Britain’s services economy is surely one of its greatest assets.  In 2023, sectors including Financial Services, Management Consulting, Legal, Accounting, and Public Relations generated a staggering £115 billion trade surplus[1]. To put this in perspective, Pharmaceuticals—often celebrated as a British success story—produced a comparatively modest £2.5 billion trade surplus with the United States in 2024[2].

Yet despite this economic powerhouse at our fingertips, we're surprisingly ineffective at leveraging our own world-class expertise. As an entrepreneur who's built businesses serving major public sector bodies and FTSE-listed companies, I've witnessed firsthand the striking variation in how organisations engage professional services—from the brilliantly strategic to the painfully inefficient.

Perhaps this shouldn't surprise us. After all, doctors make notoriously poor patients, and despite London's global dominance in financial services, less than 9% of eligible 18-39 year-old Britons hold a Lifetime ISA. Similarly, only a quarter of baby boomers aged 55-73 have savings exceeding £10,000[3]. Like exercise and healthy eating, we often know the right approach but fail to implement it consistently.
 

CROUCH – the approach to market

The PSL Predicament

Organisations with highly inefficient systems and processes, often hierarchical and bureaucratic cultures, have inevitably invented a system to give themselves more work to do than is strictly necessary. They call it the “PSL” or “preferred supplier list”. We call it W4W[4] (work for work’s sake).

With this approach to market, a client will simultaneously mailshot a requirements brief to three or more services suppliers and await their retort. This is a winner takes all approach with the fee for the assignment being awarded to the winning bidder, and often only when they’ve completed much of the work.

From the supplier’s perspective, there is at most a 33% chance (if only two of your competitors were also approached), of being paid for the work delivered to this prospective client. And that’s only if the requirement is genuine, which, all too often, it’s not.

The inevitable result? Both the quality and depth of proposals suffer, leaving clients sifting through mediocre submissions and effectively doing themselves much of the work they intended to outsource. It's a lose-lose scenario masked as due diligence.
 

The strategic partnership

What does the Boston Consulting Group, Bain & Co, Deloitte, PwC, Accenture and the Magic Circle Law firms all have in common?
 

They’ve all built huge multinational businesses off the strength relationships their billers have with the top decision makers. These firms engage in long term, and often open-ended assignments that deliver tangible value for both the consulting firm and the client. The client – customer relationship is exclusive, and as a result, mutually beneficial. As Bill Bain, the founder of Bain & Co, and the pioneer behind this model put it:

“We won’t work with your competitors, and you won’t work with ours”[5]

For organisations seeking genuine value, treat your top-performing service providers like valued employees. Just as your best talent delivers their greatest value when they feel appreciated, service providers excel when they know they're valued partners rather than interchangeable vendors. Begin with small engagements and nurture relationships organically, investing time and resources in building mutually profitable partnerships with a select few strategic providers.
 

BIND – The Engagement Model

Three engagement models typically govern commercial agreements in professional services:

Contingent – Fees paid based on outcome

Retained – Partial or complete payment upfront

Hybrid – Payments upon milestone delivery or recurring subscription
 

Choosing which engagement model works for you is more of a detail that is subservient to establishing a commonly productive relationship. Whilst we prefer the hybrid model all three can work.  However, if a contingent model is chosen, then the risk / reward ratio should be carefully considered by both parties and priced accordingly.

SET! – The Relationship

For professional service firms, the costliest aspect of business is finding and onboarding new clients. New relationships also carry the highest risk of misunderstandings and errors. When relationships are nascent, both sides easily make misplaced assumptions, increasing the risk of terminated contracts and restarting the costly acquisition cycle.

You may have heard consultants discuss "wallet sharing"—increasing a firm's share of a client's total consulting budget. This approach benefits both parties: clients receive greater value as consultants develop deeper understanding of their business, while firms can redirect resources from marketing and business development to iterating frameworks and methodologies based on real world testing and proprietary research. This virtuous cycle raises industry standards and benefits the entire ecosystem.

Win the set piece, win the match

Like hiring the right talent or maintaining physical fitness, investing time in finding the right service providers rarely goes to waste. Building quality, enduring relationships instead of pursuing transactional engagements is critical to productive partnerships. And while aligning incentives remains essential, like healthy eating and financial prudence, it's ultimately consistent implementation that separates high-performing organisations from the rest.

Alex is a Director of Penpole Consulting, a Digital Transformation and Cyber Security service provider. Penpole helps clients increase productivity and reduce organisational risk with their expert CISOs, programme and project managers, change specialists, data migration experts, and technical specialists in testing, training, integration, and configuration.

Want to connect? Reach out to Alex directly at alex.franklin@penpole.co.uk.