Although many consultants are embracing digital business strategies that benefit their clients, few are using these same digital methods to better their own firms. The leaders of these firms are missing out, digital methods present an opportunity to track and measure new sophisticated consulting metrics. A digital approach will help consulting firm leadership make better decisions on capital allocation, competitive strategy, client engagement, and productization of intellectual property.
Part of the reason why consultants are not measuring these metrics may be because many still largely measure their success by the number of billable hours they can accrue. Because they measure success by utilization, they are less focused on accomplishing more work with fewer resources and more interested in maximizing the use of their available human capital. The problem is that technology has shifted client expectations; whereas previously, clients were content to invest in consulting engagements that involved months of interviews and analysis, in today’s fast-paced digital world they expect value from day one, measurable results, and better knowledge of their business. Consultants, therefore, need to measure their success in terms of internal efficiency, customer knowledge, and competitive advantage.
Here are three key consulting metrics firm leadership can adopt:
1. Consulting Engagement Cycles
Efficiency is more important than ever in the digital age, as digitization replaces formerly manual processes and clients expect an accelerated timeline. It is imperative, therefore, that consulting firms thoroughly understand their engagement cycles in order to see where they can improve and become more efficient. By exploring the peaks and downtime of engagement cycles, firms can discover how to improve efficiency in multiple ways. By shortening engagement cycles, they can enable themselves to take on more business and increase profits. In fact measuring engagement ebb and flow over time can help firm leadership staff for peak engagement periods and begin marketing new opportunities during downtime. At the same time, using fewer resources to do more work, they can improve resource and, ultimately, capital allocation. If you can measure it, you can manage it.
2. Quality of Intellectual Property
Few consulting firms today are successfully measuring and scaling their intellectual property. Traditionally, consultants have used spreadsheets to build data models, consisting of a combination of formulas that manipulate data to form the main analysis of a project. These spreadsheets live largely in the individual hard drives of the consultants that built them. As a result, a firm’s intellectual property often remains siloed, and consultants are essentially reinventing the wheel every time they run an engagement. By digitizing intellectual property so that it is stored in a central digital repository, consultants can ensure that their intellectual property is shared, measurable and can be improved upon as they make new discoveries with each client engagement. The consulting metrics that firms can use to assess the quality of their IP can be a combination of the following:
- Direct client feedback into their questions– For example at the end of each 9Lenses digital interview, clients are asked to rate the quality of the questions on a five point scale. Firms can track these metrics across engagements and clients and use the information to make improvements and market the quality of their IP.
- The number of data points collected with each assessment– The highest performing assessments are those that capture the most information with the fewest questions ensuring high response rates and maximizing each ask of your client. By tracking the data points collected, leaders assess the quality of their questions and assessments.
- The number of times a particular assessment has been run across their clients– by tracking the most utilized assets firms are essentially providing a measure of demand.
Many firms have little window into their highest performing assets and are unable to link revenue to particular assessments. Imagine knowing your most impactful assessments that you can then market with quantifiable attributes like average customer rating or data points collected or number of times run? All else being equal, prospective clients will be more likely to choose the firm with demonstrated expertise in a particular subject matter. Consultants should be marketing top selling assessments and then measuring the return on those investments.
3. Breadth and depth of client knowledge
Most firms are using CRM systems to track and measure the number of engagements they have with each client but are they tracking their data in the same way? Consultants are in the unique position of being trusted stewards of their client’s biggest weaknesses and their strategic priorities. That is a responsibility not to be taken lightly as clients expect security and insight they cannot generate themselves. This presents a tremendous opportunity for consultants to demonstrate that they are taking that data seriously but unfortunately, 30% of client data is stored on spreadsheets on individual hard drives. Instead, firms that use a digital platform to extract data and insight from their clients are storing that information in a secure environment. More importantly, consultants then have a single location for every assessment conducted at a single client. Consultants can establish a 3360-degreeview of their clients across practice areas and job functions. As an added benefit, firms are able to break down the siloes between practice areas when client data is properly leveraged. We have yet to find the consulting firm that can present their client leadership with a cross-functional view of data and performance- and that’s a missed opportunity. By demonstrating that breadth and depth of client knowledge, firms will win more business and be able to use that cross-functional data to establish new insight and guidance that clients could not replicate themselves.
As digital transformation continues to take hold with their clients, leaders of consulting firms have an opportunity to lead by example. By adopting a digital approach to manage their IP, engagements and client data, firms can measure consulting metrics that will drive sustainable business performance in the new digital economy.