Much is said about the benefits of long-term client relationships to professional services firms. How the value delivered from one sustained relationship can far outweigh that offered by a collection of smaller, single project opportunities. And yet we also hear that clients are now choosier and more fickle: switching between advisers when they see a lower price or slightly different offer.
What can professional services firms do to ensure their clients’ heads are not turned by the latest competitor pitch?
Besides the obvious and fundamental steps of always doing a good job and not being complacent, the constant call from marketers and advisers to the professions is to focus on being different. Your sustainable competitive advantage is meant to come from a unique selling point (USP), which then sets you apart from your competitors. This distinction is meant to put ‘clear blue water’ between you and any other firm so that the choice for your clients is easy and obvious. That uniqueness is then maintained by a constant wave of service innovation that sees you forge further ahead of your competition.
However, despite firms always claiming to be different from everyone else, I have rarely seen a genuine USP, even less so one that is sustained long-term and cannot be copied or replicated with some ease. The nature of services, particularly professional services, is that distinction is hard to achieve and innovation, while regularly discussed, is rarely delivered.
Professional services firms have no intellectual property or patent regulations to protect them, as is the case with manufactured goods. The only thing that is really distinctive about the firm – the people – walk out the door at the end of the day and, god forbid, could walk across the street to the competition the following morning. And that longed-for innovative culture is often hindered by an unwillingness to take risks or invest in service development with a longer term pay-off.
In addition, professional services firms tend not to invest significantly in their brand identity, which again in the product world gives customers a reason to choose one provider over another. There are the ‘Big 4’ accountants or ‘Magic Circle’ law firms, but the gap in perceived brand value between them and the next tier is nothing compared to Coca Cola and the second tier of soft drinks firms or Nike and other sportswear businesses.
My contention is that professional services firms should focus less on the nirvana of differentiation driven by uniqueness, distinction or constant innovation and play more to factors which cement the relationship and make it either hard or at least time-consuming for the client to move. You should look to make the relationship ‘sticky’ and increase the risk, cost and time involved in switching. I’m not saying you should rely on inertia alone, but at least make the client realise that changing advisers is something they would rather not do.
Here are some things you can do to make sure you and your client have sticky fingers:
- Make sure you have multiple touch points – both in terms of people and services. Don’t rely on a one-to-one relationship, however great it is. Work on building a portfolio of services and projects and extend your tentacles across the client’s organisation.
- Be really easy to do business with. Make the client realise that if they change they’d have to establish all those processes again and wouldn’t that be such a chore!
- Develop an understanding of the client that is second to none. See if you can get to the point where you can teach you client contacts something about their own business that they don’t know themselves.
- Lock the client into long-term contracts, framework arrangements and even volume or time-based discounts. Don’t let the contractual relationship end with the current project.
- Build relationships with the client’s other advisers and stakeholders e.g. their regulatory authorities. Make yourself an essential member of the client organisation’s extended family and/or supply chain.
- Make sure you’re well-known for the services that you offer the client. Be a visible expert, renowned for being the best at what you do and always give the client you’re A team.
- Identify an opportunity or project that is of real value to the client’s business where you can think about sharing both benefit and risk. It doesn’t need to be a big project, but it should be complex, long-term and business critical to the client.
All of these should increase your value to the client and improve the relationship overall, but at the very least they will make the client realise the costs involved in switching so they stay stuck on you!