Does your firm having adding value to clients as a core objective? I’ll bet it does.
Does your firm really measure how it adds value to clients? I’ll bet it doesn’t.
Most firms ask their clients to rate overall value for money in their client listening research. To my mind this is a generic approach to assessing value and a major missed opportunity.
A new way
I think there would be significant benefit adding a section to your client feedback tools under the heading ‘Adding Value’. This section would be tailored for each client and it would ask the client to agree or disagree with a series statements as to how the firm has added value, or what difference it has made over the preceding period. This would not be merely a restatement of activity or inputs but rather outcomes achieved and real benefits delivered.
So, for example, this section might include statements like:
- Helped with the successful launch of new product XYZ and in creating 15% market awareness in 6 months.
- Improved consistency of safety incidence reporting contributing towards a 5% reduction in lost-time injuries.
- Reduced risk exposure to ABC claims from High to Moderate.
- Settled the MNO matter with a sum $1 million less than that provisioned.
- Realised incremental rental income of $500K through early project completion.
- Delivered tailored training program that contributed towards a 5% improvement in staff productivity.
- Helped with effective rollout of new corporate compliance program via dedicated secondee.
- Rejigged proposal templates and process leading to a 7.5% improvement in the bid-win rate.
The client respondent would also be asked to identify other things, big or small, that they felt have added value. They might list some valuable off-the-cuff advice provided for free or an introduction to a valuable business contact. This open-ended section would catch all the tangental things that the client perceives have been of benefit. Sometimes the smallest things can have the biggest impact.
Ideally this value added assessment should be part of a periodic relationship review conversation. It could be used in a quantitative survey but then you miss the opportunity to have a deep dive discussion into what value is and isn’t from the client perspective.
Communicating value
Communicating the benefit you deliver is essential in justifying the price you charge. The problem is that in many professional services value is in the eye of the beholder. If Perceived Value = Perceived Benefits – Perceived Costs, then it’s incumbent on the provider to work extra hard to communicate and amplify the perception of benefit. Getting their agreement or otherwise to a series of value-added statements makes the benefit more conscious and tangible. It also reveals what elements of your offering are more valuable than others.
Finding the words
Harry S Truman once stated, ”it is amazing what you can accomplish if you don’t care who gets the credit”. One of the challenges with this suggested approach is that the client may perceive the whole exercise as a kudos claiming exercise. They might think you’re trying to steal their thunder. I think this can be partly addressed by [1] explaining the rationale for the questions, [2] describing in detail the firm’s specific role in creating the outcome, or [3] using softer phrases like ‘contributed to’ or ‘helped with’. Having the statements as propositions that the client can agree and disagree with, also reduces the risk of coming across as too self-serving.
Identifying the outcomes achieved might be difficult if the service is purely a commodity or the firm’s service role is basic compliance. However, if your firm is a non-commodity player then the only reason for not doing this is laziness or a lack of creativity.
Call to action
One simple next step is to pick a key client of the firm you have a good relationship with. Write down a series of draft value added statements and ask your client which ones they support, which they don’t and which ones are missing. I bet you’ll both find the conversation fascinating and value-adding in so many ways.
account planning, Audit, business development, client loyalty, growth, internal collaboration, key account management, marketing, planning, pricing, professional service firms, strategy management
Stress test your client strategy
In Articles, Commentary on 9 February 2015 at 8:12 amMost client plans I see are tactical, short-term and myopic. They are really sales pipeline documents with coffee catch-ups tacked on. There’s often very little about intended client strategy. By client strategy I mean a game plan to win – a big picture view as to how to respond to and potentially shape the client’s needs and buying patterns over time. A clear articulation of how to run faster and smarter than major competitors.
In my view, client strategies can be categorised into five areas. These categories provide a useful checklist in stress testing your key account plans.
#1 Price, risk and cost
Price and risk-sharing is a strategic arena that provides a wealth of competitive opportunity. Firms can leapfrog rivals by offering alternative pricing and risk-sharing models that go beyond convention and better address fundamental client needs. A recent case study on Bendigo and Adelaide Bank is a good illustration of this.
A number of professional service firms are creating an edge, not by race-to-the-bottom discounting, but by negotiating
long-term incentivised retainers to deliver positive outcomes to both the client and the provider. I think there’s rich pickings for firms that can truly understand the nature and scope of client risk and identify options to de-risk the client’s business.
Another strategy in this category is to reengineer the firm’s processes to significantly reduce cost-to-serve and to enable the firm to have greater price-setting discretion. Similarly, exploring new ways to measure and enhance perceived value can drive client commitment.
#2 People and relationships
Many clients plans concentrate on relationship mapping and connecting. This is great, but cherrypicking is a client strategy often not considered with any rigour. Cherrypicking starts by asking, “if we had to hire three people that would fundamentally advantage us with this client, who would they be?”. These new hires might be in a competing firm, in the client organisation or in an adjacent provider. A quick business case analysis of the options can be extremely revealing.
I recently heard of an accounting firm that captured the lion’s share of a major client’s spend by headhunting a senior manager from a rival firm. Client feedback revealed this manager had become the ‘go to’ adviser and was far more important to the client than the figurehead client relationship partner.
#3 Data and technology
Information and communications technology is increasingly being used improve client connectedness and service. A great illustration of this is a leading Australian law firm that provides each client end-user a tailored smartphone app that features:
Big data is going to be one of the next frontiers of client strategy. At the moment, most firms and clients operate with islands of data that are not linked in any meaningful way e.g. procurement, matter management, time recording, document management, billing, HR, client satisfaction, etc.. There’s much opportunity to integrate and analyse all this data and offer both the client and the firm deeper insights into how to run more effective and efficient projects.
#4 Delivery, capacity and coverage
At the heart of the Big 4’s multidisciplinary strategy is a compelling value proposition: our capacity, coverage and consistent service delivery allows you, Mr/Ms Key Client, to lower your transactions costs, leverage your scale, make you look good, de-risk innovation, facilitate new market entry and improve compliance across ALL of your operations. Did I mention ‘make you look good!’?
Benchstrength or depth of expertise in a particular area important to the client can be at the heart of a firm’s client strategy. It’s not that the expertise itself is superior but rather it’s the critical mass of high quality talent and a strong team approach that builds trust and creates preference in the client’s mind.
#5 Knowledge and expertise
The fifth area of client strategy relates to the firm’s knowledge – both [1] technical discipline expertise, and [2] understanding of the client’s business and industry. The key here is the firm’s ability to contextualise advice and make it relevant to the client’s specific needs. A firm may have a wizz-bang CRM, but it’s useless if they can’t use this knowledge to pre-empt competitors, bring fresh ideas to the client or simply make the advice more cost-effective and valuable.
In my experience many firms over-estimate the distinctiveness and durability of their knowledge. Consequently, if you’re number 2 or 3 on the client’s pecking order i.e. the challenger brand, investment in deepening client knowledge and its application can be at heart of your client strategy.
Another related client strategy in this category is “flanking”. This is about avoiding direct head-to-head competition with a strong incumbent and instead picking up work around the edges in new expertise areas and/or locations. Once a foothold is created a direct assault on the incumbent can then be launched.
In conclusion
In stress-testing client plans it’s important not to get too hung up on the client plan document itself. A plan is not a document. A plan is the outcomes you’re seeking and your intended actions to achieve those outcomes. What’s critical is that there clear evidence of robust strategic thinking and discussion around how to compete, where to invest and, the hardest bit, deciding what not to do.
Check out Barolsky Advisors’ Profit Growth Now! to make a step-improvement in your firm’s critical client relationships.
Photo source: http://picrutes786.blogspot.com.au
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