The Rainmaker's Toolkit

Power Strategies for Finding, Keeping, and Growing Profitable Clients

Harry Mills

• Publisher: AMACOM
• Year: 2004
• eBook ISBN: 9780814413210
• Topic: Business
• Subtopic: Customer Relations
• Index: Business

Few professional firms are able to consistently grow their fees and profits. Based on the concept of relationship marketing, The Rainmaker's Toolkit gives readers the tools, techniques, and strategies to help win and close bigger deals, helping them dramatically increase the odds of success...and sustain that level of accomplishment from year to year. The Rainmaker's Toolkit helps readers identify and maximize the potential growth opportunities in their companies and gives them a step-by-step system for building a high-profit practice. The book shows readers how to: * Identify high-profit customers and build lifelong relationships with them * Stand out from competitors by differentiating their firm, services, and people * Build a million dollar referral network. Packed with more than 80 reproducable tools and templates, The Rainmaker's Toolkit shows how to find the gold hidden within every company.

PART ONE


THE MARKETING
CHALLENGE

CHAPTER 1

PROFITS UNDER SIEGE

Growing your practice in
tough times

DOG-EAT-DOG MARKETPLACE

The huge $900 billion dollar professional services marketplace has become a dog-eat-dog battleground, where you need more than a big bark. The winners—the hugely profitable few—are getting richer while the rest—the vast majority of firms—struggle to maintain margins and growth. As a result, double-digit profitable growth for most professional service firms has become a distant dream.

Even practices such as the elite law firms once seen as immune to market forces are finding the going tough. A McKinsey Quarterly analysis of the world’s largest law firms warns, “all but the most profitable are in peril.”¹

The Virtuous Cycle of Growth

The high-profit winners are growing their practices around a distinctive value proposition that will sustain high profits and double-digit revenue growth.

These high-profit, high-revenue growth firms are locked in a virtuous cycle in which they can cherry-pick top talent from their less profitable competitors and invest in expansion, new services, and cutting edge technologies.

The Vicious Cycle of Decline

The low-profit, low growth stragglers are stuck in a vicious downward spiral, losing talent and prestige at an accelerating pace until they shrink, get acquired, or simply become bit “commodity players.”

Day 29 Is Here

The drive toward commoditization and price contraction continues to accelerate. A child’s riddle, “The Lily Pad,” captures the essence of the challenge.

On day one, a large lake contains just one tiny lily pad. But every day the number of lily pads doubles, until on the thirtieth day the lake is completely clogged with lilies. On what day was the lake half full?

The answer, as bright children love to exclaim, is day twenty-nine. It takes twenty-nine days for the first half of the lake to fill with lily pads. But it takes just twenty-four extra hours for the rest of the lake to become submerged in vegetation.

Day twenty-nine is here. Three giant lily pads in the form of globalization, deregulation, and technological change are choking the professional services pond.

LILY ONE: GLOBALIZATION

Globalization has caused the creation of huge global professional service firms that can service clients across the planet. To meet client demand and stay ahead of competitors, professional service firms have merged and consolidated at breakneck pace. More than 50 percent of the world’s accounting services are now provided by the top ten firms. In HR Consulting, the top ten firms control 80 percent of the total market. In IT Consulting, the top ten players share is 45 percent. In Management Consulting, the top ten control 35 percent.

Only the legal profession, where the top ten firms control less than 5 percent of the total world market, has largely been able to resist the pull. Even so, worldwide practices such as Linklaters & Alliance have formed consortiums based around a global network of offices.

At the same time, mergers and acquisition activity has exploded. Between 1985 and 1990, there were 1,140 professional service firm M&A deals in the United States worth $27 billion. Between 1995 and 2000, the number rocketed to 7,638 worth $471 billion.

The evidence is compelling. Firms in every professional service sector have aggressively invested in size and geographic coverage. A few representative examples: In 1975, strategy consultants McKinsey & Co had twenty-four offices. Today McKinsey has eighty-two offices in forty-four countries. Accounting giant PwC, formed from a merger of Pricewaterhouse and Coopers & Lybrand in 1998, has 140,000 staff and 8,000 partners in offices crisscrossing the planet. IT services giant IBM Global Services has more than 150,000 staff serving 150 countries. Advertising and communications giant Grey Worldwide has offices in 159 cities in 90 countries. Executive search firm Korn Ferry has more than 70 offices across North America, Europe, Asia Pacific, and Latin America.

Global giants such as these have the financial muscle, talent, and global stretch to compete aggressively in any market they enter.

LILY TWO: DEREGULATION

Deregulation, the second lily, has further increased competitive intensity. The Big Four accounting firms are the best example of the forces of deregulation in action. Even though they have been forced to shed their huge consultancy practices, collectively the “Big Four” still employ more than 400,000 staff. Together they still employ more lawyers than the four largest specialist legal firms combined. They still compete directly with the merchant banks for M&A work, and they still challenge HR consultants for their most lucrative consulting work.

LILY THREE: TECHNOLOGICAL CHANGE

Technological change is the third lily engulfing the lake. Accountants, for example, have watched bargain-priced software such as QuickBooks and TurboTax damage margins for certain types of routine accounting work. Clients no longer need an expensive law firm to conduct basic research when they have access to sophisticated electronic legal databases such as LexisNexis and Westlaw. Who needs to talk to a fee-charging recruitment consultant when you can skim a low cost collection of online CVs?

While the Web hasn’t caused the terminal damage to relationship-based services that some pundits predicted at the peak of the dot-com boom, the Internet has spawned a new generation of firms, such as E-Law.com, which provide commoditized professional services. Online recruiting has become a billion dollar industry. Online recruiting now accounts for nearly 40 percent of recruiting giant TMP Worldwide’s U.S. revenue. Even the Big Four accounting firms will deliver cut-price fixed tax advice via the Web for answers to routine questions.

The firms that have flourished in this new hypercompetitive world have made marketing a central focus. They live and breathe Peter Drucker’s precept: “Because its purpose is to create a customer, the business has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are ‘costs.’”

By contrast, the underachieving laggards suffer from what I call “Marketing Deficiency Syndrome” (MDS).

Marketing Deficiency Syndrome is a “disease” that can afflict any lethargic, sclerotic, professional service firm. MDS is usually contracted by leadfooted firms that fail to inoculate themselves against market-driven changes caused by globalization, deregulation, and technological change.

The Symptoms of MDS

The symptoms of MDS appear whenever profits and growth rates stagnate and decline.

Firms suffering from MDS typically:

• Compete primarily on price, selling undifferentiated, commoditized services

• Remain heavily dependent for their survival on the continued loyalty of a few key clients

• Have a dangerously high percentage of their clients who are at risk of defection

• Lack a defined strategy for their high value clients and highly growable clients

• Hold onto their unprofitable and toxic clients far too long

• Suffer from serious deficiencies in rainmaking talent

• Lack a distinctive brand persona

• Use an inadequate and misleading set of marketing measures to track performance.

SYMPTOM 1: FIRMS COMPETE PRIMARILY ON PRICE, SELLING UNDIFFERENTIATED SERVICES

The “surplus society” has a surplus of similar companies, e...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Acknowledgments
• List of Exhibits
• Introduction
• Part One: The Marketing Challenge
• Part Two: Breakthrough Marketing Solutions: The 8Rs of Client Relationship Marketing
• Appendix 1: Exploiting the Internet: How to Integrate the Web Into Your Marketing Mix
• Notes
• Index
• About the Author