Revenue, revenue, revenue.
Every business review or workshop I conduct starts with an ideation board of some kind – it helps me understand the priorities, struggles, and goals of the consulting firm I’m working with.
And 90% of the time, the ideation board is covered with “revenue” written on sticky notes – “revenue growth”, “20% revenue increase”, “new revenue channels”, etc.
Every decision – no matter how small – is made through the revenue mindset in these firms. And I won’t sit on my high horse and claim that revenue is not essential. Of course, it is. Consulting is a business.
However, I believe that the single-minded obsession with revenue is unhealthy. It can be detrimental to the long-term success of a consultancy.
This is what I’d like to discuss in this article.
Revenue has always been my #1 focus. I had aggressive growth targets, especially after my boutique consultancy got acquired by Deloitte.
And that’s fine. I love the consulting frontline. Business development and new opportunities are essential, consultancy owners can’t just sit there and wait. Nothing will happen.
However, step-by-step, in working with and talking to many consulting firms in the past years, I also learned the downsides of an extreme revenue focus.
The road to become a high-performing consultancy is a constant upward climb, with new roadblocks arising and new processes to embrace. Consultancy owners must always be striving to improve and never allow themselves to become complacent, as the ultimate goal is TO FIND JOY IN THE PROCESS. Failure to find joy in the process will impede progress and hinder the ability to achieve the desired outcomes.
In one of my articles – 4 Lessons Learned From A Consultancy Due Diligence – I share the four additional dimensions that an investment firm wanted to get a clear assessment of when considering purchasing a consultancy.
I strongly suggest reading the article in full. Here, I’ll summarize these ‘investor dimensions’:
I want to highlight the first two dimensions. In my experience, high-performance consultancies pay just as much attention to growing their reputational footprint and building internal alignment on the growth strategy as they do on revenue.
I avidly believe in freely and generously sharing knowledge as a consultancy leader/owner. That’s hardly news to any of my regular readers.
However – and I can’t emphasize that enough – audience education is not just a feel-good activity. It’s a proven business development and growth strategy in consulting.
Recommended reading: Why You Should Share Your Expertise To Grow Your Consulting Business
Audience education is the foundation of building a reputational footprint as a consultancy. It establishes TRUST between the target audience and the consultancy.
Consulting leaders and consultancy owners should dedicate time every week to enriching the knowledge hub of their firms – creating authoritative content that addresses the most pressing pain points of the narrowly defined target audience.
Content of high educational value gets shared and re-shared within networks, growing the firm's visibility.
That’s what high-performance consultancies do. Instead of selling their services, they showcase their expertise instead. They build trust at scale with their audience and then convert that to new consultancy opportunities.
Recommended reading: Without Thought Leadership, Consultancies Will Fail
While this strategy will not deliver results overnight – it takes time to build up the library of thought leadership content and put systems in place to track and measure the results – once it starts delivering results, it never stops.
The market reputation of consultancy owners/leaders is a critical factor that significantly impacts the success and growth of their consulting firm.
A strong reputation in the market can establish the leaders as credible experts in their field, differentiate their firm from competitors, build brand recognition, attract potential clients seeking their expertise, and attract top talent in recruitment efforts.
The single-minded obsession with revenue leads to short-term strategies: how to close this lead within the next two weeks, how to wrap up the project within this quarter, etc. It leaves little room for long-term planning.
Long-term growth planning is essential to long-term success. A consultancy should have a clear idea of where it wants to get and create a roadmap to get there.
And for any growth strategy to succeed, it needs internal alignment. Every person within a consultancy – from top leadership to entry-level consultants and marketers – should clearly understand the long-term goal and the roadmap to achieving it. It’s up to consultancy owners and consulting leaders to get the buy-in from every team member.
When a cart is pulled in different directions, it doesn’t go far. When 1-2 people only pull it, progress is slow. However, when an entire team comes together and pulls it forward, things speed up much faster.
Internal alignment can’t be achieved when the focus is solely on revenue. Again, it goes back to making decisions for the short-term benefit of the firm as opposed to building up the foundation and creating campaigns that contribute to the long-term goals.
One of my biggest takeaways from the business reviews I’ve conducted for struggling firms and high-performance consultancies is that revenue growth should be built upon a mix of short-term goals and a long-term vision.
As part of this rounded approach to revenue growth, I recommend that consultancies take a close look at how they go about the following two processes:
There is a fine line between confidence and arrogance, between learning-driven and ego-driven decisiveness, and between being a focused consulting leader and a know-it-all. One contributes to success in consulting. The other one slowly but surely undermines and weakens a consulting business.
Revenue is essential and foundational for the long-term health of a consultancy.
Consulting leaders and owners should pay close attention to it, use all revenue-related data to adjust tactics and strategies, set new goals, etc.
However, consulting firms must balance generating revenue and delivering high-quality work while taking care of the team, building long-term relationships with clients, and becoming a master at educating the target audience.
These would be the four dimensions I would focus on (instead of a single-minded revenue growth focus):
Short-term revenue growth does not always indicate that a consultancy is on the path to long-term success. That’s why consultancy owners should be mindful of the risk of developing tunnel vision and try to avoid it by building a revenue growth strategy based on foundational elements that will sustain long-term growth.
Experts don’t sell. They get invited. Revenue follows.
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