“I’m not sure if there is anything that can be measured, and how it’s done.” “How do you measure the success of a consultant?” “Do they need to make money? Do they have to save their client more than what they charge them? What about hours worked?” These are all great questions.
Do what I say, not what I do.
As consultants repeatedly emphasize to their clients, the only way to demonstrate your worth is to bring the proof, the data. Unfortunately, however, they do not apply that sound principle to their own shops. As a result, management consulting has always been somewhat of an informal business when it comes to measuring and proving its own impact.
Daniel McGinn, a senior editor at Harvard Business Review, described consulting as a “black box” in the magazine’s September 2013 issue. And, because there is no widely accepted, objective methodology for measuring consulting, management consulting firms that attempt to create measures are inventing their own recipe.
The volume of sales and re-sales per consultant is how most firms measure their performance. As a result, partners are encouraged to generate more revenue and complete projects that, rather than fully meeting the client’s needs at the outset, lead to additional projects without necessarily cultivating good long-term relationships with the clients.
Then there are the Attila-the-Hun consultants, who pursue a scorched-earth policy, extracting as much revenue as possible from the client as quickly as possible and then moving on to the next target while being handsomely compensated for it.
Some businesses attempt a cross-partner evaluation, in which a partner surveys a colleague’s clients to determine their level of satisfaction. As a result, the evaluator frequently returns a favorable report on the colleague’s performance in the hopes of being included in the colleague’s next big project.
Furthermore, many consulting firms are structured as partnerships, promoting individualistic and short-term thinking that is detrimental to long-term relationships, specialized expertise, and teamwork.
The key dimensions of consulting performance
Although production in management consulting appears to be primarily intangible, some dimensions can still be measured based on client expectations. These dimensions are as follows:
- Commercial Approach. Was your proposal convincing to the client? What is your elevator pitch? Was your proposal in line with the expectations of the client?
- Relationship. How well do your consultants interact with clients and their teams? What is your company’s image in the eyes of its customers? Collegial? Honest? Trustworthy?
- Expertise. How does the client perceive your knowledge? What were their hopes and dreams?
- Posture for delivery. What is the client’s opinion of your posture? Are you accessible? Flexible?
- Project management. How did you fare on the classic triad of scope, time, and cost?
- Impact. What was the impact of your work on your client’s organization in terms of savings, ROI, change, and so on?
- Customer satisfaction. Is the client satisfied with your company overall?
Measure where you stand
However, evaluation should not end there. You must evaluate performance at the appropriate level of granularity. Assessing the company’s overall performance will not allow you to identify the partners’ blind spots or surface best practices. Going down to the consultant level will be difficult to organize (and thus expensive) in exchange for little added value.
Furthermore, suppose you are evaluated using the same criteria as similar organizations that provide the same range of services. In that case, you will be able to benchmark yourself both internally and against the competition. Such benchmarking is priceless when it comes to setting a company’s position and strategy.
Sometimes you want t hire a third-party agency to conduct the evaluations for you. So you may get honest feedback from clients, a fair review of your partners, and realistic comparisons with competitors with objectivity and anonymity.
Knowledge leads to understanding.
After you’ve measured all of the relevant dimensions, you’ll have a plethora of inputs that your company can use to:
- Understand. Understanding your client’s expectations and whether your work met their needs is essential for the business. Client expectations, such as a specific type of expertise, can be explicit at times. However, they can also be implicit expectations, such as your trustworthiness, ethical behavior, or active listening. The ability to zero in on those implicit and explicit expectations provides a significant competitive advantage.
- Strategize. Evaluation will provide you with a better understanding of your strengths and weaknesses and assist you in determining the effectiveness of your value proposition and strategy. You can also assess your performance in each of the different markets you serve.
- Learn. Identifying best practices and capitalizing on experience can help to stimulate innovation. Evaluation can also assist you in determining the blind spots of your partners and gaining a better understanding of your firm’s ecosystem.
- Improve. The assessment also provides a better understanding of how you perform in each of your process’s different steps: matching the right partner or team with the project, the proposal, delivery posture, project management, team composition, and impact. You now have the keys to enhancing the dimensions that are important to your clients.
- Manage. Knowing your clients’ specific needs allows you to constantly improve your performance, create better offerings and teams, and increase your success rate. In addition, however, evaluation can be a valuable tool for talent management, providing valuable insights into your employees and allowing you to manage better their development and compensation in an industry where attracting and retaining talent is critical.
When used correctly, performance evaluation can help you capitalize on your strengths while mitigating your weaknesses. And it may be less challenging to implement than you think.
- It is entirely free. The cost of evaluating a client engagement is a negligible percentage of the revenue generated by the engagement.
- It is already present. Your client has already evaluated you (informally), and they are familiar with evaluation processes.
- Consider the return on investment. Your return on investment is highly favorable.
An objective evaluation can help you build your reputation, increase your credibility, strengthen your relationships with current clients, and expand your portfolio.
In a nutshell, evaluating your performance allows you to ensure a certain level of performance, build loyalty, and increase your success rate.
So, what are you holding out for?
Is it worthwhile to measure the performance of Consulting Services? Many consulting firms will tell you that as long as customers continue to buy, there is no need to analyze performance further. Is that correct?
The receipt and inspection of purchased goods is a critical step in most procurement categories. When a product is damaged or does not meet the requirements, the clients will reject it. They will not renew the provider’s contract if the product is compliant but the quality is unsatisfactory. When a supplier is subject to a large number of claims, it is ousted from the panel. In the automotive industry, for example, it is the ultimate penalty.
Surprisingly, despite the large sums at stake, 57 percent of businesses lack a systematic Performance Evaluation system for the Consulting Category. Even consulting firms may not have a robust system for measuring customer satisfaction, as the cobbler’s son frequently has the worst shoes. When the account is lost, they realize the client was dissatisfied. Although this is a relatively accurate measure of satisfaction, we may be able to improve.
You can’t enhance something you can’t measure.
Consulting firms seek feedback to engage in a continuous improvement process and monitor their client relationships. And their customers expect them to listen to them and improve their processes. So, why aren’t these discussions taking place?
Executives frequently regard Consulting Services as a black box. Intangible Services, such as consulting, are challenging to manage, and measurement can be difficult. It appears impossible to quantify impact or trust. Companies, on the other hand, have learned that even intangible goals can be measured. Management by objectives has become a standard in General Management since Peter Drucker popularized it in the 1950s. SMART objectives are used throughout the organization to help employees understand their roles and responsibilities.
The same is true for Consulting Services. When you hire a Consulting Firm, you have certain expectations, such as the quality of deliverables, the ability to understand your business, or build trust with stakeholders, and so on.
Why not track how well these goals are met?
Without data, You are nothing more than another voice in the crowd
Consultants are kings when it comes to creating elaborate dashboards, KPIs, and management systems to track performance improvement. Surprisingly, they rarely get a taste of their own medicine. When it comes to measuring and proving its own impact, management consulting remains an unofficial business.
Implementing a systematic Performance Evaluation for Consulting Services is a critical component of Consulting Category management. The advantages can be seen over different time horizons.
The implementation process can be difficult at first. However, paying close attention to feedback from the main departments or business lines that use consulting can assist procurement in identifying the Consulting Firm with performance issues and gathering the necessary information to build the right improvement plan.
Longitudinal tracking of your providers’ performance is the only objective way to monitor, benchmark, and identify high and low performers: two essential elements for maintaining a fluid Preferred Supplier List. This analysis will also assist you in identifying capabilities that are underperforming. For instance, you can be very well equipped in Marketing while struggling in terms of innovation.
The goal of aligning your consulting spend with your strategy is to get the most bang for your buck. A year-long performance evaluation of the impact of your Consulting Projects will help you validate your decisions and ensure that your money was well spent with the expected impact.
Remember that performance can be assessed at any stage of a Consulting Assignment. On very large projects, mid-project assessments are a good practice. Otherwise, the term “post-mortem analysis” might be more apt.
What exactly do you need to measure?
You’ve previously built or used a Performance Evaluation System. It is not a difficult task. Keep the following common-sense suggestions in mind:
Determine what is most important to you.
The goal of an evaluation system is to ensure that Consulting Firms are meeting your expectations. But, what are your hopes? What are the most important success factors for a Consulting Project? Is it the delivery’s quality? What is the team’s level of expertise? What was the impact?
The importance of consistency cannot be overstated.
You can choose to have a separate evaluation for each project based on the key deliverables. However, if you want to use benchmarking, you must first determine the appropriate granularity in order to create a standardized evaluation. In order to create statistical relevance, you must also use it on a systematic basis. You may also want to use third-party performance measurement services.
Consider the human component.
Remember that the driving force behind the success of a Consulting Project is frequently the Partner or Project Manager in charge. You are evaluating his knowledge, expertise, and behavior for your project. You can choose to evaluate the performance of each consultant in the team – which is time-consuming and has little impact on you – all the way up to the performance of the company as a whole on the project – which makes sense for a small consulting firm but is more questionable for a big 4.
Don’t overlook the behavioral aspect.
When creating your questionnaire, don’t forget to include the soft aspects of a Consulting Project. Depending on the purpose of the project, you may want to consider the ability to build trust, create buy-in, or transfer knowledge, for example.
Do not be afraid to solicit feedback on how the project went and what your company could have done better. Some businesses will be very clear in expressing their needs but will fall short of achieving internal alignment. Others may be unable to articulate their desires or will set unrealistic expectations (time or budget-wise). Capturing this feedback will assist you in gradually increasing your capacity to use and manage consultants.
Ensure the system will remain in place
One of the most important success factors is consistency over time. If you start measuring performance but stop after a few months or measure performance at random, it will be difficult to persuade your suppliers of the seriousness of the effort. Performance measurement must be integrated into your Procure to Pay processes (P2P) to avoid this unfortunate situation.
The distribution of the performance measurement survey should be mandatory before the project’s official closure and should be automated as part of the workflow when you open a new project. In addition, it can be linked as a required step before proceeding with the supplier’s final payment.
Similar to how you probably conduct yearly performance reviews with your teammates, you can begin to pencil in a few dates in your calendar to discuss your main providers’ performance over the last few projects. This broader conversation will focus on overall performance and serve as the improvement plan’s starting point.
A development strategy with your Consulting providers can take many forms. Depending on the circumstances, it may be related to:
- Staffing (displacing low-performing individuals or those with the least fit with your company’s culture),
- movement in and out of projects (staffing evolving too frequently, poaching of collaborators,…),
- perceived performance or impact issues (disconnect between costs and actual impact),
- lack of expertise on a given subject,
- respect for company processes and policies, or commercialism
Follow-up on the action plan can be done at the most appropriate frequency. The most common rhythm is quarterly.
A great way to proceed is to create an internal network of experts to gain support in your organization while also being more specific in your improvement actions. They could be functional experts or consultants who have left the company. They can assist you in reviewing the outcomes of key projects, receiving feedback on the various firms, and developing improvement plans that are more specific to the expertise of each consulting firm. They can also help you identify alternative consulting firms not previously on your radar by utilizing their personal network. To top it all off, you might be tempted to seek their expert advice in the future when working on a specific RFP.
Last but not least, the exercise must provide value to internal stakeholders because they will have to spend time filling out the surveys. Plan a debriefing with them about the performance of the panel’s key suppliers at least once a year. Take advantage of this meeting to discuss future needs and identify changes to be presented to the panel. Keep the stakeholders updated on the action plan with the consulting firms, and keep a line of communication open to receive direct feedback to supplement the surveys.
Creating an appropriate performance measure is the first step in creating value through consulting and taking control of the consulting category while leaving decision-making and feedback to the project sponsors.
Engage in a conversation with your Consulting Providers to find out what kind of feedback they expect from you, and be open to receiving feedback in return. Would you do business with them again? Do you believe you would recommend their firm? Your net promoter score is very important to them—a compelling reason to take action based on the feedback.
“It’s an age-old question: How do you know if a consultant is any good? Maybe the best way to gauge their success would be by asking how many people want them back. That’s where the Net Promoter Score (NPS) comes in.”
Do you want to know how your consulting firm stacks up against the competition? You can easily find out with a Net Promoter Score (NPS). The more advocates and promoters your company has, the higher its overall score will be. A strong score can help increase customer retention rates and make it easier for new prospects to trust what you have to offer them.
This post will discuss the NPS, why it is essential to measure this score, and provide strategies for improving your NPS.
1. What is a Net Promoter Score, and why should I care
The Net Promoter Score (NPS) is a customer loyalty metric that measures the satisfaction level of your customers and how likely they are to recommend you.
Fred Reichheld introduced the NPS in 2003, and it has since been adopted as an industry standard for measuring customer satisfaction. It asks customers to rank their likelihood of recommending the business on a scale from 0 (not at all likely) to 10 (extremely likely).
The NPS ranges from -100 (everybody hates you) to 100 (everyone loves you). A score of 50 or higher indicates that most people are thrilled with your service.
2. How to calculate your NPS score
You calculate your NPS by taking the percentage of your customers who would recommend you (9 and 10) and subtracting from it the percentage of detractors (those who would not – 6 and below).
You can also use the following equation to calculate your Net Promoter Score:
Net Promoter Score = %Promoters – %Detractors
Let’s imagine that out of 100 customers, 90 said they would definitely recommend you while only five people said that they wouldn’t. So, applying this formula in our previous example, we get NPS=(90-05)=85; then, your final NPS score will be 85.
Watch out! There might be some cultural or industry elements to the calculation of the NPS.
- For instance, in Europe, many people happy with your services might give you a 7 or an 8. It places them in the neutral zone. As a consequence, if you have limited Promoters, some Detractors, and the majority of your customers in the neutral zone, you might end up with a score close to zero. It might look dreadful but remember that the range goes from -100 to 100.
- Conversely, Latin American respondents might be more prone to a higher score. They might also be super optimistic about the competition. Everything is relative, after all.
- Some industries like retail and consumer goods tend to have higher NPS scores (40 on average) than services providers (15 on average). For example, having a 25 NPS score puts you above the competition if you’re a TV provider. What matters is not to have the best NPS in the world but to be better than your competition.
Even though there might be some bias linked to the profile of your customer base, we can estimate that your customer mix is relatively stable over time. Consequently, regularly measuring your NPS will provide you with an internal benchmark and very insightful trends on how you are doing with your customers.
To learn more about how to calculate the NPS score, check out this post here!
3. Why do you need an NPS program
The biggest reason you need an NPS program is that it will help your company grow and scale. A high Net Promoter Score can be a valuable asset. In addition, an NPS program is a fantastic way of forecasting the direction your company will take in the future. If you are looking for leading indicators, it is indeed a sound input.
You can use it to track customer satisfaction on an ongoing basis and benchmark against other companies in similar industries. That being said, there are some caveats about using just one number when measuring customer loyalty because not everyone responds positively to this type of survey question format.
Suppose you have increased positive customer responses after taking actions based on their feedback or implementing new marketing campaigns/strategies. In that case, these actions are likely to help your bottom line, at least indirectly. However, if they aren’t providing any value for money either by increasing sales figures or reducing cost per sale, why keep doing them?
4. The benefits of having a strong NPS program
The benefits of having a strong NPS program are manifold.
Secure customer relationships
First of all, you will measure your performance over time and identify trends in customer satisfaction. By doing so, you can take corrective action rapidly if required – the sooner, the better, as they say!
Customer Loyalty is one of the most difficult metrics to measure in consulting. In the end, the best measure ends up being the number of business consultants get from an account. But when the relationship is going south, revenues start drying, and it is often too late to take corrective actions.
With a proper performance management system, you can capture weak signals and take preventive actions in due time. Don’t forget that retaining existing clients is always cheaper than acquiring new ones, so every little bit counts.
Surface new opportunities
Second, it makes sense financially speaking because happy customers are more likely to buy again from you or refer others on top of that, which is even better for business growth.
You can include in your survey some open questions regarding their future needs for next year and follow-up. You can also set up debriefing sessions and improvement plans that will be touchpoints leading to potential opportunities.
Implement Continuous Improvement
Finally, an actionable Net Promoter Score system gives birth to very focused team efforts to improve what needs improvement while celebrating wins achieved with measures taken across departments accordingly.
Maybe your expertise is deemed weak in a specific area. Perhaps your commercial approach is considered shallow. In some cases, you might have underestimated the desire from your clients for further knowledge transfer.
Is your pricing considered high as compared to the value you bring, or conversely, are your clients so happy with the pricing that you could consider charging more? Are some partners underperforming their peers? You could use this initiative as an opportunity to trigger personal improvement plans.
To learn more about the benefits of a great NPS score, check out this post here!
5. How to implement an NPS Program
The first step to implementing an NPS program is getting your team members’ and upper management’s buy-in. They need to understand the value of customer loyalty for your business, not only in terms of financial performance but also as a way to keep clients satisfied.
You can launch this initiative via a few different channels such as email, phone calls, or surveys (online or offline). With Conpulse, we have opted for online surveys, but some interviews can be performed on the phone depending on company preferences. Always take the time to write a personalized note to your clients before sending a survey. It will increase the odds of getting an answer.
In the first year, you will probably process much information since you have to go back one year in one go. After year one, you can move to a more continuous process where you survey clients once projects are completed. It will provide you with a real-time picture of the situation.
Once you’ve got all of this data, it will need to be processed and analyzed before any conclusions can be made and acted upon accordingly if necessary. Of course, the strength of your team will determine how long it takes until actionable insights are available, but within around two months, we would hope to see some results at least!
A key element in the process is debriefing with the clients. It is an opportunity to show that you care and that their opinion matters. Going through this debriefing can also be an opportunity to identify improvement opportunities on both sides and to move forward together. When the trust is strong, those meetings are a gold mine of new leads, as you can imagine.
6. Tips for improving your NPS score
Here are some tips on how to improve your NPS score by providing a better customer experience :
- Look at all the steps of the customer journey: Proposal, Commercial, Delivery, Transfer of knowledge, Follow-up. What are the strengths you need to build upon and the weaknesses to be fixed?
- Use the feedback to fuel your internal development program. For example, what is the expertise partners and principals should master? Are they there yet? How about interpersonal skills?
- Act quickly on early signals. The sooner you fix a deteriorating relationship, the better. You know how hard it is to reopen an account.
- Make sure that there are no language barriers because sometimes this can create misunderstandings between employees and clients, resulting in negative reviews. Use multilingual surveys if you can.
- Be transparent about the process of resolving problems with customers. Then, if you follow up, let them know that you will be in touch and when they can expect a resolution – This will help avoid any confusion or frustration!
- Last but not least, stay consistent. You have engaged on a journey to transform your customer relationship. Don’t drop the ball after a few months. When it comes to improvement, persistence is the key.
It’s not enough to just have satisfied customers. You need loyal ones too, and NPS can be a great way to keep them coming back for more time and again! With the help of an expert like us at Conpulse, you can quickly identify improvements in your company that will make your customer experience better than ever before. So contact us today to learn how to help you strengthen your business with happy customers who love to work with you!