When Life Gets Tough
Part Two: Holding on to Existing Clients
By Adam
Radzik
Consultant to Professional Firms
A recession implies less business activity and, unfortunately, professional firms will suffer along with everyone else and find that their revenues are down while their variable costs continue to climb, as an example in the health insurance area. Getting new clients will be more challenging in that environment, and certainly there will be a greater need to train professionals to become superior marketers as opposed to accepting them as mediocre marketers or non-marketers altogether.
 But let's set aside the need to get new clients. Let's talk about the need for firms to retain their existing clients.
What is likely to occur? It is extremely likely that a firm's existing clients will become the targets of competing firms. The competing firms will be calling, mailing, lunching and offering their services at reduced prices in order to persuade and seduce clients to leave their current professionals and try them out.
Some clients will actually succumb and leave their existing service provider and find a new home elsewhere. Recently, a New York firm lost its major Midwestern client that had been with it for 29 years. That client provided the firm with, on average, $5 million of annual revenue! Why did the client leave? Because it was unhappy. Did the client relay its displeasure? It thought so, but the firm was completely taken by surprise and is now struggling mightily to survive the dramatic loss of income.
The lessons to be learned are the following:
- Firms need to take the temperature of their client relationships with regularity and frequency.
- Even very long-term relationships can turn sour for reasons that are not always apparent.
- In a difficult business environment, the competition will become far more active and aggressive.
- High satisfaction levels of clients become critical in an economy that is significantly troubled .
The question becomes who should be the one to administer what is called the Client Attitude Survey? Should it be a member of the firm or should it be an outside expert? The problem is that clients are often reluctant to share their concerns with a person from the firm. The clients take a non confrontational position. After all, it can be unpleasant. This attitude does not help the firm to determine how the client is reacting to the service being provided.
Without a doubt, clients tend to speak more frankly with an outside expert. They feel freer to express their disappointments, their concerns, and their honest appraisal of the firm's strengths and weaknesses to an outsider. A similar phenomenon takes place with bartenders, who are viewed as safe recipients for complaints about one's spouse.
Firms need to know how clients view the quality of their service, how clients felt about the work outcomes, were their expectations met, whether the communication process was appropriate, whether clients were billed fairly, whether clients have other needs that have not been addressed as of yet, whether the clients plan to use the firm in the future and whether the client would be inclined to encourage other companies to use the firm's services?
The value of a well- executed Client Attitude Survey will almost always exceed its cost. |
