With a Recession Looming, Consultancies Must Revisit Their Positioning Right Now
A recession is looming. We see it all around us as well – both as consumers and businesses. Inflation is rising, contracts are getting put on hold or canceled altogether, gas prices continue to climb, and so on.
Here’s the thing, though. A recession is not all bad news for businesses – certainly not for consulting businesses. It is a shock to the system, but, if prepared accordingly, it can propel the growth of a consulting firm. To achieve business growth during a recession, consultancies must identify opportunities early enough and revise their current positioning.
That’s what I’ll be talking about today – what the upcoming recession means for consultancies and why they should not wait another day to revisit their positioning.
Why a recession is full of business opportunities
Bain & Company has written an excellent piece on how the best businesses plan for the coming downturn. The insight that stands out is that companies tend to make far bigger gains and losses during recession periods than in normal times. Why? Because some foresee and capitalize on opportunities, while others play defense or get stretched thin.
As I said, a recession is a shock to the system. It redefines what we buy, how we prioritize purchases, changes our needs and expectations, creates new pain points, etc. And I’m not talking only about “we” in terms of individual consumers. I’m talking about businesses.
C-level executives realize that the status quo is no longer viable to keep their companies going and tend to make significant changes in more than one way. Some get aggressive about digitalization to optimize costs, others jump straight to cutting operational costs and laying off a significant percentage of the workforce, yet others go on a buying spree, using unstable economic times to acquire smaller companies for much less money.
All these sudden changes create a land of opportunities for consultancies. Suddenly, the market that they cater to develops a whole new range of pain points, which, in turn, means new demand for targeted expertise.
Consultancies that have relevant skills and pivot towards the upcoming needs of their market will be able to use the systemic shock to discover new lucrative opportunities and grow their business.
Why consultancies should revisit their positioning
Consultancy positioning is the pivotal act of clarifying what problem(s) a consultancy is solving for which specific audience and how their approach is achieving that.
Right now, before the recession fully hits, many consultancies might be positioned perfectly in sync with their current market dynamics. However, what about 2 weeks from now? 2 months? or 12 months? How many consultancies have prepared for a drastic change in the new needs and priorities of their target audience?
"Good recession planning starts with a realistic assessment of your company’s starting position." (Bain & Company report)
Recommended reading: Positioning in Consulting Is an Exercise in Irrelevance and Here’s Why
Consulting is a resilient business
It’s about filling in the expertise and skills gaps, and the need to hire external experts is not going away. There will always be various areas of expertise that B2B buyers desperately need. How these skills and knowledge gaps are prioritized, on the other hand, is about to change.
Source Global Research studied the types of consulting services that organizations are more and less likely to use in the next 12 months. The specific services are irrelevant for the purpose of this article. What IS relevant, however, is the fact that there is serious fluctuation. Some consulting services are about to be severely de-prioritized, while others will skyrocket in importance.
A consultancy’s positioning is the foundation of everything: external messaging, marketing and business development strategy, client pitches, consulting rates, hiring, and so on. Every aspect of running a business revolves around how this consultancy positions itself to its target audience.
Finding alignment between expertise and market needs is crucial
You see, alignment is not just a buzzword. It’s an internal mechanism that ensures that every aspect of the business – marketing, account teams, project teams, senior leadership, etc. – works towards the same goal. This significantly reduces the cost of recruiting new clients and allows consulting firms to move quickly on new opportunities.
The playing ground is about to even out.
Consultancies that do not have their positioning aligned with their market right now and those that do will both find themselves in uncharted territories UNLESS they revise their positioning to align with upcoming market needs.
Consultancies that wait for the recession to hit will be playing catch-up. They will be trying to pivot their positioning once the chaos ensues, once they lose important contracts, and their financial projections get thrown in the trash.
Consultancies that pivot now will be monetizing on opportunities right away. They will be able to recruit new clients, and get enough contracts to fill up their pipeline for the year, and be perceived as market leaders.
So, you see, NOW is the time. Not tomorrow. Not by the end of the year. Not “let’s see where the chips fall before we make any moves”. Now.
How consultancies can go about the process of revising their positioning
Positioning is not the vision of a consultancy. It’s not a brand definition. It’s not the external messaging or a marketing strategy.
Positioning is a lot more foundational than all these individual parts. It’s about zooming in on the target audience's needs, understanding how they prioritize those needs and determining the most optimal way to resolve the top-of-the-list pain points with effective consulting expertise and/or services.
It’s only once you clarify this foundational aspect of a business that consultancies can move on to their marketing and business development strategies, external messaging, etc.
"Creating a laser-sharp positioning might be the most crucial decision consulting leaders must make (and maintain). Most consulting firms could make a huge step forward by spending more time to create (and permanently update) a more robust positioning definition and become better (upstream) strategic advisors. But it needs guts and courage."
The four steps of assessing positioning
First, consultancies must see where they currently stand vis-a-vis their clients’ needs. This should be done in a structured way to get a rounded picture. We are currently working on a recession-driven offering review with a mid-sized consulting firm, and this is our review approach:
- We have provided a brief training on re-checking clients' situation, objectives, priorities, and pain points. This is done via check-in calls, meetings, questionnaires, feedback inquiries, etc. The goal is to determine whether what clients care about right now is significantly different from what you’ve currently presumed / to what your current positioning and messaging speak to.
- We will then use these insights to assess the consultancy's promises to its CURRENT prospects and clients. This means reviewing all the opportunities and deals currently in the pipeline to see if any might be at risk or benefit from the consultancy checking in (and potentially re-scope or even re-negotiate).
- We will use the insights from CURRENT clients to assess the promise to FUTURE clients – i.e., prospects. We will help the consultancy determine whether, given the identified changes, changes are needed to how the firm applies or “packages” its expertise.
- Finally, all findings will be summarized in an “issues list”. We recommend that consultancies consider it a to-do list of what needs changing, why, and how.
The seven steps of repositioning
Alright, once a consultancy audits its positioning, finds gaps between its current offering and its existing client's needs, and puts together the list of issues identified during the assessment, it’s time to develop new positioning. Here are the seven steps that I recommend consultancies follow:
- Create internal alignment around your “issue list” and the next steps. The consultancy will need all hands on deck to make such a fundamental change. I’m talking EVERYONE, from senior leadership to entry-level researchers.
- Work with key stakeholders to identify key target segments and the client issues within these to focus the repositioning exercise on. This involves answering questions like:
- “Will our current client profile allow us to continue to grow our business and charge premium fees, or do we need to focus on a new audience?”
- “If the audience is the same, what are the changing pain points that are most likely to become a priority for our clients and prospects?”
- “How closely does our expertise match these upcoming needs? Are we in a position to help our clients resolve these problems?”
- “What skills should we focus on and specialize deeper in to continuously deliver value to our clients?”
- Work with key stakeholders to change how expertise is presented to said segments. This is where consultancies should work on the basic messaging – what they do, how they do it, and how prospects can benefit. It’s a 30-second pitch if you will.
- Work with key stakeholders to change how expertise is applied and packaged within said segments. What does the new service offering involve? To address the identified new needs of clients, does the consultancy need to offer a 1-month or 12-month service? Would it require a team or a single consultant? What technologies will be used? What results can be promised to clients? All of this determines how a service is presented and sold to prospects.
- Summarize the changes in a new positioning and messaging framework. This is where consultancies would take into consideration everything they’ve learned about the changes in the market and all the ways they’ve identified to pivot their services to match these market needs as closely as possible, and then summarize them in a short, cohesive statement.
- Validate with clients and prospects, refine if necessary. Consultancies will save themselves a lot of time and energy if they first validate their new positioning before rolling it out to the market and internally. They should talk to their existing clients and see how they respond to the new positioning. They should use it to pitch prospects. If any gaps are still present between what the market needs/will need and the new positioning, firms should continue to refine until they are satisfied that the new positioning perfectly fits the brewing pain points of their niche audience.
- Share internally and do it often. Consultancies must ensure that everyone within their organization knows and understands the new positioning. Marketers should revise their strategy to match the new positioning. Sales should adjust their pitch. Consultants should adjust their communication with existing clients. Research teams should focus their work on the new client profile/new client needs. Employees must be aware of the new positioning and communicate a uniform message.
"Know your consulting client. Get inside their hearts, souls, and minds. Try to know them better than they know themselves. Take this knowledge and drive it into everything you do. When a prospective client bumps into you, they should say, “These people get me.”" (Greg Alexander, from the book ‘The Boutique’)
In conclusion: proactively review the consultancy’s positioning to avoid being late to the game.
There’s a 98.1% chance of a global recession happening in 2023, says Ned Davis Research. However, consultancies should reframe their thinking around the recession. Instead of focusing on all the contracts they will lose out on, all the employees they will be forced to let go, and all other budgetary cuts they will have to make, they should focus on the opportunities.
Consulting is a resilient business. Consultancies can grow and prosper in times of economic uncertainty. Uncertainty requires guidance, it requires expertise. B2B buyers will be looking for the right type of expertise and reliable consultancies to deliver this expertise.
When positioned in line with buyers' most pressing needs and pain points, consultancies will be able to weather out the storm and exponentially grow their business. They will be on a hunt for talented experts in the field to add to their teams. They will be in the position to charge premium fees. These firms will emerge from the recession as true market leaders.
So the single most important message I want consultancies to take away from this post is DO NOT WAIT. Future-proof and recession-proof your consulting businesses now.
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Hello, I’m Luk Smeyers, and I’m helping mid-sized consultancies become high-performing consulting firms. I have been in the consulting businesses for more than 20 years, in very different roles: as European CHRO in a global consultancy, as a founder of a mid-sized analytics consultancy, and as a leader in a 'Big 4' consultancy, post-acquisition of my consultancy. I had the privilege of achieving global visibility as a consulting leader, and I never had to sell, persuade, or negotiate as a result. I have now bundled all those experiences, expertise, know-how, research, reading, successes, struggles, and failures from managing and advising consultancies in the past years.