A practical guide to improving margins

We recently ran two 30-minute webinars on putting margins at the centre of your business. The first of these outlined the steps businesses must take to improve margins which you can view here, while the second was a more specific look at how to implement these steps in order to improve margins in a sustainable way which you can view here. This week, we’re looking at some of the questions asked during the second webinar.

Our sales leaders are all about closing the deal and trying to increase the size of the deal. But our delivery staff are often challenged to translate that into the expected profits, can you comment on that?

When we look at the root causes of problems with margins, it’s often the lack of collaboration between sales and delivery. We commonly find this lack of collaboration can result in delivery managers discovering deals aren’t scoped properly, or the wrong skillsets were assigned.

It’s therefore important that delivery managers have early visibility of the pipeline to get resources lined up for the right client and at the right rates. That can only happen if there’s collaboration, and with both sales and delivery having access to the same information.


We find it difficult to measure direct benefits so how could we strengthen our unique value proposition to drive more revenue?

If you can’t define the value of ‘it’, it’s very difficult to sell ‘it’ and therefore drive up revenue. Consequently lots of firms revert to talking about their methodology only, not the business benefits.

Instead, it’s important to focus on specific market niches, jobs and pain points that lots of people have, and that they will pay a lot of money to resolve. Let’s break that down:

  • Services create value in relation to a specific customer segment, so find out about three hot topics and trends affecting your specific customer segment
  • Conduct an analysis of your competitive landscape in your chosen niche. You might be the Hilton equivalent in your market, so don’t just look and see what Marriott are doing, look too for an Airbnb.
  • Do some primary research by interviewing your existing clients to find out exactly which pain points your services relieved.
  • Make sure that in one aspect of your service, (some unique combination of your IP, methodologies, consultants skills), you differentiate yourself by outperforming your competition

What’s the best way to go about selecting and dropping service lines?

There is a lot of innovation required to stay competitive. You should make it a point to review the competitive landscape and evaluate your services and offerings as part of your annual business planning process.

You want a balanced service portfolio of cash cows and rising stars. Prioritize the opportunities and kill your commodity offerings, if the low profitability can’t be fixed through more efficient staffing.

However, you shouldn’t become too preoccupied with dropping service lines because it’s also important to invest in new, higher value, services.

We find it challenging to sell all our services to our largest accounts and the longer we’re in there the more our margins get shaved. Do you have recommendations?

Harvesting more revenue from existing accounts is key to growing revenue. It’s also something top of mind for any potential investor as recurring revenue is less risky and gives them greater confidence in your forecasts.

You should make sure you have actionable account plans. We recommend that 60% of your sales effort should be selling what you already have, to people you already know

Account plans should have stakeholder maps to keep those people who are interested in the success of your project regularly updated. This creates opportunities to highlight the benefits you offer, which you can use to sell deeper into the account.

If you were forced to pick the top three steps to improve profitability what would they be?        

The steps that are key – and that can introduce significant long-term benefits – are:

  • Working on ways to make your work deliver higher value so that you can charge higher fees – this is a ‘must do’
  • Using marketing to deliver warm leads for better work
  • Examining closely how engagements are staffed and whether there’s opportunities for better leverage

By working on increasing your value proposition (and therefore increasing your prices), and, working on improving your leverage, you have a sustainable way to improve your profitability.

To view other webinars from Equiteq, please click here. You can also read an in-depth article on maximizing profitability here, as well as the questions received during the first margin improvement webinar here.

If you are preparing to sell your consulting firm and would like to discuss your plans, please get in touch.

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