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.

Continue reading

Saying you’re unique is not enough: The importance of differentiation


While we may have been told we were special little snowflakes when we were children, we have long since realized that the competition out there is tough! And when it comes to offering a unique value proposition (UVP) in the consultancy sector, it’s not what you think, but what your clients think that counts.

The uniqueness of your proposition is judged by your clients as they compare you with your competitors. This ranges from the low end, where your service is seen as a commodity (you are a ‘me too’ supplier), through varying levels of differentiation, up to an exclusive service which clients cannot get anywhere else. The uniqueness needs to be seen within the context of your chosen target market. For example, the use of lean techniques to redesign processes is less commoditized in the public healthcare sector than it is in, say, automotive manufacturing.

One way of thinking about the difference between a commoditized, a differentiated and a unique service, is to consider a Venn diagram of your services (or sector) compared with the competition. If the two circles of the diagram overlap completely, you have a commoditized service where the main reason for purchasing your services will be based upon price. If the circles have some overlap (less than 100%) then you have a differentiated service and the purchasing decision will be less price sensitive. If there is no overlap at all with your competitors then your service is unique and the purchasing decision will be the least price sensitive of all.

There are three areas that you can work on in order to increase your differentiation from competitors:

  • Develop expertise: Deep domain expertise is very valuable to clients and buyers alike, as shown in our research. Digital marketing is currently an extremely hot sector in the M&A world as it’s fast-moving and it takes time to develop these skills in house. This means buyers are more interested in acquiring consultancies with these skills and clients are more interested in buying consultants with this knowledge
  • Ensure you are seen as thought leaders: Quite simply, if your IP is better than anyone else’s then clients (and buyers) will choose you over anyone else.
  • Always describe what you do in terms of delivering client benefit: As is often said, people don’t buy products, they buy solutions. Rather than talking about your offer from your point of view, talk about the benefits it can deliver and the problems it can solve for clients

Differentiation from competitors can be challenging but it is worth spending time on to ensure that your consultancy doesn’t become a ‘me too’ brand, competing only on price. By establishing what your clients value and couching your offer in these terms, you have a much higher chance of carving out a niche in your sector.

Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners grow and realize equity value in their business. Register here to gain full access.