Roughly 1 in 3 professional services firms has experienced at least 20% compound annual growth over a 3-year period from 2015 to 2017, reveals Hinge Marketing in its latest annual High Growth Study [download page]. These firms are almost 3 times more likely than no-growth firms to conduct frequent research on their target markets. And, it seems, they’re willing to spend to reach those markets.
In fact, more than one-fifth (20.7%) of high-growth firms invest at least 20% of their revenues in marketing. That’s about 5 times the share of no-growth firms (4.2%) dedicating that much of their revenues to marketing.
Another reflection of no-growth firms’ more cautious commitment to marketing spending: a majority devote less than 5% of revenue to marketing. That compares with 36.6% of high-growth firms with that small level of commitment.
For context, the latest edition of the CMO Survey [pdf] indicates that, on average, companies in the US allocate about 8% of their company revenues to marketing spending. And research from Gartner, meanwhile, suggests that marketing budgets comprised 11.3% of company revenues last year. (The Gartner survey was fielded among marketing executives in North America and the UK working at companies with more than $250 million in annual revenues.)
That high-growth firms spend more on marketing doesn’t necessarily imply a causative effect. In other words, they might not be growing faster because they’re spending more on marketing. They may be spending more on marketing because they have the budgets at their disposal. But it’s certainly a useful data point to support increased spending on marketing.
Where Are High-Growth Firms Putting Their Efforts?
High-growth and no-growth firms demonstrate very different levels of investment in traditional marketing techniques, per the report.
For example, while 1 in 4 high-growth firms invests a high level of effort into nurturing prospects through phone calls, none of the no-growth firms allocated that much effort to nurturing via phone calls.
Other traditional marketing areas in which high-growth firms are more likely to be putting high levels of effort include providing assessments and/or consultations, public relations, and marketing partnerships with other organizations. (Last year, partnership marketing was the area of highest impact for high-growth firms.)
No-growth firms, for their part, are investing more heavily in cold calls to prospective clients, networking at conferences and events, and pursuing industry award opportunities. This suggests that no-growth firms are pursuing demand generation opportunities to a greater extent than high-growth firms, who instead are more likely to invest heavily in nurturing.
It’s worth noting, though, that high-growth firms are deriving value from their event activities: both networking and speaking at targeted conferences and events proved to be among their most impactful traditional techniques.
Meanwhile, high-growth firms are more likely than no-growth firms to be investing heavily in a range of digital and content marketing techniques, particularly blog posts, case studies and webinars. A recent report indicates that case studies prove especially effective in moving prospects through the funnel for B2B marketers.
Interestingly, a sizable share of high-growth firms are seeing strong results from social media efforts, including video blogging, promoting thought leadership on social media, and networking on social media.
About the Data: The results are based on a survey of more than 1,000 professional services firms around the world. Some 44% are micro firms with less than $1 million in annual revenues, while 36.7% come from firms with at least $5 million in revenues. The study oversampled larger firms relative to US Census data of professional services firms.
Respondents offer a mix of services, including consulting services (24.2%), accounting and financial services (21.1%), technology services (13.3%) and marketing/communications (13.2%).
High-growth firms were determined from firms that generated more than $1 million in annual revenue and provided gross revenue data from 2015, 2016 and 2017. 535 firms met the criteria.