How do US clients view consultants?

By Fiona Czerniawska

Let’s have some fun.  Let’s take two firms – I’m going to call them Firm A and Firm B, but regular readers of our blog can amuse themselves by trying to work out who’s who.  They’re not selected at random, though: these firms have something important to tell us a lot about the US consulting market as a whole.

Firm A is a Big Four firm which says that it’s doing an increasing volume of work in the strategy space; Firm B is a strategy firm which, while ostensibly holding true to its heritage, has a growing footprint in more operational consulting, the Big Four heartland.  As part of our new report on client perceptions in the US consulting market, we asked senior executives to tell us about the quality of services they typically receive from a given firm, the perception they’ve formed on that firm’s characteristics (Is it genuinely client focused? Is it willing to challenge existing thing?), the value it adds and the extent to which they’d be willing to pay more versus their preference to pay less for its services.  There’s only a hair breadth of difference between our two firms if you look at quality of service.  Firm B has the edge in strategy; Firm A is ahead elsewhere, but only just.  Firm A is seen to be better when it comes to influencing stakeholders, Firm B on cultural fit (again, no surprise there).

Ask about value added, though, and you get a different picture.  Of course, this is a very thorny subject: how on earth do you value consulting?  We asked people to talk about value in relation to the amount they’d paid in fees.  Did they, on balance and on reflection, think that the firm had added more or less value than its fees?  If they thought value was higher than fees, by how much was that?  62% of Firm A’s current clients, and 58% of Firm B’s, said they thought the value the firm added was in line with its fees.  However, only 15% of Firm A’s clients thought the value exceeded fees, while 24% actually said it was less – the firm had cost them more than it added in value.  26% of Firm B’s clients thought value had exceeded cost and only 15% said the converse.  Even taking into account the difference in fee rates between the two firms, Firm B clearly comes out on top.

But there’s an even bigger, more important difference here.  The figures I’ve just quoted are for these firm’s current ("direct") clients – the people whom Firms A and B will also be surveying for themselves.  But our survey also asked "indirect clients" - people who, while they’re familiar with the firms (perhaps because they’ve used them in the past or seen them at work in their organisation), haven’t bought services from them in the last two years.  In other words, we surveyed prospective clients, as well as actual ones.  By doing this we’ve also been able to build up a sense, not only of what happens when a prospective client becomes an actual client (Are they disappointed or delighted?), but also of why people have the perceptions they have about any given firm.

Among prospects ("indirect clients"), Firm A does well: none of them think that the value will be less than the fees and almost half think that it will be worth more (8% think the value could be ten times or more the fees), while prospective clients of Firm B have lower (more realistic?) expectations.  As a result, the drop in perceived value is less for Firm B (down 13%) than it is for Firm A (down a whopping 34%, almost three times as much as for Firm B).  Prospects of Firm A may think more highly of the firm than those of Firm B do, but they’re much more likely to be disappointed in practice.

Firms A and B aren’t alone.  Most US consulting firms we’ve analysed score well in terms of quality of service and characteristics, but do less well, especially among their actual clients, when it comes to value.  Solve this problem, and you’ll really change perceptions.