The Management Consulting Industry’s
10 Most Critical Metrics

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In this article you’ll learn the most critical metrics that companies in the Management Consulting Industry should track.

The article does not include metrics such as Profits and Sales that are critical to companies in all industries; rather the focus is on metrics more specific to the Management Consulting Industry.

By tracking your metrics, you will dramatically improve your business results.

Why? Because not only is the old saying “If you can’t measure it, you can’t improve it” true, but visibility into your metrics allows you to identify WHERE you can make the easiest and most impactful improvements.

For each metric, we will answer the following questions:

– What is the metric?

– How do you calculate this metric?

– Why is this metric important?

Let’s get started…

1. Leads Generated

What is this metric?
This metric measures the number of prospective clients generated through marketing, social media, referrals and other methods.

leads_generated-20160323

Calculation
This metric is measured by adding the total number of prospective clients generated throughout a specific time period.

Why is this metric important?
Leads generated helps consulting firms track the number of leads generated throughout a time period and can be helpful if trending shows lead generations dropping so a consulting firm can determine the reasons why the numbers are falling and take action to improve upon the lead generation numbers.

2. Customer Acquisition Percentage

What is this metric?
This metric is measured by taking the number of new clients who have signed contracts with a consulting firm within a specified time period and dividing by the number of project proposals that were sent to prospective clients during the same time period.
customer_acquisition_percentage-20160323
Calculation
This metric is calculated by adding up the total costs of resources involved in producing vehicles including material, labor and overhead.

Why is this metric important?
This metric is important because it can be helpful in providing a consulting firm’s management with evidence of a sound pricing structure if a customer acquisition percentage is high; if customer acquisition percentage is low, management may want to look into the pricing structure in place or the type of customers the firm is targeting for proposals.

3. Number of Clients

What is this metric?
This metric measures the amount of clients a consulting firm is actively serving over a specific time period.
number_of_clients-20160323
Calculation
This metric is measured by adding the total number of active clients serviced at a consulting firm within a specified time period.

Why is this metric important?
This metric is important because the number of clients served at a management consulting firm affects how the company performs financially. This metric is also important to track since firms will need to properly plan their workforce size and schedule according to the number of clients/projects they are currently serving/working on.

Do you currently know how you’re performing on each of these key metrics?
Click here to schedule a free demo with one of our dashboard builders. They’ll show you how we can build a dashboard that automatically calculates all your key metrics in real-time.

4. Utilization Rate

What is this metric?
This metric measures the amount of time a consulting firm and/or its staff gets used for client services.
utilization_rate-20160323
Calculation
This metric is measured by taking the number of billable client hours within a specific time period and dividing them by the total available hours of staff working at the consulting firm.

Why is this metric important?
This metric is important because if a consulting firm and its staff has a high utilization rate, it translates to increased revenue for the consulting firm.

5. Average Fee Per Hour

What is this metric?
This metric measures the average amount a consulting firm charges its clients per hour for its services.
average_fee_per_hour-20160323
Calculation
This metric is measured by dividing the total fees for a project by the number of hours that were put into the project by the consulting firm’s team members.

Why is this metric important?
This metric is important because it can determine if a consulting firm is undercharging for its services and essentially not making a profit from its services or potentially charging more than what the client is willing to pay.

6. Repeat Business Rate

What is this metric?
This metric measures the number of clients that request additional work from a consulting firm following the initial project undertaken and completed for a client.
repeat_business_rate-20160323
Calculation
This metric is measured by taking the number of repeat clients within a specified time period and dividing by the total number of clients within the same time period.

Why is this metric important?
This metric is important because it can be used by management to take action and improve its services if a customer retention rate is low.

7. Billings

What is this metric?
This metric measures the amount of work that was accepted through a client company and the amount billed to clients within a specific time period.
billings-20160323
This metric is measured by adding the total amount of projects billed within a specified time period, for example on a monthly basis.

Why is this metric important?
This metric is important because it may help consulting firms plan for increased or decreased revenue and work streams from past trends.

Want to discuss the specific metrics you’re tracking (or want to track) for your company?
Click here to schedule a free consultation and demo with one of our dashboard consultants.

8. Gross Margin

What is this metric?
This metric measures how profitable a management consulting firm is.
gross_margin-20160323
Calculation
The metric is measured by taking a management consulting firm’s revenue less the direct costs of servicing its clients and dividing by the company’s revenue.

Why is this metric important?
This metric is important because it specifies the amount of money a company is able to invest in other aspects of the organization like marketing initiatives.

9. Project Margin

What is this metric?
This metric measures the amount of money a consulting firm makes from a specific consulting project.
project_margin-20160323
This metric is measured by taking the revenue made from a project and subtracting by the cost to deliver the project.

Why is this metric important?
If a project costs more than the revenue made from a project, than the consulting company needs to reconsider the amount of money that has been charged or billed for a project or possibly may need to manage projects more efficiently to be able to return a profit from the project.

10. Customer Satisfaction

What is this metric?
This metric measures the satisfaction level of a consulting firm’s client(s). Customer satisfaction surveys may specifically dive into questions regarding quality of service, quality of work completed, timely completion of work, responsiveness to inquiries and other areas.
customer_satisfaction-20160323
Calculation
This metric may be measured by conducting a formal satisfaction survey or may be measured by less formal feedback methods including emails, conversations, etc.

Why is this metric important?
Customer satisfaction is important because it provides actionable data on how management consulting firms can improve their services. If customer satisfaction is high, clients may recommend the consulting firm to others in the business world.

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