Over the last several years, professional service organizations (PSOs) have experienced an unprecedented level of disruption and change – and employees hoping that the journey ahead will (finally!) offer a nice stretch of peaceful, easy sailing need to reset their expectations: because it is all hands on deck as both competition and customer expectations surge. Indeed, as Service Performance Insight (SPI) notes in their 2016 Professional Services Maturity™ Benchmark: “PSOs should act now to expand their markets, clients and service portfolio to preempt revenue erosion.”
While there are several areas and ways that PSOs can proactively up their game – such as reducing employee attrition rates (both voluntary and involuntary), scrutinizing sales forecasts, keeping discretionary spending to a minimum, and so on – a core pillar of any revenue and profit generating effort is, as always, boosting bid-to-win ratio.
With this in mind, and based on the SPI’s aforementioned benchmark, below are 5 questions that PSOs should be asking now – not later – in order to reexamine their positioning and packaging, and ultimately discover how they can improve this critical KPI:
1. Do our target clients know and care about our organization?
Greater competition means that PSOs are even more vulnerable to getting lost in the crowd, or just as treacherously, being perceived as “commodity” and therefore unable to leverage their core value propositions and competitive advantages to win new business.
As such, and more than ever before, PSOs need to successfully connect with target clients, educate and influence them accordingly, impress them at every touch point, cultivate a relationship, and advance into a mutually beneficial engagement. And while sales and marketing teams naturally need to do plenty of heavy lifting here, getting clients to know and care about the organization must be a demonstrated priority across all departments and divisions.
2. Are we inspiring our current roster of clients to function as evangelists and ambassadors?
The dichotomy between word-of-mouth referrals and all other kinds of marketing (online, inbound, conventional, etc.) is a false one: because clients look to both sources before entering into a relationship and making a decision; and the bigger the purchase, the deeper they dig.
As such, PSOs that have a strong marketing presence – or are in the process of strengthening it – need to augment this with an equally-as-impressive client success effort, so that clients function as evangelists and ambassadors. Not because they’re asked or incentivized to do so, but because they’re inspired to share their success story, and demonstrate their gratitude for a partnership that consistently exceeds expectations.
3. Are we analyzing what drives our wins and causes our losses?
It does not take long for new PSOs to amass a library of proposals, and organizations that have been in the game for a few years can have thousands of them sitting in filing cabinets or, more likely these days, on hard drives. All of these proposals are raw data that can be analyzed to develop a profile of what drives wins – and just as importantly, what causes losses.
Obviously, this is not a “fill in the blank” exercise. As any proposal writer will readily attest, there is much more to a winning or losing a bid than the proposal itself! However, there are themes, elements and common denominators – everything from content to formatting – that can directly and indirectly point the way to a higher bid-to-win ratio.
4. Is our pipeline due for a scrub?
While there is nothing wrong being ambitious – such as trying to wrestle business away from an embedded PSO that has been serving a client for several years – the bid pipeline should nevertheless contain more qualified opportunities and fewer longshots.
Otherwise, the (lousy) bid-to-win ratio will be an unreliable, inaccurate measure of capacity and competence, and PSOs who occasionally strike oil will not be able to consistently replicate their success – since they will not really know how or why they succeeded in the first place!
5. Is our project management software part of the solution – or the problem?
PSOs without the right project management software invariably run into major problems, including (but not limited to): inefficient and manually-intensive communication processes, inability to provide customers with regular and timely updates, failure to capture and execute on formal and informal customer feedback, and issues ramping-up both internal resources and customer teams.
The eruption of any of these problems – let alone all of them at once, which is even more common – quickly sends current engagements sideways and backwards, and puts up massive systemic obstacles that block future bid wins and overall growth.
The Bottom Line
As mentioned, the journey ahead for all PSOs – those leading the way, and those that aim to get there – will be challenging. However, it does not need to be daunting. In fact, SPI found that on average, PSOs across-the-board enjoyed more than 10 percent year-over-year growth in revenues, and 15.5 percent year-over-year growth in profits. These are good numbers!
However, not all PSOs can count on this success and growth. As always, to the victors go the spoils. PSOs that capably answer the five questions introduced above will find themselves in the winner’s circle with uncommon frequency, as they boast an enviable bid-to-win ratio – which is the key to current profitability, and to future prosperity.