Factor Two: Client Retention
by Kevin D. Crone
(from the 14 Factors that Could Prevent You from Growing Your Service Business)
71% of firms say customer retention is the biggest challenge of the future. Yes, you’re doing okay and you may think there’s no threat because there’s plenty of work out there. Today, nothing lasts and there’s a beginning, a middle and end to everything. The world you compete in is changing rapidly (as we described last week, in Factor One: Keeping up With the Speed of Change). The flood of new local and foreign firms that are eager for new business puts pressure on pricing models.
As a result of increased specialization, the technological revolution, the information explosion and a multitude of other factors, a seemingly unlimited number of people deliver what could be considered professional services with everyone providing a myriad of alternative solutions to client’s problems. Everyone is competing for your client’s time, attention and money. It’s tough to be their main stakeholder. It’s easy for every client to find and defect to various providers.
Look at the accounting business, new innovative companies such as Freshbooks, ZERO, MYOB, SAASU, INVOICE2GO are all grabbing share. Plus watch out when they’re all integrated with current systems everyone uses such as CRM, ERP, etc. All of this will lead to a loss of client revenues and reduced margins.
Management must continuously consider a client’s behaviour and react accordingly.
Look how the world makes purchases:
1. They become aware of a need
2. They begin a search for a solution (usually Google)
3. Evaluate options and compare leading providers
4. Make a purchase decision
5. Demonstrate post-purchase behaviour based on experience
Your clients are searching, learning, are surprised with what’s out there. They don’t necessarily ask you. Besides, they hardly ever hear from you unless they initiate the conversation.
Your clients expect communication. They want you to know their business and their trends. They want experienced teams managing their issues. They want someone to help decrease their costs and show them how to increase revenues. Yet most service businesses believe timeliness, quality and brand matter the most. Although still important, according to our research, only 38% of buyers consider that to be number one.
Most clients don’t see the value in fees being just about those things. They want to be appreciated; they want someone to interrupt their thinking, teach them about options, de-clutter the noise, guide and advise on strategies and actions. They want a trusted, proactive advisor. If they don’t get it, they go cheap. Only 14% of buyers can tell the difference between service providers. According to them, “They all sound alike and do the same things.”
Within this sophisticated market, you either go on price by looking for operational efficiencies or go to gain a deeper understanding of your clients needs and expectations to determine the trends in your clients world and to respond proactively with new services and offering that match up.
Yet, in our experience, very few service companies engage their clients in listening meetings or have customer acuity systems. In one of our studies, more than a third (34%) indicated that in order to address existing or anticipated challenges, their organization planned to develop a customer feedback system that works. One respondent noted the need to “adapt to changing customer behaviours.” Companies that can zoom into meaningful customer insights are more likely to understand what draws their customers to them, and what keeps them loyal.
In my business coaching experience, ‘human-doers’ listen more to confirm their past experiences and have a hard time seeing how it is, rather than how it is for them. Therefore, few study their client’s markets or organizations, so they can determine how to help their clients connect the dots.
I facilitated about ten half-day client meetings for service providers over the last year and, in every case, it was the first time they’d ever done one. I never let my client team speak. They listened, sat at the back and took notes. I even brought duct tape to put over their mouths just in case they did. I asked their clients more about trends I had researched in advance, let them see their future challenges, rather than ask them if they liked my client. In each case, mouths dropped, new eyes with new views appeared and the clients felt that someone helped them distil what they needed. The clients were thankful and impressed. No supplier had ever done that with them before.
After a lot of post-meeting dialogue, new offerings were seen as possible. New approaches to prospective clients were created. A differentiated support system was more than words and intentions.
It takes shifts in perspectives, a different context of what it takes to serve today and what a real value service means to the marketplace. Most importantly, how to constantly engage their clients in meaningful, valuable dialogues. That meeting alone began to differentiate them from their competitors. No one does this! Why don’t service companies do this kind of meeting? More than anything, it’s because billable hours is the only action that is valued. Taking time to listen to clients in a group, rethink as a team, is too fuzzy for technical people and they just are uncomfortable doing it.
Even if you have done these kinds of things, we found most clients don’t know or understand your strategies. Your clients have the same issues as you do. Yet too often in their newsletters, service providers engage their clients by talking about themselves, their wonderful staff, how they all played golf together rather than create a real compelling relevant story of how their new business strategy is about helping their clients grow and then communicate it in an insightful, compelling manner.
Folksy relationships and networking still matters but, being a value-creating, trusted advisor means a lot more in customer retention. Your customers walk and so do your people if value isn’t constantly created, communicated and demonstrated.
What must be done?
- Study the trends of your clients and the market they compete in.
- Proactively begin to engage your customers in conversations about what is going on in their market.
- Begin to advise, teach, and coach your clients. Help them see what they want, is what you can provide.
- Engage your people in experiences that shift their perspectives.
- Coach and train your people in being value-creators and trusted advisors.
- Get competent at creating business cases for your clients actions.
- Create and provide new value services that help your clients increase revenue or reduce cost.
- Take some coaching on client acuity systems, client listening and becoming a trusted advisor.
- What stood out for you today?
- What is your first step?
Next week, we’ll review Factor Three. It’s a factor that only the best, most profitable companies are willing to face.
Have a great week!
Kevin D. Crone
Dale Carnegie Business Group
(905) 826-7300 / 1-800-361-2032
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