain and develop those clients over an extended period (instead of one-off projects)
• We need to create stable and reliable revenue (growth), uncoupled from headcount growth (non-linear growth)
• We need strong margins to enable investments in thought leadership, new methodologies & technology, and people training
• We need to attract and retain key players to create stability and deepen the expertise of the consultancy

I get that question all the time: "what should we track then? Here's what I would track...

1. Revenue (Rev)

• Rev total, per client, per project, per service, and trend lines
• Client concentration risk analysis (a few big clients)
• Rev per FTE (indicator for business development capacity & pricing, productivity, service design, and utilisation)
• Revenue reliability (forecast gap analysis, which is both a pipeline quality and pipeline management evaluation)

30% of annual revenue coming from new clients to fuel growth via an inbound motion, leading to:

• low CAC (cost of acquisition) <5%
• high win rates per proposal >70%
• short sales cycles (to be defined)
• bigger average deal size (to be defined)
• improved pricing levels (clients came to the consultancy, they tend to accept higher pricing levels)

70% of annual revenue coming from developing existing clients to create long-term stability:

• strong client retention >3 yr (see 
• high lifetime value (total lifetime revenue/margin)
• first-class project/client satisfaction (not via NPS but via client interview)

• per client, per project, per service, total, pre & post project measurement 
• project success: on time, on budget, on scope, outcomes achieved

4. Key player attraction & retention

There's a lot you can do here - yes, I've been a CHRO :-). But this is what I would focus on: 

• employee engagement and satisfaction: I would never do an annual survey, but I would get people together on a quarterly basis and have open discussions in combination with a quarterly score that can give that includes the leadership alignment score (see Trend #8)
• depending on how big the boutique consultancy is, I would always track retention and have a personal meeting when people are leaving (and wish them all the best, and keep them in an alumni 'something' (a community, a meetup, an annual conference,...)

Recommended reading: Adopting the Buyer’s Lens to Improve Consultancy Performance

10. AI will continue to push consultancies with superficial expertise out of the market

So many industries panicked in 2023 with the massive releases of generative AI-based products. The consulting business is no exception. What does it mean for the future of consulting?

Generative AI is a highly useful tool. It can improve productivity, help automate many tedious processes, etc. However, it also places even more emphasis on deep expertise. Clients are going to increasingly look for consultancies to help with transformational projects. That’s something AI can’t replicate. 

Many of the services offered by generalist consultants, on the other hand, are under existential threat.

But let's also be honest, we don't really know yet what the full impact of AI will be in the coming years, both internally as well as externally (clients). In any case, there's no other way than to stay vigilant, adapt, and leverage AI's potential wisely as we move forward into the unknown.

What consultancies can do in 2024

Here is a useful visual representation I came across in Andrew Rogerson's article on how professional services firms can leverage AI.

I see two main avenues for AI integration in the consulting business:

• Embracing AI internally to improve productivity. According to a Deloitte survey, 74% of organizations reported that AI technologies helped them accelerate data analysis processes. AI tools offer incredible opportunities for consultancies. They can significantly reduce the amount of time spent on repetitive processes, maximizing the efficiency of consultancies and freeing up more time for value-driven client work. 
  
  However, only consultancies that are very specific about their target audience, the types of pain points they solve for that audience, and a proven methodology will be able to take full advantage of the potential of AI. Why? Because these are the consultancies that have repetitive processes, centralized and consistent data collection, and consistent delivery methods.
  
  
• Integrating AI into consultancies' external offering in a meaningful way. Here’s the thing – everyone wants to benefit from AI these days. The hype in 2023 was so massive that many clients are starting to feel that if they are not integrating AI into their daily operations, they are missing out.
  
  Yes, there are massive improvement opportunities offered by AI-enabled tools and approaches. I encourage consultancies to start thinking about integrating AI into their offerings. However, they need to find a balance between satisfying the clients’ - sometimes thoughtless - demands for AI products/approaches and offering something that actually is of strong value (as opposed to having an AI offering just because it is “trendy”).

In conclusion

Yes, 2023 was a challenging year. It took a toll on many consultancy leaders and boutique consultancy owners. I don't expect market conditions to change drastically in 2024.

However, I don't believe this to be bad news. The demand for expert consulting services is high. Clients desperately want experts with a strong depth of knowledge to come in and help them tackle important pain points. The market is there. The demand is there. What changed is the client's expectations. Their purchasing journey, too, continues to evolve.

Therefore, there is a sea of opportunities for boutique consultancies that understand and embrace those changes, that are able to meet prospects where they are, and that can showcase their deep expertise and the transformational results of their work.

2024 is an opportunity for consultancies to infuse their business with both resilience and agility through smarter service design, laser-sharp positioning, and non-linear growth models.

Interested in receiving all my learnings to build a better consultancy?
Subscribe to my bi-weekly newsletter.