Here is an excerpt from article written by Randy Shattuck for the Professional Services Journal blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription, please visit http://www.internetviz.com/psjblog/.
To obtain a free copy of an especially informative Shattuck white paper, Five Strategies To Grow Your Professional Services Firm In a Tough Economy based on research with more than 200 Professional Services executives, please visit http://www.theshattuckgroup.com/5strats_splash.html.
Five Strategies to Retain Your Best Clients: Build a solid foundation for today, and the future
“We get our best opportunities when someone else trips,” said the VP of business development. “I don’t like to profit from other people’s mistakes, but the deals with the highest profits and the straightest path to a close come from prospects that have been burned before or treated badly.”
I listened intently, knowing what he said to be true. As much as research shows that it’s five times as difficult to acquire new clients as it is to retain existing clients, few professional services (PS) firms emphasize client retention or have formal programs in place.
“So I guess their loss is your gain,” I said. “But what are you doing to ensure your best clients aren’t in a revolving door?”
Retaining your best clients ensures a solid foundation
The Shattuck Group recently asked PS executives what is important to them. Over 70 percent stated that “retaining existing clients” was “very important,” and 22.3 percent said it was “important.” This makes sense. After all, it appears that a tough economy will continue in 2010, and we’ll all have to work harder to acquire new clients. So we’d better maximize opportunities with existing clients — right?
So why do so few PS firms have formal “client retention” programs, and why do so few existing programs offer measurable results? In our experience, client retention programs turn into client appreciation events, and that’s not enough.
How do you create a formal, effective and measurable client retention program that actually works? Use the following five client-retention strategies — not only to help you retain existing clients, but to increase profit-per-account and client referrals.
[Here’s one. To read the complete article, please visit http://www.internetviz.com/psjblog/.]
Segment existing clients
As much as PS executives want to retain every client, this is usually not realistic or even desirable. At any given time, up to 20 percent of a PS firm’s clients are inappropriate, profit-loss leaders or are too burdensome to support. We recommend that PS firms segment their clients into two buckets: “must-have” and “want.” What’s the difference?
Must-have clients are foundational and critical to the firm – where it would be nearly devastating to lose them. What makes them critical? This varies from one firm and one client to the next, but in our experience, some key criteria include:
Profit: The account is so profitable it would be painful to lose it.
Potential: You know you could impact its organization more than you already have — you have a future with the account.
Culture: There is a good fit between how you serve it and how the account likes to be served; your staff and the client’s staff work well together.
Investment: You have invested substantially in relationship-building with key decision-makers and want to see a return.
Clients whom you “want” are ones you hope to serve, but if they went away, you would be fine. Only the “must-have” clients will be candidates for a formal client-retention program.
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Randy Shattuck is a senior marketing executive and founder of The Shattuck Group, a marketing firm that builds high-value professional service brands. For 17 years Randy has helped PS firms become the de-facto standard providers in their markets and position for liquidity events that net stakeholders lifetime wealth.
Here is an excerpt from article written by Anthony Tjan. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit firstname.lastname@example.org.
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In the early 1980s Roger Fisher and William Ury authored what would become one of the best-selling business books of all time on negotiations, Getting to Yes. The book’s theme was how to gain mutual agreement between parties in an objective non-adversarial manner. The core assumption behind the book (and most articles on the topic of selling or negotiations) is that both parties want a “yes.” This post focuses on the importance of the “no.”
I received an email from venture capitalist and popular blogger Larry Cheng, describing an investment opportunity and ending with a great phrase: “as always a fast no is better than a long maybe.” I have since borrowed that sentence many times over. Too often people are not sure if they want a yes and instead create prolonged discussions because they are either: a) too embarrassed to say no, or b) just want option value.
My firm Cue Ball was recently raising capital during one of the most economically challenged periods ever to do so, and I found myself on the receiving end of “no” in more languages than I knew. As the economy improved and our portfolio held strong ground, there were suddenly many yeses and also many maybes. I found myself missing that fast no, because every maybe inevitably involved follow-up meetings, additional information, and by definition an uncertain outcome. A long maybe takes us away from the day jobs we should be doing.
I came to realize that the person delaying a decision is often not the decision-maker, but the person making the pitch. In our own desire to preserve the possibility that an investor could be swayed and cultivated, we create false hopes and become masters of inefficiency. Because of our relationship focus and soft-sell process, we sometimes forget the need to push for the “ask” and more importantly, for a definitive decision. For prospective investors on the other side of the table, there’s little downside to delaying a definitive no. Time allows one to see more information and make a more informed decision. How can you blame them?
So if you are on the pitching or selling side of an opportunity, what can you do to drive a prospect to decision? Here are four things that can help:
[Here are the first two. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit email@example.com.]
1. Be clear on the “ask.” I have seen people pitch us with brilliant clarity of ideas, but a cloud of ambiguity on what they want from an investment partner in terms of both capabilities and dollars
2. Set a firm deadline and sense of urgency. When meeting any prospective investor, customer, or buyer, set a clear deadline for a decision. In most cases you can get to a definitive yes or no just by being clear about a close date.
A yes is obviously the answer you always hope to get, but the ability to get a no, especially if it is a quick one, is critical to maximizing efficiency and effectiveness. The sooner you get a no, the faster you’ll be able to look for that next yes.
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Anthony Tjan is CEO, Managing Partner and Founder of the venture capital firm Cue Ball. An entrepreneur, investor, and senior advisor, Tjan has become a recognized global business builder.
In an article that appears in the May (2010) issue of Harvard Business Review, Jean Martin and Conrad Schmidt share their thoughts about on how to keep your top talent. If you do not subscribe to HBR, I strongly recommend that you purchase Reprint R1005B.
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In our research, we uncovered a core set of best practices for identifying and managing emerging talent.
1. Explicitly test candidates in three dimensions: ability, engagement, and aspiration.
2. Emphasize future competencies needed (derived from corporate level growth plan) more heavily than current performance when you’re choosing employees for development.
3. Manage the quantity and quality of high potentials at the corporate level, as a portfolio of scarce growth assets.
4. Forget rote or functional business unit rotations; place young leaders in intense assignments with precisely described development challenges.
5. Identify the riskiest, most challenging positions across the company, and assign them directly to rising stars.
6. Create individual development plans; link personal objectives to the company’s plans for growth, rather than to generic competency models.
7. Reevaluate top talent annually for possible changes in ability, engagement, and aspiration levels.
8. Offer significantly differentiated compensation and recognition to star employees.
9. Hold regular, open dialogues between high potentials and program managers, to monitor star employees’ development and satisfaction.
10. Replace broadcast communications about the company’s strategy with individualized messages for emerging leaders – with an emphasis on how their development fits into the company’s plans.
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If you do not currently subscribe to HBR, I strongly recommend that you purchase Reprint R1005B.
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Martin is the executive director of the Corporate Executive Board’s Corporate Leadership Council, based in Washington, D.C.
Schmidt is an executive director and chief research officer of the CEB’s Corporate Leadership Council, and is also based in Washington, D.C.