The Right Measure: Three Types of Service Firms

Recipes speak to more than MECE elements; they include recommendations on proportion. For example, a recipe tells us how much honey we should add to activate and feed the yeast. It's the same for how the seven elements work to help you grow your practice. Just as the proportion of ingredients may change with different bread recipes, the proportion of emphasis on the different elements will vary depending on what type of service you provide.

In our experience, independent of whether you work in law, accounting, or management consulting, there are three categories of professional service firms—evergreen, acute, and optimizing. Let's start with a high-level description of each:

1. Evergreen. These service providers work with clients year-in and year-out. An example is an accountant who specializes in tax preparation, or a human resources consultant who vets and performs background checks on all new employees.
2. Acute. These specialists come to the rescue just in time. Think of a tax attorney specializing in estate planning, a turnaround consultant that specializes in Chapter 7 bankruptcies, or a divorce attorney for high net-worth individuals. Their engagement with clients is not recurring over time, but rather episodic based on need, often urgent.
3. Optimizing. These service providers help clients get better at a specific aspect of their business; typically helping increase revenue, minimize cost, or reduce downside risk. They may improve one's intranet security, buttress one's growth strategy, or optimize a global supply chain. They are different from acute providers in that engaging them is discretionary. There is not an emergency they are responding to. We need to update our website. We could do this today or after the holidays depending on cash flow.

Understanding which of the service categories you are in can help you focus on the most important elements for your category. While all seven of the elements are important, we have observed that there are certain critical elements that drive engagement with each specific service type.

• Evergreen service firms provide services that are offered on an ongoing—or cyclic—basis—for example, tax professionals. Most every company hires an accountant to prepare their taxes each year. It's not a matter of if they engage with a CPA; it's a matter of who. Because of the standardized nature of recurring work, it can often be hard for evergreen providers to differentiate themselves from the competition. The challenge is either to hold on to long-time clients or to boot an incumbent. This is why you often hear accounting firms complain about competing on price and how responding to RFPs is a “race to the bottom.”

  To us, evergreen providers need to be laser focused on making sure clients know and trust them. This is why you see so many local accounting partners serving on volunteer boards as treasurers. They are trying to introduce themselves to new buyers and to work shoulder-to-shoulder with those whom they might serve. On the other hand, elements such as interest and readiness are typically not as challenging for evergreen firms. Generally, what evergreen firms do is easily understood, and the presumption is that as CPAs they are well qualified. The main question a client has is, “Do I know you?” and “Will you have my back and safeguard my interests?”

• Acute service firms are brought in on short notice to solve an emergency. These are firms that specialize in crisis management, bankruptcies, system crashes, PR disasters, and turnaround situations. The critical elements for acute service providers are understanding and respect. Their challenge is to clearly articulate their niche (do you do exactly what I need?) and establish a high level of credibility (are you the best?) so when an emergency hits, they are top of mind.

  Acute service providers need to be in the trade news letting people know about every fire they put out. They also need to cultivate their network of intermediaries because it is generalists who often refer clients to specialists. “We can't help you with this, but we have often sent clients to Jones Hatchett and we hear good things back.” “I don't do divorces, but Janice Schaefer is excellent at this type of work.”

  Acute specialists typically don't need to worry as much about available funds (e.g., ability) or readiness. If there is an acute need, clients will usually find the authority and budget. Because the trigger event hits such a small percentage of the population at any time (if ever) and the timing is unpredictable, acute providers typically cannot afford to do much in terms of direct business development. Mass advertising is far less useful than networking with those who can refer them to prospective clients.

• Optimizing service firms frequently have the hardest sell of all as their services are usually optional. For example, in an effort to stay in shape, you might maintain a gym membership (an evergreen service). If you got really sick, your doctor might refer you to a specialist (an acute service), but under what conditions would you hire a personal trainer? When it was important to you. For some reason, your priorities change, and suddenly you are prioritizing the decision to add extra help to your approach to fitness. What was a “No, I'm not interested,” becomes, “When can we get started?”

  Optimizing service providers struggle to uncover interest in would-be clients because what they do is optional. Optimizers spend a lot of time working to establish interest and to be present when priorities and readiness changes. Many old pros in the consulting and professional services business will tell you that the secret to business development is to ask lots of questions. They see questions as the key that unlocks the consultative sale, and they are correct. Questions play a particularly important role for optimization firms because it is in the answers to questions that would-be clients reveal the problems they are interested in tackling and for which the timing is right. This process of discovery is far more important than it is for evergreen or acute firms where the problem is familiar or obvious.

Using the Seven Elements as a Diagnostic Tool

Like a recipe, the seven elements can also be used as a diagnostic tool. If you pull bread from the oven and it is a hot mess, you naturally want to know what went wrong. Did you leave out the salt? Was the oven turned up too high? Likewise, maybe your practice spends hundreds of thousands on advertising at a major conference, yet nothing seems to come of it. You find yourself asking, “do prospective clients understand exactly what area of HR we specialize in?” Maybe you're getting lots of interest from potential clients, but you're not closing enough deals. Could it be a credibility issue? Have you shared enough compelling case studies? Maybe you are writing lots of proposals but are consistently losing to competitors. Could it be you need to work more on building trust and investing in relationships over the long term?

The seven elements framework provides a useful and consistent vocabulary to discuss business development opportunities within your own organization. When you sit down with your team and talk about how you are reaching out to those you are interested in serving, there are three levels where you can put the Seven Elements to work.

1. From the perspective of the client. Whether you are doing account planning on your largest customer (How can we expand our mandate?) or looking over a list of companies with whom you have never worked (How could we begin to engage with them?), it's helpful to use the seven elements as a scorecard.
   • Awareness: Who else in the client's organization needs to know who we are?
   • Understanding: Do they know what we are really good at doing?
   • Interest: Do we have a sense of their priorities?
   • Respect: Do they have objective proof of our capabilities?
   • Trust: Have we spent the time to communicate that we will always put their interests first?
   • Ability: Are we talking to the right person who has the authority to engage?
   • Readiness: Are we staying close to them over time so they reach out to us when their need materializes?
2. From your personal perspective. Maybe you are a partner in a large firm or a new sole proprietor trying to establish a name for yourself. What are you doing to build awareness with those you wish to serve? Or perhaps you're a senior partner that is pivoting to a new service niche. What are you doing to establish your personal credibility and respect on the emerging topic? The seven elements can provide a useful framework of thinking through your top action items.
3. From the perspective of the firm. How solid is your firm's brand reputation? If you're a one hundred-year-old regional law firm with a reputation of being smart, honest, and dependable, awareness may not be an issue. Conversely, if you are a new web development startup with three employees, getting your name out in the marketplace may be a top priority. If you're the chief marketing officer of a global HR consultancy, what are your top priorities in supporting your would-be clients in every step of their buying journey?

Focus on Where You Need to Improve

Practices often reflect the strengths of their leaders. If you are a natural relationship builder, you will emphasize that. If you think drinks and dinner are the key to relationships, that is what you will do. But know that looking at your practice using the seven elements and grading yourself and your firm objectively can provide important insights that can result in shoring up your practice where you may be weak.

• You do a great job asking for referrals but don't have a website. People have started to comment to you about how a web presence is table stakes these days, but you hate everything about websites—the design, the messaging, the techno-jargon around functionality. Then it occurs to you. I'm a consultant. Maybe I should hire a consultant to lead me through the process of setting up a website.
• Technology drives your practice. You use a demand-generation software to push out blogs and whitepapers, tracking downloads and time spent. The technology works pretty well, but you often find yourself stumbling through what should be an easy conversation with would-be clients. You just don't have the ability to express what you do well. Even though you can do the work, you just can't explain it. You see the work that is being lost and ask a colleague who is good at explaining your work to begin to drive those calls, using you as a subject matter expert.
• For many years, you were willing to take on any work from any client, but a review of your last two years of projects shows that increasingly your new business is coming from customer experience executives in regional banks. You decide to aggressively niche yourself to become the go-to expert in this emerging market.
• The world seems so big. You just opened the new office in San Francisco. You look out of your office in the Embarcadero and see what looks like millions of possible clients. You've been advertising in the trade publications. People have a good sense of what you do, but actually sitting down with decision makers is proving to be difficult. You realize you need to find a better way to build rapport with those you wish to serve. You sponsor a series of industry roundtables with the very people you hope to serve, giving them a chance to talk best practices and, at the same time, positioning yourself as a trusted advisor and someone with whom they are in regular contact.