The field of management consulting is both pervasive yet obscure. The term “consultant” is thrown around at random by anyone who has dubbed themselves an expert on a topic, and “management” is equally as ambiguous. But management consulting is truly a field for experts – their job is to advise companies on advanced business strategies, and the stakes are high.
Almost every industry in the U.S. uses some form of management consulting to propel businesses forward. The U.S. is unquestionably the global leader in this field, not only in size and maturity, but also in innovation and depth of offerings. According to Consultancy.uk, the U.S. controls 93 percent of the total North American consultancy market and is between five and 10 times larger than the U.K. and German markets combined. As of May 2015, there were over 600,000 management consultants employed in the United States (Statista), generating around $229 billion of revenue annually (IBIS World October 2017). In 2016, this market grew by over 7%, reaching a value of nearly $59 billion (Source Global Research). This exponential growth trend is expected to continue, with the U.S. accounting for nearly half (44 percent) of the global market (Consultancy.uk).
Collectively, these statistics suggest that management consulting is a powerful industry, directly influencing the success of many companies. In this article, we’ll define management consulting and review some current tools and client acquisition techniques of consultants.
Management Consulting Defined
Management consulting firms provide expertise on the strategy, structure, administration, and operations of a business. If these firms are operating effectively, they enable companies to refine their problem solving, improve overall performance, lower costs, and drive innovation. Typical management consulting services provide strategic direction on:
- Corporate strategy
- Organizational design and general management
- Operational processes and logistics
- HR (employee benefits, compensation, etc.)
Management consulting firms work within both the private and public sectors. Consultants can be hired to advise on strategies for an entire company or just one department or division, but the work is always conducted at a very high level in the organization. Consultants usually collaborate directly with the CEO and other C-suite executives, as well as the board of directors. It’s critical (and expected) that the people who have the power to make decisions and implement change are involved in the conversations with the management consultants.
(What don’t management consulting firms provide? This industry does not offer day-to-day administrative services, in-house training, market research, investment advice, PR, engineering design, etc.)
Think of management consulting as tailor-made thinking to drive top-level company goals. What works for one company will not necessarily work for the other, even in the same industry.
Top Management Consulting Tools
Management consultants love data. They are innovative, yet rely on facts and figures versus visionary ideas. Consultants are Excel wizards and tell complex stories with charts, graphs, and tables. The majority of the work is client facing and deadline driven, so having the best tools on hand to aid the work is essential. Here are seven of the top management consulting tools:
Customer Relationship Management (CRM) Software
The traditional one-two punch of the rolodex and spreadsheet combination has been superseded and surpassed by CRM software. In its simplest form, CRM software tracks and manages all customer, lead, and prospect data and then associates it to revenue. Using CRM software will improve workflow and task management in big ways for anyone operating or building a consulting business. For example, notes from phone calls will automatically populate within the corresponding account records, so data is easily accessible and trackable. Keeping individual clients and projects organized is critical for customer service, as well as business goals. With so many moving parts in management consulting, projects and contacts can quickly get lost in interspace. With CRM, consultants can keep tabs on what needs to get done, so all those moving parts stay on track.
Specifically related to leads, CRM software automatically moves leads through the sales funnel. Leads can be categorized by channel (e.g. website, email, webinar, etc.) and then organized in such a manner that consultants can prioritize who to reach out to and how.
Benchmarking involves the analysis of a company’s internal processes, products, or services, and then comparing those findings to the equivalent versions of competitors or industry leaders. For management consultants, the goal is to identify superior examples of performance and practices (otherwise known as key performance indicators, or KPIs) and use those to “set the bar” for a company. During the entire process, KPIs are analyzed, evaluated, and tweaked to ensure the goals are reasonable and critical to gaining a strategic advantage in the industry.
The natural inference would be that consultants improve operations and strategies by imitation, but more often it’s through adaptation of best practices to suit the needs of a specific company. Benchmarking is an essential tool because it drastically shortens the learning curve for a company to generate and implement the best operations and strategies, improving performance quickly.
As Bain & Company defines it, “The balanced scorecard translates mission and vision statements into a comprehensive set of objectives and performance measures that can be quantified and appraised.” Management consultants typically create measures around finances, customers, employees, internal operations and processes, and innovation.
Developing a balanced scorecard can be challenging, as it usually requires navigating the preconceptions (and personalities) of CEOs and board members. All company heavyweights will have an opinion to contribute on what a company’s vision and strategy should be.
That being said, a balanced scorecard is one of the most important tools management consultants use to enact significant organizational change. Once the vision and strategy are defined, consultants link performance categories (e.g. operations or innovation) and clear objectives to that vision and strategy. The next step is to track results and update the strategy as needed.
A core competency is something a company does really, really well. It is often a differentiator in the market and always a competitive advantage. Management consultants identify core competencies and use them as the foundation for a company’s strategy. If a company lacks or needs to uncover these competencies, consultants develop organizational roadmaps that set goals for competence building.
Once established, core competencies determine where to allocate resources, whom to partner with, how to build customer loyalty, and more. By focusing on its key strengths, a company has a better chance of sustaining success, expanding, and innovating, while also distancing itself from competitors. Bain & Company says it well: “Understanding core competencies allows companies to invest in the strengths that differentiate them and set strategies that unify their entire organization.”
Relationship Capital Software
For established management consulting firms and those just building a consulting business alike, relationship capital software is an invaluable tool. This technology tracks industry developments, identifies top prospects, and activates professional and personal connections, making it a powerful way to grow and retain business.
For example, RelSci’s relationship capital platform offers a few key features that give management consultants a competitive advantage. For prospecting and business development, consultants perform research in RelSci’s proprietary database of 6+ million influential decision makers in 2+ million organizations. The detailed profiles on individuals and companies within the database are created using thousands of independently verifiable and credible public sources. This is a one-stop shop for consultants performing their due diligence or trying to find clients. The software also maps an individual and company’s entire network of connections, revealing who knows who and how. Management consultants use this “map” to find pathways to prospects or even partners for clients.
Additionally, RelSci’s relationship capital software helps management consultants stay on top of industry, prospect, and client developments. Using the “alerts” feature, consultants receive a customized report with news and updates on everything from employment changes and stock sales to charitable donations. These alerts include items not typically covered in the media and provide consultants with a concise, valuable snapshot of the happenings of clients and prospects they want to keep an eye on.
Overall, relationship capital tools have distinct benefits for management consulting firms, primarily being a powerful way to leverage and strengthen connections.
Employee Engagement Surveys
Employee engagement surveys measure whether the in-house team is happy. These surveys are usually anonymous and inquire about an employee’s level of motivation, job satisfaction, professional relationships, and more. Why would this be a tool management consultants care about or be responsible for? Because numerous studies have proven that companies with mentally and emotionally engaged employees are more successful – business performance is better, customers are happier, and culture is stronger. Not only is retaining top talent important from a standpoint of organizational excellence, but companies with high turnover incur significant costs for recruiting, hiring, and training.
Management consultants use employee engagement surveys to identify and build on the strengths and talents of a company’s workforce. Similar to identifying core competencies, the results of these surveys will develop into a competitive edge that can be expanded and maximized.
Supply Chain Management
Supply chain management (SCM) directly relates to a company’s operational strategy. SCM is the orchestration of everyone and everything responsible for delivering a product or service to a customer. This involves streamlining three primary flows: the physical flow (movement, storage, and delivery of goods and materials), information flow (daily and long-term communication of plans, orders, and status), and financial flow (credit terms, payment schedules, ownership agreements).
Management consultants rely on SCM technology to ensure the complex process is operating efficiently and cost effectively. It requires an incredible amount of organization to synchronize the flows between suppliers, manufacturers, distributors, and customers themselves. With SCM, a consultant’s goal is to establish strong processes and communication between all parties so the entire supply chain is operating smoothly as one unit. Ultimately, effective use of SCM tools will result in better customer service and minimized expenses.
Management Consulting Techniques to Acquire More Clients
The best tools in the world will only help so much if a consultant doesn’t have a solid strategy for acquiring new clients. Bypassing the obvious methods of phone calls and emails, the following are four effective techniques to use when building a consulting business:
Share Valuable Resources
A resource can be anything tangible – an article, video, infographic, report – as long as it has a direct tie to the management consulting industry and would interest the target audience. Sharing knowledge positions consultants who are reaching out to prospects as industry experts and helps establish credibility.
Consultants can develop these resources themselves, or simply link to existing ones. Remember that technology can save time – for example, the alerts tool within RelSci’s relationship capital software offers a treasure trove of interesting resources.
Be a Guest Speaker
Giving a speech or presentation isn’t finding consulting clients as much as showing them. When a consultant speaks in public, whether it’s on stage or in a boardroom, they have the advantage of undivided time and attention. It’s an ideal environment to showcase expertise and knowledge.
Leverage Your Network
The most effective client acquisition technique is finding a mutual connection. For consultants, uncovering first-degree and extended network connections will create invaluable opportunities to open doors and turn cold calls into warm introductions.
Host a Webinar
Live or recorded, webinars are a great way to educate and provide useful information to prospective clients. Many consultants use webinars as a way to answer FAQs and engage with prospects in an informal, low-pressure setting. Again, this technique will demonstrate expertise and also has the benefit of being interactive if the consultant chooses.
The management consulting field is a powerhouse, gaining more traction each year within the U.S. and internationally. The tools and techniques consultants use to be successful in their jobs will grow and evolve as well, making this industry one to watch as it will likely blaze trails for other industries.