Incumbent advantage: Why clients keep coming back for more

Lots of consulting firms get very excited by the proportion of their work that’s repeat business. Obviously, they say, it’s because we’ve done such a good piece of work that they keep asking us to come back and do more. And at a common-sense level that’s obviously true: no one would buy twice from a duff supplier. But firms shouldn’t lull themselves into a false sense of security.

Almost all firms–certainly the successful ones–have very high levels of repeat business: 65% is common; 80% by no means unheard of. And, of course, it’s a bit of a double-edged sword: win too much business from the same, small number of clients and you easily create a dependency that leaves you exposed to future change. But the truly misleading thing about numbers such as these is that they tell you less about how good you are and more about how clients see the world. When clients ask you to do a follow-up piece it’s because they’re more likely to be positive about consulting work they’ve experienced than work they’ve read about on paper.

This is something that runs right through our research: In all but a very small number of outlier firms, clients are more positive about the work done by firms they use a lot than by those they’ve used in the past or know by reputation only. Globally, around 70% of clients who’ve worked closely with a particular firm would rate the quality of its work as “high” or “very high”, but only 58% of indirect clients who know the firm less well would. The reason is probably twofold. Most marketing by consulting firms leaves a lot to be desired and is particularly weak when it comes to explaining what’s special about a given firm’s approach. It doesn’t, in effect, do justice to the quality of work a firm actually does. But you could pump out the best marketing collateral in the world and still lose work to an incumbent provider because clients need to experience a firm’s work before they recognise its quality. Nothing you can do can communicate what you do as well as doing it.

So, all the firms that have high levels of repeat business aren’t better than their competitors, it’s just that clients have seen in practice what they can do. Actions really do speak louder than words.

To find out more about the views direct and indirect clients hold, see our report programme here.