Consulting Sales, Marketing & Industry Analysis

Part
01
of four
Part
01

Industry Analysis: Adjacent Industries

Our research found that the airline/aviation, apparel manufacturing, healthcare, and utilities industries might be a good fit for a consultancy that specializes in the safety, care, and comfort of humans. The reasons we chose each industry are included in our research findings below.

Four Industries That Might Be a Good Fit for a Consultancy Specializing in the Safety, Care, & Comfort of Humans

1. Airline/Aviation

  • The airline/aviation industry might be a good fit for a consultancy that specializes in the safety, care, and comfort of humans, as the industry directly involves all three of those categories.
  • The industry involves safety (because it transports people), care (through stewardesses and other services provided), and comfort (through seat design and spatial layout).
  • The airline/aviation industry involves the manufacturer of airplanes and the transportation of people around the world.
  • This industry is a truly global industry that connects not only people, but also businesses and communities worldwide.
  • The aviation industry has a long history of growth, as it "has doubled in size every 15 years and has grown faster than most other industries."
  • Leading companies operating in the U.S. airline/aviation industry include Southwest Airlines (which accounts for 20% of air travel passengers in the U.S.), Delta Air Lines (16% of passengers), and American Airlines (15% of passengers).

2. Apparel Manufacturing

  • The apparel manufacturing industry might be a good fit for a consultancy that specializes in the safety, care, and comfort of humans, as the industry directly involves all three of those categories.
  • The industry involves safety (by making different types of protective clothing to endure various elements and conditions), care (through producing specialized clothing made for medical procedures and rehabilitation), and comfort (by using materials that feel good to wear, such as breathable fabrics).
  • The apparel manufacturing industry involves the production of clothing/garments/outerwear from start to finish.
  • Approximately 6,200 companies comprise the apparel manufacturing industry in the U.S.
  • The fabrics used in the production of garments within the industry come from ones the manufactures make themselves and ones that are purchased by apparel manufacturers.
  • The industry's total revenue in the U.S. amounts to approximately $9.6 billion annually.
  • Leading companies operating in the U.S. apparel manufacturing industry include Vince, Tapestry, Michael Kors, Nike, and Lululemon athletica.

3. Healthcare

  • The healthcare industry might be a good fit for a consultancy that specializes in the safety, care, and comfort of humans, as the industry directly involves all three of those categories.
  • The industry involves safety (a critical aspect of medical treatments/procedures), care (through doctors and nurses), and comfort (by helping people heal and get well).
  • The healthcare industry "provides goods and services to treat patients with curative, preventive, rehabilitative or palliative care."
  • It is among the top industries within the economy of the U.S.
  • The healthcare industry in the U.S. is so expansive that by 2025, it's projected that one-fifth of U.S. spending will go to healthcare.
  • It's estimated that by 2025, healthcare spending in the U.S. will reach $5.6 trillion.
  • The healthcare industry consists of entities that are "devoted to prevention, diagnosis, treatment, and rehabilitation of medical conditions."
  • Medical treatment provided through the healthcare industry is delivered through both services and products.
  • Medical care is delivered through both public and private healthcare providers.
  • Leading companies operating in the U.S. healthcare industry include UnitedHealth Group, CVS Health, Express Scripts, and Anthem.

4. Utilities

  • The utilities industry might be a good fit for a consultancy that specializes in the safety, care, and comfort of humans, as the industry directly involves all three of those categories.
  • The industry involves safety (by ensuring that utilities are properly transmitted and maintained), care (by delivering life-sustaining water, for example), and comfort (by delivering the power used to generate heating and cooling so people feel comfortable indoors through all seasons).
  • The utilities industry includes the transmission and provision of water, gas, and electricity to people and companies.
  • Also included in the utilities industry are "companies that provide electricity through renewable energy sources, such as solar or hydro power, and companies that generate and sell energy to utility companies."
  • With regard to electricity and gas, these utilities are either owned by investors, cooperatives, or are publicly owned. In contrast, water utilities typically are publicly owned.
  • Net revenue in 2019 for the utilities industry in the U.S. is projected to reach $880.3 billion.
  • Leading companies operating in the U.S. utilities industry include NextEra Energy, Duke Energy, Dominion Resources, and Southern Company. That data is also included in this Google Doc.

Research Strategy

In order to identify industries that might be a good fit for a consultancy that specializes in the safety, care, and comfort of humans, we first looked for a comprehensive list of industries. In reviewing the industries in that list, we specifically looked solely for industries that directly involve the safety, care, and comfort of humans. Each industry we chose directly involves all three categories. The industry overview information we found came from sources such as First Research and Revenues and Profits. The last step in our research involved identifying leading companies operating in each industry. To identify those companies, we used rankings/lists of top companies operating in each U.S. industry from sources such as Statista and Becker's Hospital Review.
Part
02
of four
Part
02

Marketing and Sales Expenditure Benchmarks

The percentage of revenue that small consultancies in the United States typically spend on sales and marketing could not be reliably determined given the lack of data. However, there are a few sources indicating that service consulting firms in the country spend 6.20% of their revenue on marketing, and that compared to large firms, small firms spend a bigger percentage of their revenue on marketing. A general rule of thumb is that small businesses with annual revenues below $5 million and profit margins of 10% to 12% should allocate 7% to 8% of their revenue to marketing.

Helpful Findings

  • According to the most recent version of The CMO Survey, wherein 22 service consulting firms were polled in July and August 2019, service consulting firms in the United States spend 6.20% of their revenue on marketing on average, and 20.0% of service consulting firms say their marketing unit is responsible for sales.
  • Based on the same survey, small companies spend a larger percentage of their revenue on marketing compared to large companies. In general, companies with annual revenues below $25 million spend 11.2% of revenue on marketing, while companies with annual revenues of at least $10 billion spend only 3.6% of revenue on marketing.
  • The aforementioned information suggests that the percentage of revenue that small consultancies typically spend on sales and marketing is slightly higher than 6.20%. It is worth noting, however, that Accenture, a very large consulting firm, spent 10.29% of its $43.2-billion revenue on sales and marketing, and Genpact, another large consulting firm, spent 6.8% of its $3-billion revenue on sales and marketing.
  • Based on articles published by Medium and Glenmont Consulting, the rule of thumb among small businesses with annual revenues below $5 million and profit margins of 10% to 12% is to spend 7% to 8% of revenue on marketing.
  • In 2017, the country's broader management, scientific, and technical consulting services industry, which generated a revenue of $261,002 million, spent $4,325 million or 1.66% of revenue on purchased advertising and promotional services.
  • In 2017, 67% of companies polled for The CMO Survey reported that they "give marketing and sales joint responsibility."
  • FTI Consulting spent $15.5 million or 0.76% of its $2,028-million revenue on advertising in its fiscal year that ended on December 31, 2018.

Research Strategy

In finding the percentage of revenue that small consultancies typically spend on sales and marketing efforts, we began by looking for surveys of sales and marketing budgets, spend, expenses, or expenditures. We believed that by doing so, insights specific to small professional services or consulting firms might be uncovered. This initial approach led us to The CMO Survey, a joint effort of Deloitte, Duke University's Fuqua School of Business, and American Marketing Association. Survey results do not include any data particular to the sales and marketing budgets of small professional services or consulting firms, but they indicate what percentage of revenue service consulting businesses typically spend on marketing, and how the marketing budgets of small businesses compare to those of large businesses. The rest of the sources we found, which were published by Medium, Small Business Trends, Web Strategies, U.S. Small Business Administration, Fundera, and Glenmont Consulting, focused on small businesses only, not small consultancies. From these sources, we learned of a rule of thumb that small businesses are advised to use when determining the size of their marketing budget.

Since the United States Census Bureau regularly conducts surveys of businesses in the country, we scoured the bureau's website for information specific to small consultancies. The management consulting services industry, which has a North American Industry Classification System (NAICS) code of 54161, appears to be the industry consultancies or professional services belong to, so we checked if the bureau tracks the operating expenses of this particular industry. After scouring the website, using the bureau's data explorer, and examining the data produced by the Service Annual Survey, however, we came to the conclusion that the bureau does not publish any data on the expenses of small consultancies. The only relevant details available are the purchased advertising and promotional services and the revenue of the broader management, scientific, and technical consulting services industry in 2017. Using these figures, we were able to perform the following calculations and find that the broader management, scientific, and technical consulting services industry spent 1.66% of revenue on purchased advertising and promotional services in 2017.

Revenue: $216,947 million + $12,732 million + $31,323 million = $261,002 million
Purchased advertising and promotional services: $4,325 million
Purchased advertising and promotional services as a percentage of revenue: ($4,325 million/$261,002 million) x 100% = 1.66%

Our last strategy for finding the desired percentage focused on finding the sales and marketing budgets of individual small consultancies. Clutch and Vault readily list the top small business consulting firms and the best boutique consulting firms, respectively, so we referred to their lists for examples of small consultancies. We could not find the sales and marketing budgets or expenses of these individual small consultancies, however, as they are privately held and are not obligated to share details about their revenues and operating expenses. What is available are the financials of publicly traded professional services firms such as Accenture, Gartner, Huron Consulting, Navigant Consulting, Booz Allen Hamilton, FTI Consulting, Marsh & McLennan, and Genpact. As can be seen in the computations below, Accenture spent 10.29% of its revenue on sales and marketing in its fiscal year that ended on August 31, 2019, while FTI Consulting spent 0.76% of its revenue on advertising in its fiscal year that ended on December 31, 2018. Gartner, Huron Consulting, Navigant Consulting, Booz Allen Hamilton, and Marsh & McLennan do not provide breakdowns of their selling, general, and administrative expenses.

Accenture (2019)
Revenue: $43,215,013,000
Sales and marketing expense: $4,447,456,000
Sales and marketing expense as a percentage of revenue: ($4,447,456,000/$43,215,013,000) x 100% = 10.29%

FTI Consulting (2018)
Revenue: $2,028 million
Advertising expense: $15.5 million
Advertising expense as a percentage of revenue: ($15.5 million/$2,028 million) x 100% = 0.76%

All in all, the percentage of revenue that small consultancies spend on sales and marketing could not be accurately determined given the lack of data, so in its place, we provided the typical marketing budget of service consulting firms and the rule of thumb small businesses use in sizing their marketing budget.
Part
03
of four
Part
03

Marketing & Sales Expenditures

An in depth search of company websites, press releases, marketing consulting experts, and business consolidation sites found that information on how consultancies with $10 million or less in revenue break out their sales and marketing efforts does not appear to be publicly available. We were, however, able to find helpful information on the marketing activities that consultants find bring in the most money as well as data on how much firms are spending overall on marketing activities. These findings have been provided below, along with details on our research strategy.

Helpful Findings

  • A survey sent to over 34,000 consultants provided some detailed insights into the sales and marketing practices of these consultants. Fifty-seven percent of the survey participants are from North America, 70% (read from graph) are individual consultants with no employees, and almost all the survey participants would be considered small consultants, with only about 1% (read from graph) making more than $3 million per year.
  • Thirty-seven percent of consultants reported that referrals are the number one way of getting new business, and more than half reported getting 60% or more of their new business from referrals.
  • The survey respondents overall reported not spending much on marketing, with 40% spending less than $1,000 per year, 38% spending between $1,000 and $5,000, and only 20% spending more than $5,000.
  • By estimating percentages from a graph provided on marketing activities, it appears the top five marketing activities that consultants spend the most time on are networking and events; referrals, LinkedIn outreach; making phone calls; and email marketing. This data was pulled from the graph titled, "What type of marketing do you spend the most TIME on?" Of these activities, consultants reported that referrals and networking had by far made the most money for them.
  • Data published in April 2018 (but collected as of August 2017) found that small businesses spend about 1% of revenue on marketing, and that the amount had been relatively steady for several years. Although there was not a category specifically for consultancies, it still provides a broad picture of what small businesses overall are doing in the marketing space. The report does mention that the marketing budget for a B2B consulting firm may "be small and focused on social media advertising or sponsored content. Your advertising might be limited to boosting your content and lead collection activities."
  • Magnetude Consulting, a firm that itself is estimated to have annual revenue of about $6 million, states that companies should think of their marketing budget in three broad categories: people, technology, and advertising. Magnetude breaks down the spending in each of these categories to be about 50-75% on people, 15-25% on tech, and 10-25% on advertising.
  • Also, in Magnetude's experience with their clients, firms with 10-50 employees typically spend 4-8% of revenue on marketing. They also reported that professional services firms spend 9.4% of revenue, on average, on marketing.
  • Consulting firms can attract new clients by becoming thought leaders in their areas of expertise. This happens through consistent content development, network building, and article pitching. These are all tasks done by individuals and would therefore fall into the people category.
  • For professional services companies, advertising expenses may be mostly made up of digital advertising and event sponsorships.
  • According to DIY Marketers, some key ways to market a business include hiring a branding expert; updating logos and letterhead; updating the website and optimizing SEO; and attending trade shows and conferences.

Category Spending Estimates

  • To calculate some spending estimates for a small consultancy firm we made some assumptions based on our research. The following estimates are for firm with $6 million in revenue (chosen randomly based on looking at firms with $10 million or less in revenue), that spends 6% (the midpoint of Magnetude's range for firms with 10-50 employees) of revenue of marketing.
  • This firm would have a marketing budget of $360,000 (6 million*.06).
  • The firm would spend $252,000 (360,000*0.7) on the people category of marketing. The range for spending on people was 50-75% and we assumed the higher end. 70%, as consultancies tend to need more people marketing, as they focus on thought leadership.
  • Our example firm would spend $72,000 ($360,000*0.2) on the technology category of marketing. The range for spending on technology was 15-25% so we assumed the firm would land in the middle, at 20%.
  • The firm would spend $36,000 ($360,000*0.1) on the advertising category of marketing. The range for spending on advertising was 10-25%, and we chose the low end, at 10%, as that was all that was left to bring total spending to 100%.

Research Strategy

We began our search looking for aggregated data on the typical breakdown of marketing expenses for small consultancies. This led us to survey data published by Sageworks and Consulting Success that provided some findings related to the request, but nothing specific on the cost breakdown for marketing for small consultancies.

Next, we accessed Vault's list of top boutique consulting firms to see if there was any information available on individual firms' marketing expenses. To confirm that we were only looking at companies with less than $10 million in revenue, we accessed each company's website, as well as business consolidator sites like Crunchbase. Using this strategy, we identified Putnam Associates ($8 million, estimated), Health Advances ($9.5 million, estimated), The Bridgespan Group ($7.4 million, estimated), The Cicero Group ($10 million), The Cambridge Group ($4.6 million, estimated), and Keystone Strategy ($8.2 million, estimated), as consultancies with $10 million or less in revenue. All of these firms are private, and therefore are not required to publish financial data. However, we examined company websites and press releases for information, as well as looking for case studies on the marketing strategies for any of the identified firms. While this led to an article where an executive at Cicero Group discussed diversity in public relations, and a case study of how The Cambridge Group worked with Bastion Elevate to improve their marketing, there were no details found on marketing expenses or how they are broken down.

Finally, we attempted to triangulate some estimates based on total marketing budgets for small consultancies, as well as publicly available information on the percentage spent on various marketing activities. The only data that was found for this strategy was the marketing ranges provided by Magnetude Consulting. Since these ranges were not related to specific marketing activities, but were instead related to marketing categories, this strategy was not successful.
Part
04
of four
Part
04

Marketing & Sales Organizational Structure

Our research suggests that the best practice around sales and marketing organizational structures for small consulting or professional companies is relative to the business, concept, culture, strategic priorities, marketing tactics, marketing expectations, and budget of each company. Thus, it is impossible to determine the best practice without a prior comprehensive understanding of the business itself. However, the information regarding the suggested organizational structures and roles required in the sales and marketing team in the company is comprised below.

Organizational Structures

TRADITIONAL MARKETING STRUCTURES
  • Small professional services companies tend to choose the traditional marketing structure for its cost-effective characteristics. It involves marketing generalist/coordinator, designer, event coordinator, sales support, writer, and email coordinator.
  • In a larger firm, the bigger traditional marketing structure may be chosen. It involves numerous teams consisting of leadership, product marketing, industry marketing, geography marketing, business intelligence, marketing services, brand, events, sales support, marketing communication, and digital.
MODERN MARKETING ORGANIZATION STRUCTURES
  • Experts also encourage consulting or services business owners not to be limited to the traditional organization structures due to the fast growth of marketing and technology.
  • Integrated marketing structure involves individuals or teams that handle various responsibilities, including sales leadership, marketing leadership, business intelligence, sales support, marketing operations, sales segment (industry, geography, and business), market segment (industry, geography, and business), and digital platform.
  • Bifurcate-centralized marketing structure involves individuals or teams that handle distinct roles, including Customer Relationship Marketing (CRM), digital, sales leadership, sales segment (industry, geography, and business), market segment (industry, geography, and business), business intelligence, marketing leadership, sales support, and marketing operations.
  • Bifurcate-decentralized marketing structure involves individuals or teams that handle numerous functions, including Customer Relationship Marketing (CRM), digital, sales leadership, sales segment (industry, geography, and business), market segment (industry, geography, and business), business intelligence, marketing leadership, sales support, and marketing operations.
MARKETING ORGANIZATION STRUCTURES STRATEGIES
  • There are a couple of strategies before determining a marketing organizational structure in a company, such as product-based structure, geographical-focused structure, channel-based structure, functional structure, segment-based structure, and customer journey-based structure.
  • The product-based structure involves individuals or teams that are dedicated to specific product lines. A product manager may also be responsible for various duties, including marketing strategy, marketing operations, and customers' insights and analytics, as well as media planning.
  • The geographical-focused structure is needed in a company which provides its services in multiple markets to understand the customer preferences related to each territory.
  • The channel-based structure focuses on the medium used to market the company's products, such as direct mail and e-commerce.
  • Functional structure has different teams or departments that are responsible for various areas, such as advertising, sales or market research.
  • Segment-based structure emphasizes on the groups of customers, related by industry, application or usage.
  • Customer journey-based structure is the variant of segment-based structure which also focuses on the product and geography to reflect the customer journey.

Roles Required in the Marketing Organizational Structures

THE STRATEGIST
THE FUTURIST
THE ENFORCER
THE IDEALIST
THE QUANT
  • The person who handles this position must have a strong mathematical ability.
  • The Quant must possess a deep understanding of "the inter-relatedness of the roles and other parts of the firm". He/she should ensure the quantitative data is useful for learning and/or competitive purposes.
THE CREATIVE

Research Strategy

To determine the best practices around sales and marketing organizational structures for small consulting or professional services companies, our research team began to seek any related information through marketing consultant blogs and articles from reputable websites, such as Hinge Marketing and Prudent Pedal. We specifically reviewed sources that were focused on small consulting or professional services companies to ensure our findings were accurate. After extensive research on various articles, studies, and expert blogs, we found that there wasn't any single best practice around sales and marketing organizational structures for small consulting or professional services companies. However, all of our sources had firmly stated that the best reporting structure depended on numerous aspects of the company itself.

Then we attempted to look for any information related to small consulting or professional services companies that applied these practices through news platforms and websites. We also utilized advanced search engines, including News Lookup, Google News, and Millie Northern Lights. However, the only information we could collect was the representative of the sales and marketing organizational structure without the mention of the organizational structure design itself.

As for our next strategy, we looked for the requested information through scientific literature platforms, including NCBI, Science Direct, and Science Open. But, we found that our strategy remained unsuccessful. Then, we tried to visit several websites of small consulting firms and professional services companies to find the sales and marketing organizational structure strategy that these selected companies used. The firms that we chose included Anchor Advisors, Ltd., ThreeSixtyEight, The Jill Raff Group, L+R, and Brand New Matter. Although these websites provided information about the authorities and their positions, there wasn't any clear information related to the sales and marketing organizational structures of the companies. Additionally, the profiles shown on the websites were the CEO, business advisors, consultants, and other irrelevant roles, instead of individuals who are responsible for sales and marketing. It is also unclear if these individuals had multiple roles. After extensive research and using three different strategies, we concluded that the information related to sales or marketing organizational structures for small consulting or professional services companies wasn't publicly available.
Sources
Sources

From Part 01
From Part 02
From Part 03
Quotes
  • " If you run a niche B2B consulting business which typically has a complex and long sales cycle, then pay-per-click ads may not work – for a lot of reasons. Your potential clients are probably not looking for a solution in Google or Bing. And they have to get comfortable with you, rather than buy immediately based on a click. In that case, your money could be better spent on other forms of marketing such as content marketing using lead collection forms."