Online, or digital, marketing delivers faster growth and higher profits for professional service firms. That’s according to Hinge Research Institute and their findings from an online survey of 500 professional service firms.  Their findings include:

Online marketing by professional service firms increases their profitability

Greater online lead generation leads to greater total profitability. The survey found that firms generating more than 60% of new business leads via online marketing are two times more profitable than those generating less than 20% of new business leads online.

Online marketing is widespread and poised for growth

• The survey found that more than 77% of firms generate at least some new business leads online.
• 46% of firms have redesigned their website within the past year.
• About 66% of firms plan to increase online spending in the next 12 months. The average anticipated increase is 56%.

Hinge asks, “Why is it that firms that generate a higher percentage of online leads are more profitable?” Their data was inconclusive, but they suggest that is could be due to online marketing being less costly than traditional marketing over the long term. Once a firm is getting good results in searches, the incremental costs decrease.

To add my two cents, I think another factor is that when a prospect chooses to interact with your firm it is “sold on your ability to deliver the goods,” so to speak. They are comfortable and confident in your firm, to a relatively high extent and less sensitive about the fees. Furthermore they probably have reached a pain point where they are ready to act in obtaining a solution for the challenge.

 Online recruiting is also widespread

• 55% of firms recruit employees online.

• About 1 in 4 firms attract 40% or more new hires online.

Personally, I’ve noticed how the career section on websites has expanded and how some of the larger professional service firms have put together video shows discussing their firm’s culture and the benefits of being an employee. I’ve also seen an explosion in job ads on LinkedIn. And many of them specifically state they only want responses from principals, no agencies.

Traditional marketing techniques at professional service firms are giving way to online marketing and inbound marketing strategies as buyers of professional services change their habits.

Hinge Research Institute released its 2011 examination of the current state and untapped potential of online marketing in professional services firms. Here are few of their findings.

Results demonstrate that professional service firms embracing online marketing grow faster:

• Firms generating 40% or more of their leads online grow 4 times faster than those with no online leads
• High-growth firms obtain 63% of leads online while average firms obtain 12%
• Greater engagement with online tools is associated with faster growth

Using online marketing also increases professional service firm profitability:

• The greater a firm’s online lead generation, the greater its total profitability.
• Firms generating 60% or more of their leads online are 2X more profitable than those generating less than 20% of their leads online.

My take

I belong to several LinkedIn groups, including those focused on professional service firms, such as Association for Accounting Marketing (AAM) and Social Media Marketing for Financial Services. There is definitely a growing interest and involvement in online marketing. There is also a lot of confusion about what it is, and how it works. Oddly, I observe a number of professional service firms updating their websites, but omitting the blogging component.

The blogging component, in my opinion and in the opinion of many well-known online experts, is that the website’s blog is the most important part of an inbound marketing effort. Indeed, the Hinge report shows that high growth professional service firms find blogging to be their most important tool, followed closely by search engine optimization (SEO). Of course, blogging and SEO go hand-in-hand.

Read or download the full report, “Online Marketing for Professional Services Firms,  How Digital Marketing Delivers Faster Growth and Higher Profits” at Hinge Research Institute.