How many clients are truly loyal to your firm?
You’d be surprised how huge the divide can be between perception and reality on that question.
Whenever I’m engaging with firms on a client loyalty assessment, I expect many of the partners within that firm to underrate themselves slightly. Not on their expertise, but on the state of their client relationships. But when I asked the above question to the partners of a CPA firm, guess what they said?
They believed that 1% of their clients were actually loyal. 1%!
In reality, Value Drivers would later find about half of their clients were loyal to the firm. But the partners saw their own firm so much differently – and so much worse.
While the percentage differences between perception and reality were a mile apart, it’s far from the first time that we’ve seen a professional services firm view its client loyalty more negatively than it actually is. As a matter of fact, we’ve never had a firm overrate themselves in relation to what their clients perceive! That’s right: Professional services firms are consistently underrating their value.
So how does such a gap occur?
In many occurrences, the problem starts when you undervalue what you can do for a client. When you don’t perceive your own firm is delivering enough value, you’re probably leaving a lot of money on the table. That’s because it’s likely you are not doing some or all of the following:
Asking for referrals
Charging enough for out-of-scope work
Selling enough (or any) additional services to existing clients
Pushing your partners to upsell services
Wanting to know the truth – even if it hurts occasionally
With such inaction in the face of opportunity, the CEO can become the Chief Complacency Officer. There’s no telling how many more problems firms can be solving for their clients, creating millions in additional revenue streams. It’s there for the taking…so why wouldn’t a firm take advantage of it? The excuses are many – and few of them hold water.
“We don’t have enough people to manage that additional workload.”
You can identify and hire people. Yes, some may be more challenging to find than others but consider the return in having someone to help manage one additional service and strengthen a client relationship. The effort and challenge of recruiting more talent hardly means a firm should refrain from looking entirely.
“Our partners don’t like to pitch services they don’t thoroughly understand.”
You’re asking your partners to educate clients on areas of the firm that they may not be familiar with. You’re not expecting them to deliver the new services. Instead, you need them to leverage their understanding of their clients to identify their unmet and emerging needs and then introduce them to people in your firm who can solve their problems. In doing so, a partner will enhance the value of your firm in the eyes of that client.
“We’re already bringing in a large amount of revenue from our client base.”
That’s good – but that’s describing the situation today. Think about the average tenure of a client in your field and what it would mean to sell just one or two additional services to that client over the life of doing business with your firm. Let’s take Accounting, for example. The average length of a client relationship with a CPA firm is 7 years – how much could a CPA firm earn in additional revenue for every additional service sold to an existing client…over 7 years?
Internal Change Isn’t Billable. But It Will Be.
See, these aren’t issues relating to bandwidth or recruitment or sales like some people portray them. Take a closer look and you’ll realize that they often lead back to whether or not management is motivated to change or all too comfortable with business as usual. True, yours may be a business measured on billable hours and some of the changes you’ll need to make in terms of your internal systems and processes are non-billable in themselves. Yet, what might those billable hours in the future look like once you add one service, one department or one contact for your existing clients? Better yet, how much further will you have strengthened the relationship with your current clients?
Real Value Can’t Be Discovered In A Vacuum
By the way, if you’re seeking a deeper, more genuine sense of why your clients stay with you, you can’t just “ask the partners what they think.” Even if your internal findings are insightful, they’ll never capture the complete picture of loyalty and retention until you solicit candid feedback directly from your clients.
Can you handle the truth? Fasten your seatbelts and prepare to handle it. It’s worth hearing and acting upon. Every time. Especially since we’re certain that far more than 1% of your clients are loyal to you.
Are you a leader with courage?
Courageous leaders do not fear feedback. They proactively seek out the perceptions of others to know if the messages they are sending, the vision they are projecting, the values they are modeling, the plans and commitments they are holding people accountable to, and the changes they are implementing are taking hold as needed. Good leaders do not get defensive or angry when they don’t hear what they want to hear and they act upon the feedback to enhance their effectiveness and credibility.
You’ll be able to learn more about this and the other 25 attributes that characterize effective leaders with courage in my forthcoming book “Being A Leader With Courage: How To Succeed In Your C-level Position In 18 Months Or Less.”
Will this be the year you finally seek feedback from your clients?
If it is, you’ll want to check out our client loyalty assessments. In just 3 months, we'll provide you with a terrific sense of where your vulnerabilities in client loyalty lie and what additional services your clients need. When gaps in perceptions are revealed, you’ll also receive the constructive feedback you need to change your processes and behaviors.