There are at least three reasons why professional services firms need to use more market research in making decisions. I am referring to research about their markets, clients, competitors, and staff.
Strategy
The first reason firms need more research is to inform the decisions that constitute their business strategy.
Countless hours will go into innumerable pages of analysis to support discussions at partners’ retreats. To what end? Decisions will be made–that’s the easy part. The saying that strategy is 10% inspiration (i.e., formulation) and 90% perspiration (i.e. implementation) is apt for partnership-based cultures. The problem is firms are all too frequently not very good at the first, formulation, or the second, implementation.
Why? The are several reasons. Partners tend to collude and thereby avoid tough issues. They are excessively internally focused (because they usually lack strategic benchmarks). They too often plan with the lowest common denominator (i.e., the weakest link) in mind. They have an aversion to saying no. They tend to follow the herd (believing it’s safer). They have a bias for intuition rather than factual evidence. And they focus on the short term.
So, what do savvy firms do to overcome these blockers? One of their solutions is to use hard evidence. Professional people are rational thinkers. Facts persuade, especially when they are independently sourced and on point.
Strategy
The first reason firms need more research is to inform the decisions that constitute their business strategy.
Research gives leaders the data and mandate they need to effect material change in their firms.
A firm and its practitioners will be rated well on cost consciousness if clients believe their money is being spent, in clients’ words, “as though the money being spent was the firm’s own”. Yet our research consistently shows the weakest link in managing clients’ perceptions of value is poor cost consciousness.
Check out this video, it is less than six minutes. Just before the two minute mark, Mr Sharp describes how Four Seasons is “selling value”. They are one of the leaders in luxury hotels worldwide and one of the most expensive. As he says, they led (not followed) the hotel/resort industry through $100, $200 … $1,000/night price points, because they provide value that people perceive and wish to pay for. In 2007, Bill Gates and a Saudi Arabian prince bought 95% of the company on a 50/50 basis, with Sharp owning the rest. You don’t get business partners like that unless you know what you are doing! In June, my spouse and I paid an astonishingly high amount to stay in a fabulous Four Seasons resort. We were happy to do so, because the overall experience/value warranted it. We are already dreaming about going back there and staying at other Four Seasons resorts elsewhere in the world.
Paul hosted our third episode of 3in30.
Source: beatonbenchmarks 2020
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References
Dixon, M., Freeman, K., & Toman, N. (2010). Stop Trying to Delight Your Customers. In: Harvard Business Review, 88(7/8), 116-122.
Hayes, B. (2012, May 7). The Best Likelihood to Recommend Metric: Mean Score or Net Promoter Score? [Blog post]. Retrieved from: http://businessoverbroadway.com/the-best-likelihood-to-recommend-metric
Hayes, B. (2008). The True Test of Loyalty. In: Quality Progress, 41(6), 20-26.
Reichheld, F. (2003). The One Number You Need. In: Harvard Business Review, 81(12), 46-54.
Reichheld, F. (2006). The Ultimate Question. Driving Good Profits and True Growth. Boston: Harvard Business
Reichheld, F. (2006, July 27). Questions about NPS – and Some Answers [Blog post]. Retrieved from: http://netpromoter.typepad.com/fred_reichheld/2006/07/questions_about.html
Doorn, J.V., Leeflang, P.S.H., & Tijs, M. (2013). Satisfaction as a Predictor of Future Performance: A Replication. In: International Journal of Research in Marketing, 30(3), 314-318.
