Now in its sixth year, the PM Forum Marketing Leaders’ Benchmark reveals that marketers are optimistic about the future, but have more work to do to help their firms meet rising client expectations around technology and client service innovation, says Alastair Beddow.
The last 12 months have been relatively kind to professional firms. In the face of market uncertainty, demand for professional services has remained robust, and this has generated better than expected financial performance for many firms. Healthy top-line and bottom-line growth means the significant downward pressure on margins witnessed at the beginning of this decade has eased somewhat.
And yet, 2017 was far from an easy ride. This time last year respondents to our annual marketing leaders benchmark predicted that lower cost competitors, new service delivery models and Brexit uncertainty would make 2017 very challenging. Few would disagree that these factors have been top of their mind over the last 12 months, and will remain there for the foreseeable future.
These issues present opportunities for marketing and business development professionals to demonstrate leadership and insight on core strategic concerns within their firm. This year’s benchmark clearly shows forward-thinking marketing and BD leaders are successfully positioning themselves as go-to experts on these issues in order to support senior leaders make better-informed decisions about the future of their firm.
Adaptability is the watchword for 2018
So what does 2018 have in store for professional firms? This year’s benchmark shows that marketing leaders are more optimistic about the next 12 months compared with previously. Although issues such as Brexit, a weak Pound and lower-cost competitors remain a concern, far fewer respondents think they will have a negative impact on their own firm than 12 months ago.
Macroeconomic concerns have been superseded by a number of tactical issues such as GDPR implementation: 32% think GDPR will have a negative impact on their own firm over the next 12 months, and only half (52%) describe themselves as adequately prepared for the GDPR challenge ahead (see Figure 1).
Given the diversity of strategic and tactical issues raised by marketers, a high degree of adaptability will be necessary to translate optimism into robust financial performance. Although there is an obvious benefit in having a few clearly defined priorities that can be pursued during 2018, many marketing leaders in our survey also recognise they will have to adapt quickly and change course as their firm’s clients and markets shift.
In practice this means focusing marketing and BD time and attention on the activities and decisions that will best drive the firm forward. As one respondent to our benchmark says, “Think about building the top line and not about marketing ‘projects’. Too many people get sucked into day-to-day management at the expense of addressing what activities actually make money”. Ask yourself: how much of what you have planned for 2018 will tangibly improve your firm’s business performance?
Significant progress on client experience
Regular readers of our annual benchmark will know that client service has been a top priority for marketing leaders for the last three years. 2018 is no exception: the proportion who cite improving client experience as their number one priority for the year ahead has risen from 21% in 2017 to 32% this year.
It is encouraging to see real progress being made on some of the practical initiatives that improve day-to-day client service. For example:
• 29% of benchmark respondents have a client journey map that outlines touchpoints in the firm’s relationship with its clients, up from 10% in 2017;
• 48% now have a named individual on the firm’s Executive Committee with responsibility for improving client experience, up from 42%; and
• 27% say they now reward or bonus people in the firm based on the quality of the client experience they deliver, up from 21%.
As further evidence of their commitment to improving client service, 75% of respondents say they plan to provide more training for fee-earners in their firm to improve their client experience skills, up from 62% in 2017. This is now the second most cited priority for the year ahead, up from third place last year.
Despite the progress made, there is some way to go to give greater visibility of client insight among firms’ senior leadership. Just a third (34%) of those surveyed say client service KPIs are regularly tracked and reported at Executive Committee level.
Integrating technology into client experience
Within the last 12 months professional firms have found new ways to use technology to address the challenges facing their clients. Buzzwords such as automated document review, intelligent search and audit automation have begun to dominate the discussion about innovative client delivery.
Our benchmark reveals that marketing leaders see great opportunity ahead for further investment in technology, automation and artificial intelligence (AI). 61% say their rationale for investing in this area is to improve the client experience. Surprisingly, perhaps, far fewer marketing leaders see cost efficiency (47%) and increasing speed of delivery (42%) as primary drivers for investment.
When planning further innovation investments over the year ahead, it will be important for firms to have a clear view of how automation or AI fits into their commercial proposition and client delivery model. This is particularly important in the context of the 43% of survey participants who are concerned about the level of added-value extras that clients routinely demand from their firm, and the third (33%) who say they give away too many free-of-charge added-value services.
Automation and AI within the marketing function
This year’s benchmark also reveals firms are planning significant investments in marketing automation. Today 36% use marketing automation for campaign management and 33% use automation as part of their social media management (see Figure 2). During 2018 a further 39% say they plan to add automation to their firm’s website content, and 32% plan to add automation to their CRM system.
The benchmark reveals marketing leaders are bullish about the ability of automation to speed up existing processes and create better outcomes across a range of activities. This includes pitching (“self-serve pitch processes for lawyers aided by technology”), client relationship management (“tailored information shared proactively with clients via their own personalised information portal”) and online client experience (“website content tailored to the user based on known preferences”).
The human touch: enhancing skills of marketing teams
Although automation and technology are high on the agenda for 2018, marketing leaders recognise the importance of the human touch. As one respondent summarises, “Automated systems are important for effective delivery, but it is the human aspect of the role which dictates the actual performance of the firm’s marketing.”
With this in mind it is interesting to see that, when asked about how they would boost their internal capabilities around digital client experience, data analytics and service innovation, most marketing leaders had a preference for upskilling their existing teams, rather than recruiting specialists or outsourcing. Only in the realm of AI and automation is there significant appetite to outsource (32%) rather than build internal capability (18%).
Putting aspirations into practice
Senior marketers clearly have ambitious plans for 2018. More automation of marketing process, and spending more time coaching and training fee-earners on client development skills will both require significant investment of time and money. Just how realistic are these ambitions?
The good news is that our benchmark shows spending on marketing and business development activity is on the increase. When asked about their budget and headcount, marketing leaders are optimistic, anticipating an average 2.3% rise in overall marketing budget, a 2.0% increase in marketing team headcount, and a 2.9% rise in marketing team salaries. All of these figures are noticeably up on 2017 levels and provide a solid foundation for addressing the many challenges that will arise over the year ahead.
Alastair Beddow is a Director at Meridian West, and a co-author of Professional Services Leadership Handbook. He helps professional firms to develop and implement client-focused strategies.