There are two words that best describe the professional services sector from a managers perspective; exciting and frustrating. On the one hand, the sector is growing exponentially. It is expected to grow at a compound annual growth rate of 9.1% by 2022, when the market will be worth $8.0824 trillion.
Such consistent growth for the better part of the decade shows that professional service firms have an excellent opportunity to scale in the coming years. Sounds exciting, right? However, the industry also comes with a unique set of challenges.
Some of the primary challenges include a shortage of labor, maximizing billable hours, planning for outgoing demand, and waiting for client payments. Despite such challenges, you are still expected to deliver exceptional services. Otherwise, you stand to lose your clients to increased competition.
Compared to companies that deal with products, there is a greater need for service firms to enhance the customer experience continually. So how can a company achieve a competitive advantage? In this article, you will find five key competitive advantages in the service industry that will help your firm excel in 2021.
1. System to Detect Common Project Bottleneck
Bottlenecks are congestions or factors within your service delivery process that result in delays. Addressing such bottlenecks is essential as they have a significant impact on your bottom line. First, they reduce the number of clients you can serve while affecting customer satisfaction, which can be detrimental.
Due to the unique nature of the service sector, bottlenecks are quite common. They include approval bottlenecks for deliverables, change requests, hours, and resources. There are also financial bottlenecks that cause project delays due to the late release of funds.
Bottlenecks are not just mere delays. They have a significant impact on projects and overall company success. Some of the negative effects include:
- Loss of man-hours
- Reduced quality and performance due to disruption
- Increased probability of projects exceeding the budget
- Decreased client satisfaction
This is why gaining and maintaining a competitive advantage like having a system that helps identify bottlenecks is crucial. Some of the steps to take to help you achieve this include:
- Creating a process for Identifying potential bottlenecks
- Setting up measures to identify potential bottlenecks
- Defining the change management process
- Updating your resource planning approach
At the bare minimum, clients expect excellent and timely delivery of services. Though delays arent completely avoidable, you can mitigate their effects with a bottleneck detection system. When such delays arise, communicate with your client and let them know the measures you will take. These are some of the minor things that make or break relationships with clients.
2. A Clear Understanding of the Project’s Status
Depending on the scope of the project, different tools and the collaboration of multiple teams may be necessary for developing a sustainable competitive advantage in the service industry. As the number of tools and people involved in a project increases, so does the risk of poor visibility. When you do not have a clear and accurate picture of the progress of a project, the following risks are inevitable:
- Bad decision making
- Wasted resources
- Miscommunication with clients
All these can lead to project failure or, at the very least, ruin your relationship with customers. Considering that service companies greatly rely on repeat business and referrals, you must ensure that you can track project progress at any given time. In this regard, a project scorecard is an invaluable competitive advantage in the service industry. It makes it easier to track progress, allowing you to identify and rectify any issues swiftly.
To set up an effective scorecard, you should:
- Determine the measures to track
- Set targets for each measure
- Fill in the scorecard
- Monitor the results to identify data trends
- Share the results with other stakeholders
3. The Ability to Update Clients With the Right Data Quickly
One of the tenets of running a project successfully is keeping your client in the loop at all times. Some of the information you need to share with your client includes upcoming payments and project plan baselines, among others.
Ordinarily, such data is shared via email, which is not an ideal method for referring back to previous communications. A more suitable alternative is having a central information hub or a platform that makes it easy to retrieve communications later if need be. Such a competitive advantage will improve transparency, accountability, and customer satisfaction. As a result, clients will be more likely to offer you future work and refer you to other companies.
4. Improved Cash Flow
If theres one thing certain in business, regardless of industry, its the risk of failure. Surprisingly enough, the biggest threat to your professional service firm is not a lack of market demand or failure to generate sales. Data from a US bank study suggests that 82% of businesses fail due to cash flow challenges. This means that even after landing clients and generating sales, your business can still fail.
This is because, without proper cash flow management, your business will not have funds when needed to settle expenses and capitalize on opportunities. The effects of poor cash flow include:
- Strained relationships with vendors
- Missed opportunities due to insufficient funds
- Difficulty covering overhead costs
When it comes to projects, preventing cash flow issues is about synchronizing the delivery team and finance teams efforts. This will ensure that the project is billed on time, preventing any financial bottlenecks.
Arguably the biggest disruptor in the modern-day business ecosystem is technology. Organizations that are quick to adopt new technologies gain a significant competitive advantage in the service industry as efficiency and productivity increase. Some of the tools that can help your organization include financial, resource, and project management software.
More importantly, its not just about having many tools at your disposal. The tools you have should have the capacity to connect to each other and the systems you have in place. This will make processes more efficient and ultimately affect your bottom line.
Set the Pace in Your Industry
The professional services sector is very lucrative but highly competitive and comes with unique challenges. This is why its essential to capitalize on all key competitive advantages available. Investing in the right tools is arguably the best way to streamline processes and improve efficiency, allowing you to stay one step ahead of your competition.
Birdview offers professional services automation tools that allow you to gain full control of your projects. All from one platform, youll be able to detect bottlenecks, track project progress, give clients quick access to data, and improve cash flow. Request a free demo today to find out how Birdview can help you scale your professional services firm.