Assigning clients and revenues to specific industries can be challenging.

Years ago, I had the task of entering new client information into billing or customer relationship management (CRM) systems containing a number of required and optional information fields. One important field was the “client industry” field. Unfortunately, industry was often open to the interpretation or opinion of the partner who brought the client in. Frequently, the client’s industry was entered incorrectly because the client’s industry or true business activities weren’t clearly understood. Even worse, when the client operated in multiple industries, the partner entering the new client information was often biased toward one or another industry designation. Often, no industry designation at all was provided for a new client entry because that information wasn’t perceived as important enough to record.

But accurately recording a client’s industry is very important. Industry information provides a baseline for the size of each industry practice, enabling you to track revenue, other key metrics and an industry practice group’s progress toward reaching its growth-rate goals. Even if you don’t have a formal industry practice group for every industry in the U.S. economy, you need to accurately track each client’s industry; and engagement revenues should also track to industry. 

The benefits of capturing industry information include:

• Establishes baselines (for gross and net revenue, number of clients and realization) for all clients, across all industries, by service line and location. Baselines are the starting points for measuring annual and continuous growth.
• Allows you to understand the relative sizes of industries your firm serves. You may discover that the largest industry served in terms of gross revenue is private households (or individuals), but this group of clients may have the lowest realization, meaning it’s relatively less profitable for the firm.
• Reveals hidden areas of strength and expertise. The firm may have a concentration in an industry or sector within a larger industry that you didn’t even realize you had. Once you uncover a hidden strength, your firm may decide to develop a strategic growth plan and invest in building out a formal industry practice group to leverage the traction you already have.
• Uncovers gaps or problems – your data may reveal industries where cross-selling is already strong, or industries that are ripe for cross-selling specialty services.

Information is power. And assigning clients to specific industries is an extremely worthwhile endeavor that can help your firm grow and prosper.

To learn more, check out: www.LermanStrategies.com