This article was originally published in PM Magazine's April 2020 edition.
A major wine retailer that I occasionally frequent, recently underwent a nationwide store refurbishment programme.
Subsequently, upon walking into my local shop, I was greeted by a smiling member of staff, immediately offered a glass of wine and the opportunity for a wine tasting. “They are having to work harder for my money” was my immediate thought.
Across the retail sector, operators are having to invent new ways to entice customers away from the internet and back to the high street. One suggestion in particular caught my eye. In a recent report, Collaborative Retail, from analysts Gekko, 73% of the 2,000 adults interviewed admitted that they thought that independent retailers should collab- orate to come up with innovative ideas like sharing shop space. Collaboration will improve the customer experience and drive sales, goes the thinking.
Are professional services firms subject to the same pressures as the retail sector? I believe so.
A worrying trend was highlighted in the 2018 Inside the buyer’s brain study of 1,400 buyers and 3,000 sellers of professional services by Hinge, a US research- based branding and marketing consultancy. Over a five-year period between 2013 and 2018, buyers were asked how likely they were to stay with the same service provider in the subsequent two to three years. In 2013 the percentage was 71%, but by 2018 the number had declined to 57% – a near 20% fall. Statistics enough to keep the most hardened Managing Partner awake at night. In general, clients are becoming less loyal.
Professional services providers will have to work much harder to overcome the more indiscriminate habits of buyers. More than ever loyalty cannot be taken for granted and must be earnt. Deeper and more effective collaboration is the key to unlocking greater client loyalty.
What do clients want?
Research shows that technical expertise is a leading indicator of what clients value most from their professional advisors.
However, many modern buyers of professional services want more than commoditised advice. They have higher expectations of their relationship with their lawyers, accountants or other professionals.
Clients want what I call MABFL – More and Better for Less. They want value. If we are being honest, it is important because professional services advisors are easy to replace, and the evidence would tend to show that they are being replaced with increasing regularity.
US academic and author David Maister in The Trusted Advisor speaks of clients really wanting their professional advisors to do more things ‘on spec’ – e.g. investing time in preliminary work in new areas. He also speaks of clients wanting their professional advisors to lead their thinking, and spend more time helping them to think and develop strategies.
In a 2017 study by Nisus Consulting, nearly 2,300 buyers of legal services (50/50 Legal qualified to non-lawyer) were polled on the most important factors driving client loyalty. The findings were instructive, with strategic thinking and personal chemistry topping the list – both key elements of successful collabo- ration. My interpretation is that clients are telling us that collaboration is not just desirable but is a prerequisite to maintaining and developing relationships.
Full client service collaboration in practice
Full client service collaboration goes further than simply integrating expertise with colleagues from different practice groups or areas of specialisation – although that is an essential part. Beyond that, it is the unprompted offering of insights and educating clients with new ideas and perspectives. It is both ‘internal’ and ‘external’ collaboration.
For internal collaboration to succeed, firms must constantly make it an organi- sational priority. A clear structure, meas- urement indicators, training and financial incentivisation are important components.
Successful external collaboration also requires a client-centric mindset, and one where it is essential that the professional advisor takes the lead. It is simply no longer enough to wait for the client to make contact when an issue arises. True collaboration always comes from putting the client front of mind – even transactional clients. Questions such as: What more can I do to help? What has the
"Clients are telling us that collaboration is not just desirable but is a prerequisite to maintaining and developing relationships."
Key elements and obstacles
In order to embed a culture of full client service collaboration and add structure to its development and implementation here are some key principles:
- A critical appreciation that every team member understands that a firm’s clients are their greatest assets and act accordingly
- An understanding that excellent client relationship management begins with the leadership team
- Collaboration involves prioritising client’s objectives
- Strategies and systems for how clients are interacted and collaborated with must be adopted
- Genuine collaboration involves asking clients what they want and acting upon it.
From my experience of working for leading professional services firms, I know that, whilst these may be laudable aspirations, putting them into practice is more difficult. Distrust of the ability of colleagues and the desire to hold onto clients frequently leads to silo working.
The financial benefits of a collaborative approach are often ambiguous.
Indeed, collaborating with a client to gain a deep understanding of their needs, strategy and aspirations can come with a high price tag – unpaid time. For each client ‘How much collaboration time is enough time?’ is a difficult question to answer.
For those professionals conducting mainly one-off transactional work (such as dispute resolution, commercial property or family matters for lawyers), the
The benefits of a collaborative full client service culture
If the obstacles to full client service collaboration are to be overcome and client loyalty increased, the benefits must be clearly understood and communicated.
There is no better place to start than the fact that greater internal and external collaboration brings financial rewards.
Research has shown that partners who share work that they originate, end up with significantly bigger books of busi- ness than those who tend to hoard work.
In addition, by teaming up with colleagues from other practice areas, colleagues have a better understanding of what they have to offer.
Clients in a true collaborative rela- tionship with their professional advisor are not only less likely to move to another provider, but are more likely to introduce more complex, higher value work to their existing providers. For true collaboration, clients are willing to reward more than simply technical expertise.
Retained loyal clients are more willing to accept the odd lapse or mistake on the part of their advisor as well as being more likely to recommend them to others.
If collaboration drives client loyalty, then there will, of necessity, need to be less reliance on the boom and bust search for new clients. We all know that it is more expensive to win new clients, than to retain existing ones.
Finally, if no better reason is needed, genuine collaboration with clients can help preserve revenues during economic downturns.
Polishing or sea change
What my local wine retailer is doing is endeavouring to ‘collaborate’ with me to create a bespoke experience that I find memorable and rewarding. They are seeking to create a bond that will cement our relationship rather than simply selling me bottles of wine. Professional advisors need to build similar bonds.
For some, the collaborative approach comes naturally and polishing what is already being done is all that is required. For others, it is a sea change in the way in which clients are perceived and inter- acted with. In both cases, what is certain is that true collaboration is key to client loyalty.