6 Ways To Avoid The Revenue Rollercoaster Trap

Many consulting, professional, and technology service businesses find themselves trapped in the following vicious, no-growth cycle. The firm is either:

• Heavily marketing because they don't have enough leads and new business, or
  
  
• Heavily billing and delivering, and thus have no time for marketing, lead generation, and selling.

We call this the service revenue rollercoaster. It's a common trap for many professional service companies because when they get busy they can't sustain their marketing momentum... they're too busy with client work. Then, when the client work slows down, they must start marketing from square-one all over again, as all momentum from previous marketing efforts has stalled.

How to Avoid The Trap -- Create A Revenue Engine

The ideal role of the marketing function for consulting and professional service companies is to generate a sustainable flow of leads and revenue, helping the company to avoid using only billable resources to intermittently generate leads for their practices when business is slow.

Consider the following six guidelines to help your firm establish and benefit from a sustainable lead and revenue generation engine:

1. Choose To Avoid The Services Revenue Rollercoaster: The first step in avoiding the services revenue rollercoaster is to realize it exists, and to overtly declare, "We are going to maintain marketing energy by creating a lead and revenue generation engine and avoiding the pitfalls of the revenue rollercoaster."
   
   
2. Balance Billable And Non-Billable Resources: When creating a revenue engine, assign a non-billable resource as the senior marketing leader. This person, whether full or part-time, should be able to set strategy for and lead the revenue engine, not merely implement tactics.
   
   Senior billable resources may flow in and out of the marketing team as the busyness of their practices dictate, but it is imperative that the revenue engine continues to function and improve under the seamless leadership of a competent senior person.
   
   
3. Understand Services Marketing: The person who heads your firm's marketing efforts doesn't necessarily need to be an industry insider (i.e. you don't need a CPA to run your CPA firm's marketing efforts), but you do need someone who understands how profitable services clients are attracted and retained.
   
   
4. Dedicate Management And Staff: It may be trite to say so, but without senior management support, your revenue engine aspirations will turn into a "marketing department" that buys a few ads, sends some mail, maintains a website, and puts together your glossy brochures.
   
   Senior managers must set the tone, fund the efforts, and involve themselves in the revenue engine. Revenue engines in services firms depend on the energy and efforts of all the professional staff --from the partners, to the rising stars, to the new associates.
   
   Without senior management dedication, the billable staff will not involve themselves with the revenue engine. Without the billable staff actively on board and working in concert with marketing, you won't have a revenue engine.
   
   
5. Reward Business Development Success: To get billable resources on board and involved with your ongoing marketing efforts, you must first consider what drives their behavior.
   
   For example, if a professional is only compensated on billability, they will only focus on business development when it is absolutely necessary (producing revenue rollercoaster behavior). If they are compensated for some balance of the two, they will be more inclined to balance their energy on both—generating and delivering business simultaneously—thus helping to smooth out the revenue rollercoaster.
   
   Consequences are also important. It's counterproductive if, for example, the most senior person in the firm frowns every time she sees someone not billable, even if the person is actively and energetically engaged in a business development activity that they're incented for and expected to do. Uncover and mitigate these "informal" disincentives to business development.
   
   
6. Maintain Client Satisfaction And Loyalty: According to Fred Reicheld and Earl Sasser in the Harvard Business Review, "for service companies, a 5% increase in customer loyalty can produce profit increases from 25% to 85%," and client satisfaction drives client loyalty.
   
   As your marketing efforts take hold and you grow, make sure you continue to focus your firm on maintaining loyalty and satisfaction. Though many don't, all firms should formally measure client loyalty and satisfaction. Marketing should have a major role in client satisfaction and loyalty measurement, and in driving firm behavior to increase satisfaction and loyalty.
   
   By maintaining client satisfaction and loyalty, you smooth out the revenue rollercoaster because you increase your chances of the phone ringing with a new project waiting for you on the other end.

Consistent Lead And Client Generation

Avoiding the revenue rollercoaster by implementing a revenue engine takes time, focus, energy, funding, and, most important, organizational change. It can, however, be the key to breaking the vicious no-growth cycle of marketing/billing/marketing/billing that traps many professional service firms.

By implementing a sustainable revenue engine, you not only avoid the revenue rollercoaster trap, you wholly reverse it. Once business development and marketing energy are simultaneously sustained, success breeds success. Sustained marketing efforts tend to snowball over time; the longer they're sustained and continuously improved, the greater the payoff.

In this case, that success is measured in consistency of leads, revenue, and profit to your firm.

RainToday Note: Want to learn more about lead generation for professional services firms? Read Mike Schultz's white paper, Making Lead Generation Work For Professional Services.

John Doerr is a Contributing Editor of RainToday.com and a Principal of the Wellesley Hills Group, a consulting and marketing services firm that helps service companies to grow. John can be reached at /1381_jdoerr@whillsgroup.com.

Mike Schultz is the Publisher of RainToday.com and an advisor to service businesses worldwide. He can be reached at /1381_mschultz@raintoday.com.