Specialism and customer loyalty in the German consulting market

There’s much to like about the German consulting market: high average revenues, greater availability of talent relative to other markets, and, at this time of year, the promise of glühwein and Christmas markets. OK, that last point isn’t one of the criteria in our market attractiveness index, but the DACH region (of which Germany is by far the largest part) has topped our ranking for two years running without even taking mulled wine into account.

But while it’s an attractive market, it doesn’t mean everything is easy here. Like consultants in other markets, they’re grappling with fierce competition and swirling uncertainty in Europe and beyond. On top of that, our client perception data points to another important trend in the market: that German clients are particularly impervious to notions of loyalty.

We survey thousands of senior end users of consulting every year, asking each to tell us about three of the world’s leading consulting firms. What’s interesting about Germany is that clients there are more likely than they are anywhere else to tell us about three similar firms. If they’re telling us about Deloitte, they’re also likely to be telling us what they think of PwC and KPMG. Similarly, if they’re talking about McKinsey, they’re most likely then to also talk about The Boston Consulting Group and Roland Berger. In other words, if they’re thinking about your firm, they’re also likely to be thinking about your competitors, too.

That’s not the same the world over. Let’s take McKinsey as an example. When we look at all the responses we had about McKinsey globally, it tells us that McKinsey is having some success in pushing its direct competition out of its clients minds (click here to see for yourself). Clients who are telling us about McKinsey are most likely to also be thinking about IBM, Deloitte, and KPMG—firms with different but usually complementary services. Far fewer of the people who selected McKinsey also selected BCG; fewer still selected Bain.

So, what’s different about Germany? We think much of it is to do with buying habits: Clients in Germany tend to have a laser focus on specialism. In practise it means getting exactly the right skills and experience for each issue—custom-building to their needs with a suite of firms. The idea that you’d hire a firm just because you know them and have worked with them elsewhere doesn’t hold much water.

That makes it all the more important for German clients to have a firm grasp on which firms do what in their market. But our data suggests they might not. Consulting firms in Germany tend to have very large outshine scores (our term for the difference between their capability as perceived by prospects and direct clients—or the extent to which they outshine their reputation once engaged to work on a project) which points to the idea that prospects have a bit of a gap where their knowledge of firms’ capabilities is concerned. It’s a gap we think needs closing, and that looks like an opportunity for consulting firms.

To download an extract of our report on Client Perceptions in Germany, click here.