In 2011, most consulting firm leaders expect it to take no longer to sell their typical projects than it did last year—in fact, 25 percent expect sales cycles to shorten, according to a Consulting magazine survey of more than 800 vice presidents and partners.
Just over two-thirds of respondents anticipate sales cycles to be no worse then they were in 2010, a big improvement from 2010 when that was true of just under half of respondents and 2009 when only about one-third reported good news.
The share of respondents reporting good news vs. bad news has essentially flip-flopped in the last two years. In 2009, 62 percent of consultants reported longer sales cycles. In 2010, that number dipped to 54 percent. But in 2011, only one-third of firm leaders anticipate it taking longer to sell engagements.
In the context of other profitability measures tracked by Consulting, we take this as a good indication that the consulting marketplace is indeed in the midst of a recovery.
When we talk about a "recovery" across the marketplace, it's not just about an uptick in sales. Client spending on "pent-up demand" can be short-lived and lead to premature investment by firms. An uptick in a lot of small projects can generate an initial increase in revenue, but also isn't necessarily sustainable.
A true recovery is the result of a number of factors. And several key indicators are providing encouraging signs. In the November/December edition of Consulting, we discussed the extent to which average projects are getting larger. The combination of larger projects and shorter sales cycles is an important one-two punch that should provide greater confidence in the stability and security of the recovery.
The result of taking less time to sell larger projects is a significant drop in the internal cost per sale, an important turnaround from the last few years. And it's a very welcomed change given that other operational benchmarks continue to trend negatively (compensation is climbing, clients continue to push back against fee increases, utilization rates remain under pressure, and the coming spike in voluntary attrition threatens to undercut the foundation of firms' leverage models).
—Jess Scheer
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