Friday, November 20, 2009

Focusing on Your Key Client Relationships

The Pareto Principle is evident among most A/E firms, with roughly 80% of their revenues coming from 20% (or less) of their clients. Obviously these few client relationships are critically important to the well-being of our firms. Yet relatively few firms have adopted a key account management approach.

The stakes are high. The loss of a key client can have a devasting effect on a firm. Over the years, I've witnessed the defection of a few top 5 clients, resulting in millions of dollars in lost revenue--and several staff positions. In one case, the firm lost over $70 million in anticipated backlog.

Surprisingly, there were no dramatic failures in any of these situations. No design busts. No blown schedules. Not even the loss of a key staff member. The shortcomings were much more subtle--and cumulative. Misunderstandings. Inadequate communication. Perceived slights. Differences in expectations.

The fact is that any of these situations could have been easily avoided. These key client accounts simply needed the management attention they deserved. They needed a disciplined, collaborative approach to ensure the firm was giving appropriate care and attention to their most valuable clients. Such an approach might look something like this:

Appoint an account team. Your most important client accounts should never be entrusted to a single individual. Even the best client managers can make mistakes, or have blind spots, or leave your firm! They may be too close to the work or the client to have an objective perspective. The collective brain power of an account team increases your chances of having a sound account strategy and taking good care of the account. This team should have a leader (account manager) and meet at least monthly. What should they be working on? Raising the level of service. Ensuring the success of current projects. Planning how to position your firm for new work with the client.

Develop a key account plan. This brief written document outlines how you intend to strengthen the client relationship, address any service deficiencies, position your firm for new work. Have the account team spend a few hours developing the initial plan, then update it periodically as things progress and new situations arise. The following outline for your key account plan is suggested:

1. Describe the Client
  • Overview of the client (size, services, organization, etc.)
  • What are the client's priorities? What are the projected expenditures?
  • What are the client's major challenges? How can we help the client be successful?

2. Assess the Relationship

  • What work have we done for the client? How have we performed?
  • What is the current state of our relationship with the client?
  • Who are the key decision makers? What is our relationship with each?
  • What are the critical success factors for each? Do we know?

3. Evaluate our Positioning

  • What are our relevant strengths, differentiators, weaknesses, vulnerabilities?
  • Who are our primary competitors? What is the current standing of each?
  • What is our current positioning relative to our competitors? Where do we need to improve?
  • How can we improve performance on our current work with the client?

4. Define our Strategy

  • What are our goals in terms of services, projects, revenue, etc.?
  • How do we leverage our strengths?
  • How do we mitigate our weaknesses and vulnerabilities?
  • What is our single best opportunity at this time?
  • What are the next best actions we need to take to strengthen our position?

Give top priority to improving service to your key clients. There's a tendency sometimes to take our best clients for granted. We work hard to win new clients and address problems with existing clients. But when things seem to be going well with our top clients, we may not give them the attention they deserve. Don't let your guard down! There's always someone trying to displace you, and they may be providing that next level of service and attention. Never be satisfied with the status quo.

Be sure you're getting regular feedback. Only about one-fourth of A/E firms formally gather feedback from clients. Feedback is the bedrock of great service. You can't be sure you're serving your clients well if you don't ask. Certainly, you want to be certain that your top clients are fully satisfied with your performance and service. For more insight into how to do this, check out this earlier post.

Become a trusted advisor and valued resource. In their book Clients for Life, authors Sheth and Sobel describe the path from "expert for hire" to "steady supplier" to "trusted advisor." Obviously the latter is the more secure position. Many firms serve only as a steady supplier even for their top clients. That leaves them vulnerable to being displaced. Trusted advisors are indispensable. They provide valued insight, not just expertise. They work collaboratively with the client, not just perform tasks. Are you a trusted advisor with your top clients? If not, determine what you need to do to become one.

2 comments:

K.A.D. said...

Mel, these are excellent points. So many firms focus on getting the job but don't build the relationship once they get it. THis article is a great resource.

Mel Lester said...

Karen,

Thanks for your feedback! I'm glad you found my post helpful. We can all use the regular reminders to tend to the relationships that matter most.

Mel