Consulting Firms Retrench with Social Media: A 2013 Research Report

By Robert Buday (Partner, Bloom Group), Sally Caputo (President and Chief Operating Officer, Association of Management Consulting Firms) and ResearchNow

Key findings:

  • Consulting firms are retrenching with social media, spending less of their marketing budget on it (18%) this year than they did last year (22%).
  • Buyers of consulting services still don’t view social media as an important way to find a consulting firm, yet a third have not used a consulting firm after it was mentioned negatively in a public social media site.
  • The most effective consulting marketers use social media differently than the least effective marketers do. The marketing leaders are much more likely to train their consultants about how to use social media as a marketing tool. They are also more likely engage in online dialogue with prospects (not just promote content). What’s more, the leaders make much bigger investments to develop thought leadership content, which presumably gives them more and better material to promote via social media.

Study Overview

Once one of the most publicly guarded of professions, the consulting industry has opened up quite a bit in recent years, perhaps in part thanks to social media. In our fourth annual study, we found that the vast majority of consulting firms (87%) are using LinkedIn to market their services. About two-thirds (68%) promote themselves through Facebook. And a little more than half (54%) use Twitter.

Thus, consulting firms are no doubt much more “social” than they used to be on the Web. The days of presenting carefully coiffed websites and electronic publications that invited little online interchange are over. Most consulting firms now use LinkedIn, Facebook and Twitter, full well knowing that those public social media sites enable viewers to talk back to them. And about half the consulting firms we surveyed (49%) even let viewers comment on the articles they post on their own websites. 

But what is social media getting these consulting firms? By itself, apparently not much. Barely half (54%) of the consulting firms said they can tie their social media activities to leads and client projects. And social media channels are among the least effective at generating awareness and leads for consulting firms. In contrast, longstanding marketing tools – including public speaking and consultant-bylined articles -- are much more likely to make the phone ring or email box chime. That helps explain why consulting firms have slashed the percentage of the marketing budget they will devote to social media this year to 18% from 22% last year. 

These are just a few of the findings of our research, which we completed this spring. It was the fourth year in a row in which we explored at how consulting firms were using social media. This year, 84 consulting firms participated in the survey, which featured 30 questions. And it was the third year in which Research Now surveyed buyers and how they used social media to find consultants. Some 218 executives from companies in more than 25 industries participated. Half of those companies had revenue of more than $1 billion. 

This report explores the findings in both surveys and compares them to the results in our three previous studies.

 

Consultants Push the “Pause” Button on Social Media
In days before the World Wide Web, consulting companies relied on print and podiums to build business.  They created glossy journals for customers and prospects, ghostwrote books, sent their consultants to speak at conferences (sometimes paying for the privilege), hosted customer meetings, schmoozed the press and sponsored sporting events.  

But starting in the early years of the new millennium, online and social media began to grab an increasing chunk of the marketing budget. In 2005, consulting firms spent just 2% of their marketing budgets on social media; they devoted 70% of that budget to offline marketing (e.g., print publications, seminars, etc.) and 28% to what we refer to as traditional online marketing (emails, website publications and other one-directional online communications). (Note: Bloom Group and AMCF conducted our first survey together in 2010 and asked those respondents to estimate how they carved up their marketing budget in 2005.) (See Exhibit 1.)

By 2010, our respondents were spending an average of 48% of their budget on offline marketing, 37% on online marketing and 15% on social media  In 2012, social media’s share rose to 22%. But this year they project only 18% of their marketing budget will go to social media. 

Exhibit 1: In 2013, consulting firms will reduce the proportion of their marketing budget that they spend on social media.

 

Still, that pause in spending appears to be momentary. Asked to project budget allocations for 2014 and 2015, consulting firms predict that social media’s share will bounce back to the 2012 level (22%) next year and continue rising to 26% by 2015. They expect to be spending a lower percentage of their budget on offline marketing (39% in 2015 vs. 45% this year) and a slightly lower percentage on traditional online marketing (falling from 37% this year to 35% by 2015). 

 

How Social Media Stacks Upon Against the Traditional Consulting Marketing Channels

Offline and traditional online marketing still command 82% of the consulting marketing budget for good reason: Consulting firms continue to rate them as more effective at generating awareness and leads than social media marketing channels.

While online social media marketing has commanded plenty of attention, consultants’ three most highly-rated thought leadership marketing techniques harken back to the old days of consulting marketing: presentations at third-party conferences, seminars and bylined articles in external print publications (those owned by third parties) were rated as the most effective marketing channels (on our scale of 1-5). Posting on public social media sites, YouTube, comments on articles in external publication sites and LinkedIn groups were all rated in the fourth tier of marketing effectiveness.  (See Exhibit 2.)


Exhibit 2: The most effective consulting marketing channels are offline (marketing events and print articles)

To understand what consulting firms view as their most effective marketing channels, we have asked them annually since 2010 to rate about 30 marketing channels. (See Exhibit 3.) (In 2006, Bloom Group conducted its own survey of more than 100 consulting firms and asked the same question, although that survey listed 13 channels to be rated.) Since 2006, the data shows a remarkable pattern: Offline and traditional online marketing channels have been – and continue to be -- the most effective ones. 

 

Exhibit 3: 
Not dead yet: Consulting firms rate public speaking and publishing as more effective marketing channels than social media

However, that doesn’t mean that most consulting firms view social media marketing as worthless. Quite the contrary. They indicated that social media can be quite effective at driving potential buyers (and influencers as as the press, Wall Street analystics and others) to their websites, published content, seminars and other marketing channels. This showed up in their answers to one of our open-ended survey questions this year: What was the most effective social media marketing strategy or tactic used over the last 12 months? Here were some of their answers:

  • “Using LinkedIn to talk about items on the website.”
  • “LinkedIn - to share publications/information.”
  • “Sharing of whitepapers on sites like LinkedIn. [It] generated interest and immediate feedback, [and] positions the firm as an advanced thought leader in the field.”
  • “While attending industry events, we used a pre-defined strategy for social media posts throughout the event. Generated interest in the event and included pictures. Followers felt as if they were there with us was some of the feedback we received on this effort.”
  • “We have used our social media channels (Twitter, Facebook and LinkedIn) to promote our thought leadership articles. This was effective because it increased the reach and engagement of our thought leadership articles as we shifted to an online-only publication.”

In fact, an operations consulting firm (with revenue between $100 million and $500 million) said getting its consultants to create social media profiles about themselves and share content with their followers increased readership and event attendance. “This resulted in deeper relationships with good/strong contacts and improved relationships with weaker [ones].” Over 12 months, the respondent said the firm could attribute $3.5 million in revenue from this social media initiative.

In our view, this shows that using social media as a channel on its own has limited value; it can be much more powerful when it is used to drive buyers and influencers on the consulting purchase to a consulting firm’s published content, webinars, seminars and other places where that firm can show the depth of its expertise. Using a LinkedIn update, for example, to say you have a new white paper or seminar won’t get you much. But if it drives people to your white paper or seminar, that could get you much more.

 

Consultants’ Favorite Social Hangouts: LinkedIn, Facebook and Twitter

There are numerous social media sites for consulting firms to use. But only three are used by the majority of these firms: LinkedIn (by 87%), Facebook (68%) and Twitter (54%). No other social site comes close. (See Exhibit 4.)

Exhibit 4: LinkedIn, Facebook and Twitter are consultants’ favorite social sites

We also asked consultants to tell us which three of the social sites listed in the above exhibit generated the most interaction with online viewers – that is, the most number of views, comments, “likes,” sharing of messages, and so on. LinkedIn, again, finished on top, rated by 92% in their top three. But Twitter finished ahead of Facebook, with 62% ranking Twitter in the top three compared with 55% for Facebook. The fourth big social network – Google+ -- was rated by only 6% to be in their top three social platforms on this measure. (See Exhibit 5.)

 

Exhibit 5: LinkedIn, Twitter and Facebook generate the most viewer interaction for consultancies.

But much can change with social media. LinkedIn has only been around since 2002; Facebook emerged in 2003. Google’s social network (Google+) went live only two years ago, in June 2011. With that in mind, we wanted to know how consulting firms viewed the importance of the social networks that we asked them about three years from now. Do they believe LinkedIn will remain their most effective social marketing tool? That Google+ will continue to be of marginal value? 

Consulting firms’ answers suggest they don’t see things changing over the next three years (see Exhibit 6). By far, 87% said LinkedIn would remain in their top three of most effective social marketing platforms by then. A much lower percentage – less than 50% -- put Facebook and Twitter in their top three. And only 10% felt Google+ would be one of their three most effective social marketing tools.

Exhibit 6: LinkedIn, Facebook and Twitter are expected to remain consulting firms’ most effective social marketing tools over the next three years.

 

About Half of Consulting Firms Run LinkedIn Groups

LinkedIn Groups are highly popular in a number of industries far beyond the consulting business. In fact, there were more than 1.5 million LinkedIn Groups in March, according to this article on the IDG News Service. A number of consulting firms (both large and small) have created LinkedIn groups with numerous members including:

  • Bain & Company: Launched in February 2008, the private group today has about 7,900 members.
  • Boston Consulting Group: nearly 1,800 members, launched in October 2009.
  • McKinsey & Co.: nearly 30,000 members of a group focused on its McKinsey Quarterly journal content. The firm launched this in September 2008. 
  • Palladium Group: the education and consulting firm (known for the Balanced Scorecard approach to measurement) has had a group since October 2009. It has about 1,000 members.

About half of the consulting firms we surveyed (49%) have at least one LinkedIn group. For some, these groups have been instrumental to developing business. A market research and consulting firm with revenue of less than $10 million said its 20,000-member LinkedIn Group was its most effective social media tool. Yet on average (for the 35 consulting firms who said they run LinkedIn groups), LinkedIn Groups were rated to be less than moderately effective on five key measures (see Exhibit 7):

  • Getting clients interested in content (rated only 2.46 on a scale of 1-5)
  • Identifying topics on which to create content (or get feedback on topics already chosen) – 2.23
  • Driving clients to webinars and seminars (2.20)
  • Initiating discussions with prospects (2.09)
  • Testing content before it goes wide (2.03)

 

Exhibit 7: For the average consulting firm, LinkedIn Groups are not effective marketing tools.

More than half the consulting firms we polled (57%) said they’ll devote about the same amount of time this year to running their LinkedIn groups as they did in the past; 37% said they will spend more time, and 6% said they’ll spend less time. This suggests to us that most consulting firms are struggling to get value from their LinkedIn Groups.

 

How Buyers of Consulting Services Use Social Media to Find Expertise

For the third year in a row, ResearchNow surveyed buyers of consulting services as part of our research. From their research panel, they got 218 executives to take a separate survey in May on how they use social media to find and evaluate consulting firms. About those respondents:

  • All either make or participate in the decision to bring in a consulting firm. Some 41% made the decision; 58% provided input or information to the decision-makers.
  • They worked in companies across more than 25 industries, with banking (13%), health care services (12%), industrial manufacturing (11%) and retail (6%) as the sectors with the most respondents.
  • Half the respondents were in companies larger than $1 billion in revenue; 25% were in companies from $500 million to $1 billion in revenue; 26% were in companies of less than $500 million in revenue
  • The consulting firms they used most frequently were IT (by 56% of respondents), functional or industry specialists (by 55%), business advisory (45%), strategy (44%) and operations improvement (44%). (See Exhibit 8.)

Exhibit 8: Buyers use a range of consulting firms

Their answers to 17 questions revealed that social media may not be their most important tool today to finding a consulting firm. However, comments they find in social media about consulting firms do have impact – especially if they’re negative.

But the first thing we wanted to know was whether social media had become an important tool for finding consulting expertise, compared to the traditional ways they have looked for expertise. This is the third straight year that we have asked this question. We asked buyers to rate the importance of 15 ways of finding a consulting firm on a scale of 1 to 10 (1= not at all important, 10=extremely important), some of which were social media. The answer: Buyers don’t place great importance on social media for finding consultants. (See Exhibit 9.)

For the third straight year, personal references from colleagues – from inside or outside a firm – were rated as the most important. Contacting colleagues inside one’s firm was tops (at 7.07 on our scale), slightly ahead of contacting people outside the firm (7.06).

Buyers rated thought leadership channels as the next most important ways of finding consulting firms. At No. 3 was viewing consultants’ presentations in public conferences (those not hosted by that consulting firm), which received a 5.8 average rating of importance. Reading consultants’ quotes in articles in business publications and consulting firms’ online publications were tied for No. 4 (at 5.56). Behind that were online searches (5.37) and reading consultancies’ print publications (5.35). Those were followed by consulting firm seminars (5.06), consultancy-bylined articles in business media sites (e.g., Harvard Business Review’s online edition) (at 5.0), and listening to consulting webinars (4.96).

Buyers rated social media channels as the least important ways on our list of 15 techniques. For example, they gave websites that allow employees and former employees of consulting firms (or all kinds of firms, for that matter) to provide opinions of those firms an average importance rating of 4.82. (These websites include GlassDoor.com and Vault.com.) And they rated consulting firms’ pages in public social networks such as LinkedIn and Facebook even lower on average (at 4.42). Even posting questions on public social networks such as Facebook and LinkedIn finished low as an important tool for finding consulting firms (3.88). 

 

Exhibit 9: For buyers, personal contacts and thought leadership trump social media in finding the right consulting expertise.

To get a better understanding of exactly which social networks were more helpful than others in finding consulting firms, we then asked buyers and influencers to rate them on a scale 1-5 scale. (See Exhibit 10.) While their “helpfulness” ratings have increased over the last three years, none of the social networks received an average rating of at least three (which would have indicated it was “somewhat helpful”). 

LinkedIn was rated more helpful than any of the others we listed (at 2.99). Private online social networks (such as those run by trade or professional associations) were rated second (2.73). And Google+ came in third (at 2.49). None of the others were higher than 2 on average.

 


Exhibit 10: Buyers' favorite social site for finding consultants: LinkedIn 

While social networks might not be an important way for most companies today to find consulting firms, they aren’t entirely unimportant. In fact, buyers use social media as part of the vetting process for consulting firms they’re considering (Exhibit 11):

  • A third say they have decided against using a consulting firm after seeing it mentioned negatively in their online social networks;
  • 38% would rule out a consultant with a negative social media comment even before they issue an RFP.  
  • 43% say a social mention would at least moderately change their opinion of a firm that they had not used before
  • 53% say that LinkedIn groups provide the most comments, positive and negative, about consulting firms. 


Exhibit 11: What is said about your consulting firm on social media can help or hurt your chances of getting work.

So what kinds of social media comments have the greatest reputational impact – positive or negative – on a consulting firm? We asked respondents to indicate the degree to which social media comments on seven aspects of a consulting firm – its delivery capabilities, client management practices, sales tactics, published or presented intellectual capital/thought leadership, individual consultants, employment practices and advertising practices – would change their opinion about that firm. A higher percentage of respondents said social media comments about a consulting firm’s intellectual capital, client management practices and delivery capabilities would carry more weight. More than 60% said comments on those aspects of a consulting firm would change their opinion about that firm at least moderately. (See Exhibit 12.)

That suggests that consulting firms should aggressively use social media to promote their best articles, conference presentations, research reports and other intellectual capital. If the content is strong (and buyers feel the same way), their positive comments could have substantial impact on the opinions of other buyers of. (Conversely, we must mention, poor content could erode positive or neutral opinions about a consulting firm if that content is criticized on social media.)


Exhibit 12: Social media comments on your content can greatly shape buyer perceptions.

 

How Consulting Should Use Social Media: Comparing Marketing Leaders and Laggards 

Among our survey respondents, we identified 14 “leaders” whose thought leadership marketing activities (social media, offline and online) generate 30 or more leads per month, and 36 “laggards” whose marketing generate 10 or fewer leads per month. 

Here are the four biggest differences we found in the answers of these two groups of respondents:

  1. Leaders invite input on their online articles. Among the leaders in our survey, 57% allow comments; 71% let viewers recommend content; and half poll viewers on content.  But only 47% of the laggards allow comments; 33% let viewers recommend content; and only 17% poll viewers.
  2. Leaders enlist consultants onto the social media promotion team – and train them. Both leaders and laggards permit consultants to use social media to promote the firm (100% of leaders do vs. 94% of laggards). That’s essential since the total number of LinkedIn connections of a consulting firm’s consultants can easily be more than the number of contacts on its marketing database. But there are two key differences between leaders and laggards in getting consultants to use social media. First, 71% of leaders provide consultants with social media training; only 29% of laggards do so. Second, 92% of leaders have comprehensive and explicit guidelines for using social media vs. only 29% of laggards. Learning how to effectively use social networks such as LinkedIn, Twitter and Facebook takes time. The leaders appear to better understand the value of making their consultants more proficient with social media – and providing clear guidelines of what is acceptable.
  3. Leaders spend much more on thought leadership content.  Just investing in social media marketing is not enough, as our research shows.  The leaders spend more than seven times as much as laggards on creating thought leadership content: 1.1% of firm revenue vs. 0.15% of firm revenue for the laggards. In fact, leaders spend less of their marketing budget than laggards do on social media; for leaders, it’s 12% of marketing spending vs. 19% for laggards. What this says to us is that without strong thought leadership content, an extensive social media presence is likely to disappoint consulting marketers.
  4. Leaders are more likely to bring their online content to life with videos. Some 89% of leaders use online videos vs. only 51% of laggards. This isn’t surprising, in light of our data that shows in finding consulting firms, buyers see live presentations from consultants at conferences and seminars as more important than any method other than references from colleagues. This suggests that there’s something that resonates with buyers in seeing a consultant speak about his or her expertise – something that can’t be accomplished by the published word. While they may not be as powerful as in-person presentations, online videos appear to have significant potential in making a consultant persuasive and personable.

To see other differences between the consulting firm leaders and laggards in our survey, go to this webpage created by Bill Shander, CEO of the data visualization firm Beehive Media

Consulting firms should be incorporating the best features of face-to-face marketing into their social media campaigns. That means reshaping how they think about social media: as a tool to put consultants on a live, online podium. Consultants should should use social media channels to interact with prospects – not just to show them how smart they are. They must get their firms’ consultants onto the social media promotion team. Finally, they must produce lots of compelling content. Without it, viewers won’t be intrigued.

 

About the Authors

Robert Buday is a partner at Bloom Group who has led this study since 2010. He can be reached via email at bbuday@bloomgroup.com and followed on Twitter at @bbuday.

Sally Caputo is president of the Association of Management Consulting Firms. She can be reached at scaputo@amcf.org.

ResearchNow conducted the survey of buyers of consulting services.

 

Our Three Previous Studies on Thought Leadership and Social Media Marketing in the Consulting Industry

To read our previous years' studies, click on these links:

 

 

 

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