The value gap

Here’s a little chart with a big message.

Regular readers of research will know that, in our large-scale surveys of clients, we often divide respondents into two groups: ‘indirect clients’ (people who know a firm by reputation, prospects in effect), and ‘direct clients’ (those who have worked closely with a given firm, or who have been personally responsible for hiring it, in the recent past).  Some of the biggest differences we see are not by geography, sector or the functional role of respondents, but as a result of this relationship.

Typically, direct clients are more positive about the quality of work done by consulting firms than indirect clients.  Prospects, it appears, often assume quality will be average, but, the more they have close contact with a firm, the more they’re likely to think positively about this.  Consulting, it seems, is better in practice than it is in anticipation – and for most people, clients and consultants alike, that’s not a surprise.

What’s much more of a surprise is that the reverse happens if we switch our attention to value.  While 55% of indirect clients think that consulting firms will add value, only 44% of actual clients do.

What’s going on?

Part of the explanation may be that indirect clients have unrealistic views about what consultants can deliver.  Consultants are often brought in when other avenues have been exhausted, so that scenario isn’t implausible.  But we also need to recognise that a failure to add value doesn’t translate into complete lack of value (in fact only a small percentage of clients think that consultants take more in fees than they add in value), but indicates the amount of consulting work that’s a transaction.  The client pays a fee for, and gets, a service: nothing more nor less.  That’s not bad, but for an industry whose underlying proposition is about improving performance, it’s not exactly a ringing endorsement either.

Should consulting firms be worried by this?  Plenty will probably shrug their shoulders and send out the invoices. But for those that aspire to something more, the opportunity is huge: demonstrating you add value could be a real point of differentiation.