Marketing Professional Service Firms

Presented by : Robert Sawhney: Managing Director, SRC Associates LtdVenue: Auditorium, Hong Kong Institute of CPAsDate: 3rd March 2010

2

Disclaimer

The materials of this seminar / workshop / conference are intended to provide general information and guidance on the subject concerned. Examples and other materials in this seminar / workshop / conference are only for illustrative purposes and should not be relied upon for technical answers. The Hong Kong Institute of Certified Public Accountants (The Institute), the speaker(s) and the firm(s) that the speaker(s) is representing take no responsibility for any errors or omissions in, or for the loss incurred by individuals or companies due to the use of, the materials of this seminar / workshop / conference.

No claims, action or legal proceedings in connection with this seminar/workshop/conference brought by any individuals or companies having reference to the materials on this seminar / workshop / conference will be entertained by the Institute, the speaker(s) and the firm(s) that the speaker(s) is representing.

3

The State of Play

GFC Demanding clients Regulation Competition Globalisation Consolidation Social media and Web 2.0 Talent retention and management

4

According to Ron Baker

The Firm of the Future

5

How PSFs are Different!

Product resides in the structural, social, and intellectual capital of firm – knowledge and learning key

Key marketer is the professional who interacts with client Differentiation is harder to achieve – ‘we do better audits’ Branding at the individual, practice group, and firm level Marketing and BD coupled together – misunderstanding? Professionals don’t take easily to being ‘managed’, strategy

bottom up and involves all or no one (are they interested)?

6

And the difficulty of…

Fundamental misunderstanding by professionals of what marketing is

Growth of 10% per annum, who needs it? Strong resistance by seniors Belief in conflict with professional ethics and association

guidelines Combined role of producer/manager Short term orientation and lack of longer term strategic

thinking

7

Marketing and client value

Firstly – what marketing is not: Promotion Clever logo and new brand name Run by the marketing/BD people Something that can be turned on and off according to

prevailing conditions In its entirety, something that cannot be measured using ROI

8

Cont’d

What it is: A business process about creating client value A firm culture that has the most significant impact on firm

performance The guiding force for strategy and strategic management The bed rock of firm performance (market orientation)

9

Me arguing with someone!

http://www.thenewlawyer.com.au/article/firm-marketing-inspires-email-vitriol/493687.aspx#comments

10

We are now in the ‘value’ era

Clients want their PSF to be more commercially oriented and demonstrate the value they provide (i.e. cost savings, risk mitigation, business improvement)

According to HBR (March 2006): value propositions should have a resonating focus with clients that identifies a few key points of difference (with points of parity)

11

What Professionals Really Sell According to research conducted at the Centre for Management of

Professional Services (Said Business School, Oxford University), a firm's ability to differentiate itself and create a sustainable strategy relies on four factors:

· Expertise - knowledge and experience

· Relationships - clients and other stakeholders

· Reputation - expertise, experience, and engagement

· Service - processes, services, and engagement

According to the authors, a sustainable strategy can be built around these four factors whereby they create a virtuous cycle of innovation, organisation learning and knowledge management, as well as access to new markets. The authors' research demonstrates clearly that for a firm to create differentiation that means something (i.e value perceptions to client), a firm must spend time on factors aside from technical quality of work.

12

What marketing really is: Bed rock of firm performance

Client value, satisfaction and firm performance

Market based strategy and strategy implementation (based around value for clients)

Client orientation

Competitor orientation

Inter-functional

coordination

13

What Does it Mean to be Market Oriented?

Marketing is a business philosophy that puts creating and delivering customer value at the heart of all that an organization does

It is an organization culture that acquires and disseminates information-cross functionally and across hierarchies, and acts upon that information

This sharing and information coordination tolerates no functional silos

14

Why firm culture is so important

The recent review and findings by the Accounting & Corporate Regulatory Authority of Singapore (Acra) that accounting firms in the region are struggling with audit quality should make firm leaders sit up and take notice.

Research has shown that auditors are more likely to accept risky client assignments if they believe it would lead to further work

In a paper published in Behavioural Research in Accounting by Jenkins et al (2008), the authors set out a number of areas whereby culture can impact a firm’s governance and the role that seniors within the firm play through their behavior such as mentoring, client interactions, communication, and social influence. They highlight a number of studies and situations whereby firms have engaged in unethical actions (lowered audit quality) due to the cultural conditions of the firm. Primarily, those cultures that value revenue generation over all other activities tend to be at most risk

15

What should you strive for? (David Maister)

16

Quick Case

Harrex Group, NZ (source: J of Accountancy, 2008) Founded in 2007 by Brendan Harrex, first chief value officer

at his former firm He says focus on time and cost only creates illusion of

managing a PSF What really matters is value creation No more hourly billing, a change of culture

17

Cont’d

Key Performance Indicators for Harrex: * Ability to think strategically on behalf of clients * Client Communication * Delegation * Turnaround Time * Client Feedback * Effective Listening and Communication Skills * Knowledge Elicitation/Coaching * Risk Taking, Innovation and Creativity * Continuous Learning * Passion, Attitude and Commitment * Team Player

18

Thank You!

If you want any of the full references for work cited or have any questions, please feel free to contact me:

bob@srchk.com, www.srchk.com Blog: www.marketingasia.typepad.com Twitter: http://twitter.com/robertsawhney LinkedIn – Robert Sawhney Our New Book: published by Lexis Nexis in 2009) available

from LN in HK and www.amazon.com.