Many consultants are embracing and selling digital business strategies that will benefit their clients. However, 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. These metrics can help leaders make better decisions for capital allocation, competitive strategy, and client engagement.
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. Consultants can be more efficient by not measuring utilization. The problem is that technology has shifted client expectations. 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, clients expect an accelerated timeline. Consulting leaders need to understand engagement cycles in order to see where they can improve and become more efficient. By exploring the peaks and down-time of engagement cycles, firms can discover how to improve efficiency in multiple ways. In addition, 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 same time, using fewer resources to do more work, consultants 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 on the individual hard drives of the consultants that built them. As a result, a firm’s intellectual property often remains siloed. Consultants are essentially reinventing the wheel every time they run an engagement. Consultants that use a single digital platform to manage IP can share and measure knowledge and improve on it with new discoveries in each client engagement. The consulting metrics that firms 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 metric 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 diagnostics? Diagnostics you can 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. Firms can incorporate these consulting metrics and then market top selling assessments, measuring the return on those investments.
3. Breadth and Depth of Client Knowledge
Most firms are using CRM systems to measure client engagement but are they tracking their data in the same way? Uniquely, consultants are trusted with 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 opportunity for consultants to demonstrate that they are taking that data seriously. 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 have secured that data.
More importantly, consultants then have a single location for every diagnostic conducted at a single client. Consultants can establish a 360 degree view of their clients across practice areas and job functions. As an added benefit, this digital approach breaks down silos between practice areas. We have yet to find the consulting firm that can present their client with a cross-functional view of performance. Consultants are missing an opportunity. By demonstrating breadth of client knowledge, firms will win more business and establish new insight 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.