Referenceable Customers

Maintaining positive customer references is critical to success for any consulting service company. Not only will this result in repeat business from satisfied customers, but these customers are also a great tool in prospecting new clients. Sharing genuine customer success stories from customer to customer enables brand building and validates your offering compared to your competitors. The larger your customer reference program is, the easier it is to find relevant success stories to share with your prospect.

  • 66%
  • 74%
  • 81.4%
  • 88.8%
117 days. Average time to find, recruit, hire, and ramp a new consultant. For tips on reducing attrition in services, check out this article. (Source: NetSuite, SPI)
“As attrition goes up, the percentage of annual revenue achievement goes down.”

Read this article to learn more.

Annual Revenue Per Billable Consultant

Annual revenue per billable consultant is a rough indicator of how much revenue your billable resources generate each year and the productivity of your consultant team. This number should be higher than the average fully-loaded cost of your consultants, meaning your consultants are generating more revenue than it costs to employ them. This number varies widely depending on the type of consultancy and services provided to clients. Architecture, engineering, and legal consulting firms tend to see a higher annual revenue per billable resource.

  • < $190,000
  • $191,000
  • $228,000
  • $265,000

Utilization

As a consulting firm, your most valuable assets are your employees and their skillsets. Utilization rate indicates how much time your employees are spending on client project work compared to internal tasks. Increasing employee utilization optimizes your profits and allows your business to take on more projects, hire the best talent and attract high-caliber clients. It’s important to set realistic utilization targets for your employees and compensate them for their achievements. A utilization target that is too high may result in consultant burn-out, while a target that is too low won’t incentivize employees to be more productive and reach their full potential. Having a clear view into your company’s utilization rate is critical to recognizing inefficiencies, improving staffing, identifying training opportunities and increasing profitability.

  • < 71%
  • 71.2%
  • 74.8%
  • 78.3%
Foundational
Competitive
Best in class
Transformative

Gross Profit Margin

27.7%

47.5%

57.4%

63.6%

Gross Profit
Margin

Percentage of revenue after Cost of Goods Sold. For a services company, gross profit is typically revenue minus professional services staffing costs. This metric signifies how efficiently your company uses its labor to deliver services profitably.

Referenceable Customers

66%

74%

81.4%

88.8%

Referenceable
Customers

Percentage of total customer base willing to provide positive stories about a successful delivery of your products or services. This is used to create demand.

Churn

> 4.7%

4.7%

3.7%

2.7%

Churn

Also known as the Rate of Attrition, churn is the percentage of subscribers who discontinue their subscriptions within a given time period. For a company to expand its clientele, its growth rate, as measured by the number of new customers, must exceed its churn rate.

Utilization

< 71%

71.2%

74.8%

78.3%

Utilization

The percentage of time that your company’s consultants are billing clients. The higher the better, until it gets to a point where it negatively impacts morale. The typical target utilization at consulting firms is 80%.

Annual Rev per Billable Consultant

< $190,000

$191,000

$228,000

$265,000

Annual Rev per
Billable
Consultant

This metric represents the average amount of consulting revenue generated by a consultant. The higher the annual revenue per consultant, the better.

Days Sales Outstanding

49.4 days

48.3 days

47.3 days

46.2 days

Days Sales
Outstanding

How many days, on average, it takes your customers to pay invoices. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your accounts receivable are being managed. The lower this number is, the better.

Time to Close the Books

> 10 days

5 days

2 days

Hours

Time to Close the
Books

How many days it takes your finance team to produce a Profit and Loss Statement, Balance Sheet and other analyses so that managers can understand how the business performed for that period (typically monthly). The fewer days, the more efficient the finance team.

Finance FTEs per $100M Rev

> 4.5 FTE

4.5 FTE

3.3 FTE

2.4 FTE

Finance FTEs per
$100M Rev

A calculation of how many FTE (Full Time Equivalent) Finance department resources are required for each $100M in revenue earned.

IT FTE Per
$100M Rev

> 3.7 FTE

3.7 FTE

2.8 FTE

1.9 FTE

IT FTE Per
$100M Rev

A calculation of how many FTE (Full Time Equivalent) IT department resources are required for each $100M in revenue earned. The fewer the FTE, the more efficient your IT team.

Source(s): SPI, Finlistics

Parameters

Foundational

Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.

Competitive

Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.

Best in Class

Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.

Transformative

You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.