As business owners, managers and employees of any organization know, it is challenging to maintain your client base in the best of times, but in a recessionary economy (with increasing regulations and competition for every client dollar) the challenge can often seem insurmountable. We have clients that we want to keep and who are likely experiencing the same issues as we have in our practices: a need to contain or reduce cost and a mandate to maintain revenues and customer service levels while continuing to grow the organization’s client base. This is no small task for any organization, but for professional service firms, in which prospective clients often view services as commodities and business expenses versus a business investment and strategic tool, it can often look and feel like we are on one side of the Great Wall of China and the clients are on the other side … and we are climbing, climbing, climbing to get over that wall.
Keeping the Clients
When the economy is tight and revenues and profits are down, every dollar a client spends is valued more highly than when times are good. Clients start looking for the “best deal” as a means to cut costs in the short term, often without thought to the impact on their companies in the long term. They become pennywise and dollar foolish. One accountant is as good as another. They can Google professional services of bookkeepers, accountants, franchised tax preparation firms and consultants across the country and around the world, and the bottom line in choice is cost.
What happens when we compete solely on cost? We become the very commodity the client perceived us to be. We get engaged in a battle of pricing and bidding for projects that drives our practices further and further into a cost perspective within our own operations. As a result, we begin focusing not on the client and services but on cost reduction and avoidance. We develop tunnel vision, no longer focusing on the relationship with the customer and how to differentiate and add value for the customer that they can see, feel, and translate to improved performance, but on internal cost structures, managing staff time to reduce project costs and using less expensive resources to work with the client.
Client retention is dependent on our ability to establish a relationship that goes beyond the cost of services to value recognition and management. As professional service firms, we need to be able to pass the test of “how are you different from your competitors?”—not in your own eyes, but in the eyes of the client (and prospects). If you don’t want to be treated as a commodity service, then don’t act like one. Stand out from the competition on what you provide for the investment a client makes by using your firm.
Copyright ©2009 Lea A. Strickland, MBA CMA CFM CBM GMC