Built to last

Greater choice in the modern marketplace means that clients are more likely to change their advisors than in the past.  Michelle Gahagan and John Monks explain how to keep hold of your key business partners.

Historically, it was rare for clients to change their professional advisers.  Clients tended to stay with their accountants, lawyers, actuaries and property consultants (to name but a few) for long periods of time. Only a significant error on an adviser’s part would cause the client to review the relationship and seek alternatives.  As a result client loyalty in professional services was often the envy of other commercial sectors.

As Bob Dylan would say, times are indeed a-changing.  Increasing commercial pressures, are now causing many clients to periodically review their advisers. Like everything in the world today, we all have greater choice.  Some clients switch advisers because they are genuinely dissatisfied with the incumbent’s offering.   Others may be satisfied, but want something more from the relationship. 

Today’s professional services firms face clients who are becoming more and more discerning and hunger for a greater return on their investment.   They want advisers who understand them and present solutions, which have their business interests at heart.

So is loyalty a thing of the past? From our experience of working with a myriad of professional services firms over the last 14 years, we would say not.  Strong client loyalty is still in existence, but like any business goal it needs careful planning and management.

We have seen firms whose clients are completely delighted with their advisers.  They resist competitor advances to such a degree that they even alert their advisers which competitors are trying to court them and how.  These clients are less resistant to fee changes. They not only give repeat instructions, they refer new clients too.

So what are these professional services firms doing differently?  For a start, they are much more proactive about the way they manage their client relationships. Their client loyalty is built from 4 key activities and these are underpinned by 3 cultural behaviours.  Before we look into each of them, there is one more thing that all these firms exhibit.  They are very realistic about what they can deliver for each of their clients.

All clients should receive exceptional service, however, there are those who will be of vital importance to the firm’s business.  This could be for any number of reasons, such as their current or potential fee income, their referral or strategic value or perhaps their name in the market place.  These are the clients who, if they took away their business tomorrow, would have a serious and negative effect on the firm’s business.  Such clients warrant extra attention and a more proactive approach to managing their relationship. 

Traditionally, professional services firms have not been as sophisticated as other sectors in segmenting their client base.  This is largely because it is only really in last 15 years that marketing expertise has been brought in.  Increasingly though, and from realising that their resources are not infinite, professional services firms are undertaking segmentation exercises.  The more successful ones are identifying their key clients and ensuring that client loyalty amongst this group remains at an absolute high.

The four key activities that build client loyalty are:
1. Managing the fee-earning work in a way that ‘delights’ clients
2. Defending client relationships from outside advances
3. Developing the client relationship so the firm is ‘irreplaceable’
4. Project managing the client relationship to build a position of trust

Underpinning all these activities are the firms’ values and characteristics, their motivation to deliver a great client experience and how successful and effective they are at key client planning.

Driven from the top
All of this cannot be achieved unless client management is taken very seriously and this motivation needs to be driven from the top of the firm. In the best firms senior management acts as role models and advocates. They adjust the firm’s reward and recognition programmes to reflect excellent client management and retention as well as new client gains. This sends out the signal that the firm does take the client experience very, very seriously.

As we mentioned at the beginning, securing client loyalty requires careful planning and management. The best key client plans we’ve seen live and breathe.  They are not a plan for a plan’s sake and they are not a history of the client’s relationship with the firm.  Instead, they give vision of how the firm wants to develop the client relationship.  They hold specific objectives and actions to be achieved by given people in the firm by a given time.

Concise and focused
They also look much wider than the specific work being undertaken and capture the team’s ongoing intelligence as to the opportunities and challenges facing the client – and how the firm could support them.  These plans are concise and highly focused. They are kept up to date and are visible amongst the firm.  This ensures that any intelligence on the client and their world, which could impact on the relationship, is not missed.

Clients will continue to be approached by competitors.  Most, however, do want to stay faithful to their advisers but only if they feel they receive tremendous value and they truly prize that relationship.  Just like any business activity, achieving this requires a process and careful planning. In doing so, the more astute professional services firms do not simply focus on managing their fee-earning work.  The look at a variety of different facets to the relationship and reflect them in their individual client plans.

Managing the fee-earning work
It used to be a common misconception that if you got the fee-earning work right, clients would stay loyal forever.  Clients, however, have come to expect a high quality service as a given. It is no longer a differentiator. How well a firm performs in its fee-earning work can only really be judged by its clients’ perceptions. For a client to remain loyal and give their advisers new instructions, these perceptions need to be very positive.  This will only happen from a belief that their needs and expectations are being satisfied or exceeded, that the service this firm is providing is extremely difficult to replace or replicate.

Building such a position of trust requires professionals services firms to understand, establish and agree their clients’ expectations at every stage of the relationship. This will be whilst selling to the client, in the final negotiations, at the start of work, at regular stages in the execution of the work and also at the end of the engagement. A client’s expectations can be gleaned from a firm’s conversations and/or planning meetings with them.  Whilst fee-earners often make a good job at agreeing the ‘technical deliverables’ of an assignment, frustration on both sides is sometimes caused by a failure to agree the ‘soft stuff’.  This invariably includes how the two sides are going to work together, how they will communicate, how meetings should be run etc.

Having established and agreed the client’s expectations, firms are in a much stronger position to plan and execute their work so that it meets or exceeds them.  In doing so, those firms that are very good at client management continue to communicate with the client throughout the planning and execution stages.  This enables them to crosscheck expectations in case they have changed.  It also enables these firms to make ongoing improvements to there overall service delivery.

Defending client relationships
Once professional services firms have a clear picture of the clients they need to protect, the more proactive ones set to uncover any weak spots in each of those client relationships. This often relies on making an assessment of how strong a relationship with a particular client is.

Relationships in professional services firms tend to centre on the interpersonal dynamics between a person in the firm and a key contact in the client.  However in recent years there has been an increase in the number of senior fee-earners moving between organizations and this can put client relationships at risk.  As a result, more and more firms are building multi-level relationships between their organisation and their clients.  They are becoming more sophisticated at creating client teams, which really reflect the interests and ‘personality’ of each client.  And they are ensuring through their client management systems that frequency of contact is maintained with the client (even if they are not working for them).  This is an excellent way of ensuring your firm is considered when new work becomes available. 

Developing the client relationship
Some firms bemoan that clients ‘pigeon-hole’ them for providing a particular range of expertise. The client doesn’t realise that the firm could help and support them in a much wider capacity.  Client development is about promoting the totality of a firm’s business to key clients in order that they believe the range of capabilities the firm possesses.  This is not about trying to ‘flog’ a range of services to get a bigger share of the client’s wallet.  If this is the key motive it does, in time, become apparent and the client resists the firm’s advances.

Those firms that are successful at developing the client and their business use all their knowledge of the client to establish very tailored solutions.  These draw on a wide range of capabilities from within the firm.  The aim is to provide even greater support and additional value to the client and help them achieve their business objectives.  Targeting clients with activities and correspondence that correlate to their specific interests and issues can really help here.  The greater support the firm can give, the more ‘irreplaceable’ they become in the client’s mind.

Project managing the client relationship
Client project management is about the firm’s culture and approach to key client management.  Those firms that excel in this area create systems and ways of working that ensure that all people involved with key clients contribute to the knowledge and plans relating to them. In doing so, these firms ensure everyone is passionate and motivated to deliver a great client experience. This isn’t just about the key client teams’ approach; it looks wider at all the client’s ‘touch points’ in a firm.


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