Choosing a consulting company is quite the challenge – especially for firms who haven’t worked with one before. Almost every consulting agency claims to have considerable experience and extensive expertise in terms of the services they provide. Many of them have broad portfolios with dozens of completed projects and great references. So how do you assess which consulting firm is going to work best and help you achieve your business goals?
In this article we present the key aspects that should be taken into account when choosing a consultant. We assume the point of view of the consulting firm’s client and discuss practical tips that can be used both by smaller companies and large organisations. They will come in handy in choosing a partner for a single project, but also when you decide to initiate a long term business relationship.
What’s the profile of the consulting company?
The most important criterion for selecting a consulting company is their ability to fulfil a specific need. The search for a consultant must therefore always begin by identifying the precise objectives that the firm will have to meet. It’s only when you have this knowledge that you can start verifying offers – checking whether the firm is capable enough to achieve these objectives, i.e. whether it has the right profile.
There are many different consulting firms out there. Each of them has different competencies and specialises in different areas of business. Here are a few examples:
- companies with the most wide range of competencies, which often come from the financial consulting segment, and have gradually expanded their operations (e.g. PwC),
- companies involved in management consulting (e.g. Bain & Company),
- companies consulting mainly in the area of markets and products (e.g. PMR),
- companies specialised in one area, e.g. in technical consulting, or environmental consulting.
And although the initial reaction is often to choose an agency with a narrow specialisation, it’s worth to stop for a moment and consider other options. An advisor from a niche area is not always guaranteed to be the right partner.
If the business problem is broader and requires knowledge of various industries and markets, the ability to tackle a topic from different perspectives is as important as experience in a given area. It’s just as important when considering a long-term partnership. Then you’ll want a consultant who has experience in many areas and who will able to provide the right support when needed.
What services does a consulting company offer?
Determining the goals of the project is also useful when deciding if the consulting company has a range of services that fits the client’s needs. It’s worth taking some time to learn about their offer and see if the consultants can provide comprehensive support, or help only in certain stages of the project.
Of course you can choose to work with an agency that does not have all the crucial skills. But you need to be aware that this can lead to one of two situations:
- the consulting agency will commission part of the work to another entity, which, in a way, can lead to limiting or losing control over that part of the project,
- the client will have to look for other consultants to carry out the remaining stages of the project – this involves additional work such as searching for a new partner and familiarising them with your company’ strategic plans.
If the client is interested in entering a new market, they can benefit from the offer of several types of consultants. Some will help them in more general issues, and some in more specialised ones.
A consulting company that offers market analyses and advice in the process of entering a new market will be a good choice – better yet if the agency has expertise in the area of market research (analysis of consumer behaviour and preferences, brand study, competitor analysis, concept and product testing, etc.). This broad range of services ensures that a project is treated holistically, without the need to involve additional entities. In contrast, companies without research facilities will outsource parts of the project to subcontractors.
When the planned entry into a new market also includes the acquisition of another company, additional abilities will be required. You will want a consulting company that offers not only research and analysis of the target market, but also assistance in developing market entry strategies and carrying out acquisitions (purchasing companies). As a result, a client who decided to purchase an entity operating in a given market works with the same partner for the whole duration of the project. A consulting firm will not just prepare the client to enter the market, but will guide them through the entire process and provide support in the early stages of operating in a new market (e.g. indicating parties worth of interest and conducting negotiations).
What markets does the consultant operate in?
One of the most important criteria for selection of consultants (except the price of service) is usually industry experience. And rightly so, because the effectiveness of the project rests on it.
The first aspect that you should check is the knowledge and the number of completed projects in a given industry (e.g. food, pharmaceutical, construction, ICT, retail). We recommend that you find out a few details:
- what types of projects did the company carry out in a particular industry,
- when were they conducted,
- why did the client decide on that particular scope of the project,
- why did the client choose to cooperate with this particular agency,
- was the client satisfied with the firm’s work,
- did the client return with more projects.
Another important aspect is to understand the company’s experience in the following segments: B2B (business-to-business) and the B2C (business-to-consumer). Each of these segments is governed by completely different rules. If the subject of a consulting project is a product or service addressed to both the business client and to the individual client, then experience in both segments is crucial.
In which countries does the firm operate? What is their business model in international markets?
When deciding on a project in a specific country (or countries) it’s worth checking how the consulting firm operates in those countries. Here are the two basic models:
- The firm has an office in the particular country. Their projects are carried out by consultants working at the local office.
- The firm does not have an office in the particular country, but is active in the region. In this situation, it can use one of two approaches: it can either delegate consultants who have experience in a particular market (sometimes speaking the local language), or commission partners or subcontractors to conduct the project. In both of these cases, it’s worth checking to see what experience the consultants have in a particular market. And in the case of a firm that works with a partner, you should also look at what kind of projects they had jointly conducted, and what was the quality of those projects.
The choice will be even harder if one company is to carry out different projects in different geographical locations. The decisive factor should then be the experience in the specific business area and/or in the specific product category, and not experience in the specific country. This does not mean that we should not make sure whether the consulting firm is able to perform international projects, and if so – in which countries.
When the project is to be carried out in several countries at the same time, another issue comes up. Is the firm experienced in coordinating simultaneous work in many countries, sometimes on different continents, in different time zones and different cultures? Sometimes, a project can have a disappointing outcome (or even fail completely) because of the inability to manage complex multinational projects.
How does the consulting company communicate with the client?
How a consulting company manages a project may be important to the client. An important factor is how the firm delegates responsibilities. And additionally, how it separates areas of responsibility between the individual members of the project team. This is particularly important when a project is composed of various competences, market or topical areas.
The main factor here is communication with the client. It should be organised in a way that provides the client with a complete knowledge about the project, but also in a way that is as concise as possible. If the project is performed by several people (often specialists in a given field, responsible only for a small part of the project) and there is no single coordinator, then it is not a convenient solution for the client.
If there is a project manager, then even if him or her doesn’t have the competencies of the expert working on the projects, it’s a big plus for the client. The project manager will supervise the team and their work, gather information about every aspect of the project, and report to the client and inform them about any potential risks. This way, the project manager can give the customer feedback at every step of project and provide information on any problems that might arise.
Having a single point of contact is more convenient for the client also when they need to make a critical comment or express dissatisfaction with a part or all of the work. In such a situation, the only person to whom the criticism is directed is the project manager. The client does not have to worry about the redistribution of liability for the identified problem on the firm’s side, because the issue will be handled within the company by the product manager.
Who has the consulting company worked for?
Another of the elements that you should verify before establishing a relationship with a firm is their client portfolio. This can allow you to form certain conclusions about the company’s profile and operations. However, to be sure about them, you need to confirm the formulated assumptions during further verification of the potential partner.
Here are a few examples:
- if a firm is working with large international players, you can assume that it has completed comprehensive multinational projects,
- if the portfolio is made up mostly of local companies, this could mean that the company is not focused solely on big projects, but can also conduct smaller projects for smaller clients,
- if the portfolio consists only of companies operating in a handful of industries, you can assume an industry specialisation,
- if the firm’s clients come from many different industries, it might be that the company has a functional specialisation (for example market analysis, testing and introduction of products, financing).
What kind of references does the company have?
References are a very useful, but often overlooked source of knowledge about the company and its prowess. A good practice is to review the references of the company you’re considering. But that’s not nearly enough to be able to precisely assess a future business partner.
Therefore, it’s worth asking the consultant for the opportunity to talk with one or two clients to obtain additional knowledge. During conversations with these companies, you can ask, among other things, about:
- overall satisfaction with the cooperation,
- the quality of supplied materials,
- the manner and speed of communication,
- flexibility in the implementation of projects,
- the level of understanding of markets and business issues.
It’s not unorthodox to ask to speak to a few of the company’s clients – on the contrary, it is common practice in the industry.
What is the price-quality ratio?
The final criterion for selecting a consulting company which we present is to assess the value for money of the project. This element is highly subjective. You should therefore consider the choice by taking into account the company’s capabilities, the project’s scope, method of financing, etc. This issue is very extensive, so we would like to draw your attention at this point to only two frequent cases.
Some consulting projects – because of their specific nature – will require consulting company recognised as a leading expert in a specific area. Some of these projects can be, for instance, market analysis projects for the purpose of obtaining financing from a bank or other financing institution, or for the purpose of reporting associated with the requirements of public markets. The customer can choose to work with a renowned (and, consequently, expensive) consulting firm. Perhaps even significantly more expensive than the price-quality ratio would suggest, but the aspect of reputation and brand strength can be the decisive factor.
It often happens that large companies work only with large consulting firms. Let’s consider a different approach for a moment. By giving a smaller (but professional and competent) company a chance, the project can be carried out with much more attention and diligence, and the attitude towards the scope of the project will be more flexible due to the importance of a large client for a smaller firm. In this case, the value-for-money principle may prove to be a great choice.