The Three Current Challenges Facing Professional Services Firms – and How to Avoid Them

Posted by Greg Roworth on Oct 8, 2019

I’ve recently come across three separate surveys relating to the challenges facing professional service firms across the globe which were conducted by Hinge Marketing, Deltek and Research Now, where each  identified three challenges as significant for firms in accountancy, engineering, architecture and management consultancy fields:

  • Increasing demands from clients
  • Increasing levels of competition
  • The need for new skills to serve clients.

Clients of professional service firms are demanding better quality work, faster delivery and greater transparency and accountability.  This leads to an anxiety in providers to please clients by trying to meet these demands and results in stretching resources, entering areas beyond their capabilities and creating relationships that are unsustainable.

Increasing levels of competition are coming from two areas.  Bigger players are becoming more aggressive and are making it harder for established smaller and mid-sized firms to retain clients or win work with new clients. Conversely, there is a high growth rate of aggressive start-ups using price as a competitive strategy to establish their position in the market. 

The disruption in markets caused by new technologies and increasing client demands increases pressure on many firms to add new skills to their portfolios.  With the perennial challenge of finding and keeping good talent, this added pressure increases the vulnerability of established firms and makes it difficult for them to grow and scale.

Each of these challenges has a significant impact on the ability of professional service firms to compete and survive, let alone grow and scale.

When you study these challenges thoroughly however, doesn’t it seem that these challenges are not the cause of difficulties for professional service firms, but actually the effect of not performing well at the strategic level?

These challenges all emanate from an underlying weakness in marketing.

With weak marketing, firms wanting to grow face a lack new opportunities which often leads to a need to take whatever work they can get from clients or take any new client they can get. 

For market leading and high growth firms it is different.

The key strategy for growing firms is to use effective authority positioning to drive demand.  They attract opportunities consistently and predictably and can determine which clients and which work is best for them to take.  Authority positioning means that firms are seen as expert advisors, or thought leaders, rather than mere service providers, which gives them greater influence in client relationships, to recommend what the client really needs, rather than accepting and doing what the client thinks they want.

Increased competition is a factor of the increasing commoditisation of markets.  With little to choose from between suppliers, clients typically buy the cheapest.  Firms are seen as commodities when they fail to differentiate themselves from competitors.  Leading firms address this challenge strategically by defining a focused specialisation.  Rather than expand services to appeal to more clients, leading firms narrow their focus to what they do best for a limited target market.  This means that as a specialist, their prices can be higher, as they create a market position where others can’t compete. 

The combination of authority positioning and focused specialisation create a flow on effect relating to the need for new skills.  Because leading firms operate strategically in a narrow market with a focused specialisation, they also limit the need for a broad range of skills and can operate with specialists who need limited training.  They don’t need to stretch their resources or operate in areas of weakness to please clients.  Their positioning and focus enable them to dominate their market, instead of having to spread themselves thin to win more work.

The reality is that the challenges professional service firms suffer can be avoided by operating strategically to position themselves as the authority in their market and by promoting their focused specialisation.  To achieve supremacy, a firm needs to develop a strategic authority marketing system, so that they create the demand for their services to give them choice in who they take on as clients and what sort of work they engage clients for at premium prices.

If you would like to learn how you can establish a strategic authority marketing system, I have a free 45 minute video training at

Author: Greg Roworth

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