Declining demand for consulting services, increasing market challenges - there is ignificant press coverage of the tougher conditions consulting firms are facing:
Strategy consulting firms ("Like McKinsey, Boston Consulting is experiencing the crisis", "Bain's international growth only in single digits"),
Big4 ("Deloitte launches biggest reorganisation in a decade to cut costs"),
IT consulting companies ("Accenture cuts revenue forecast in signal of slower consulting market").
The (large) consulting firms are in the process of realigning, modernizing and simplifying their strategies and organizations. Flexibility and continuous improvement are the keys to success in times of declining demand. Find out here how to make your services more attractive, find new ways to attract clients and effectively differentiate yourself in the eyes of clients.
1. The growing challenge for consultants
After almost unlimited post-pandemic growth in consulting, the consulting business has faced economic uncertainty since the end of 2022 and a significant decline of annual consulting market growth in 2023 due to fluctuations in the global economy, geopolitical tensions and cost inflation (to name but a few).
The loss of assignments due to reduced client budgets, the postponement of projects and the indecisiveness of clients when awarding mandates lead to uncertain predictability of fee income. All of this indicates that clients' budgets, needs and expectations have changed, which in turn requires consulting firms to be more agile, innovative and client-centric than ever before.
2. Necessary adaptation to the market
There are various ways in which consulting companies can make their services more attractive and relevant to potential clients. A continuous review of your own offerings and, if necessary, a realignment is a prerequisite. It is important to recognize trends early on and offer innovative solutions in order to stand out from the competition. Our studies show that over 90% of clients want new collaboration models with consulting firms: The ability to adapt and evolve is therefore an essential component of consultancy success and should not be neglected.
3. Finding new ways to win customers
Two opposing trends can be observed: In more difficult times, clients generally turn to established consulting firms. But as Source Global Research shows, there has been an increase in the number of clients (88%) who are increasingly looking to work with new firms. One explanation for this is that in areas that are considered drivers of consulting demand (such as technology and sustainability consulting), client demand for specialized niche expertise is increasing as the maturity level of clients in these areas continues to rise.
This trend towards specialization favours consulting firms that prioritize the development of their value proposition and differentiate themselves through crystal-clear and precise positioning. By exploring new business areas and developing a limited number of focused and innovative services, consultants can remain successful in the long term and prevail in an increasingly challenging market.
4. Self-reflection and optimization: Intelligent service design & focused positioning as a strategy for success
What can consulting firms do in 2024 to secure their position in the market?
Innovation plays a vital role in the development of a persuasive value proposition. New ideas, services and technologies make it possible to create added value and increase customer benefits.
Here are a few tips on how consulting companies manage to persuade clients with customized services and focused positioning:
Increase service & delivery specialization (standardization, reduce variability of projects)
Create recognizable and scalable consulting products (simple and easy-to-understand formats with clearly predictable project results, increase recognition & visibility)
Develop services and collaboration models that achieve stronger customer loyalty (subscription models, technology-supported (SaaS) services, vertical service integration)
Define entry formats to lower the decision barriers for customers (division of end-to-end services into smaller, manageable projects or modules)
Provide results-oriented approaches and ways of working that focus on long-term success and provide precise methods for developing solutions
Strengthen knowledge sharing ("education-driven" marketing & thought leadership content) (presenting specific expertise and demonstrating an outstanding understanding of clients' problems and the consulting firm's ability to solve these problems efficiently and effectively).
Consulting companies that seize the opportunity to drive their business forward through intelligent service design, focused positioning and value-oriented business models will remain successful this year and beyond.