Adventure of Strategy

So you've had this important client (this VERY important client) for more than 30 years. You've been doing good work for them and your firm has grown steadily on the steady flow of fees. How secure is your position?

This is exactly what Bob Bernstein and Skip Rein, founders of Missouri-based ad agency Bernstein-Rein must be thinking right now. According to an article in Fast Company, Wal-Mart are putting their $578 million advertising account up for review for the first time in 30 years. Bernstein-Rein and Omnicom GSD&M have been sharing that revenue river for three decades, the former growing to 300 staff in the process.

Of course, the time to consolidate one's position with one's client is not only when one hears that they are about to review that position. In this case, the catalyst is a new CMO at Wal-Mart, who is looking to shake off the "deep discount" image in favour of a more trendy, upmarket look and feel that will attract wealthier customers. A short magazine article can't cover all the issues exhaustively and presumably Bernstein-Rein didn't last 30 years with Wal-Mart by providing anything less than satisfactory service. Who knows: they may even survive the review and last another 30 years.

The point is: This case study reinforces a point that I made in a recent post (What Do "Bad" Clients Cost Your Firm,) that "satisfactory" service doesn't hack it in today's market. David Maister has a great line on this, when he explains how clients score the "scale of 1 - 5" questionnaires that they sometimes get. Clients, he says, interpret the figures like this:

4. You're OK. We'll pay your bills and keep on using you.
3. Call me (no big deal, but since you asked ....)
2. We're not using you anymore
1. We'll trash you to anyone in the market that cares to listen
5. We're delighted and your position is secure.

A sobering insight! Most of us grew up in an educational environment where 51% was a "pass" and 75% a "distinction." In client retention, anything less than 80% is dubious. What can be done to get those scores up? (Let's be clear here: I'm not talking about stuff that can be delegated to the "marketing people" but rather what your lawyers, accountants, consultants, engineers or in this case graphic designers etc can do to deepen and enrich their relationships with their clients.)

The answer is actually quite straightforward: Talk to your clients. With the clock off. Learn more about their business. About 'what keeps them awake at night.' About their market and how they see it developing. This will enable you to (1) provide them with more value and (2) customize your professional input more closely to their needs. In most generic client surveys that I have seen recently, where these issues are not right at the top of the list, they are very close to it.

If your firm is consistently scoring less than 4/5 (assuming that it is at least progressive enough to be tracking client satisfaction) then best you don't toss that headhunters business card in the waste-basket just yet.

Comments, as always, are most welcome and may be posted below. Please also feel free to forward any posting on this blog to anybody else that it may interest.

Rob, thanks for the acknowledgment here. Your readers may want to know that the implication of my analysis of 1-to-5 questions is that the only valid way to interpret them is NOT the average score, but the percentage of top scores (ie 5's.) Getting 4's buys you nothing and contains little infomation other than you are not screwing up.

Fred Reichheld (the loyalty expert from Bain) has a terrific new book out based ont his same insight, called THE ULTIMATE QUESTION. He gives hard data showing that financial results can be predicted by the percent top scores to the question "Would you recommend us to a friend?" (Actually his analysis is a little more refined, but it's the same basic insight.)

My pleasure, David. Fred Reichheld's material was the basis of the blog posting that I did a couple of days back on how much "bad" clients cost the firm. Reichheld's is the first model that I have come across that reliably predicts the value of a "good" client versus a "bad" client. Really excellent, groundbreaking stuff! Rob.

And yet how many professionals even dare ask the question? Isn't the crux of the problem that professionals of all stripes get to a position where they become part of what I call the 'entitlement or tenured culture.'

Where they can never spend what they earn unless they're totally profligate and where bending the rules has become part of the culture. This is surely wrong at many levels.

In my view, this medium blows that idea to smithereens. There is no hiding place. Look at KPMG and the tax fraud thing. That's not going away any time soon. Now we have PwC in terrible trouble in Japan with a massive containment program going on.

Professionals can help themselves tremendously through this medium. Here I'm thinking about David's blog and the Deloitte podcast. These are great examples where the accumulated knowledge of a number of people is making for an incredibly rich and inviting learning experience.

That's something you can't get out of academic texts but only through 'doing,' trial and error. the true beauty of this medium is that if people see you are passionate and genuine, they ARE incredibly forgiving. In my mind that's priceless.

If on the other hand you are a clear fake, then the bloggers are merciless. Look at the furore at Wal-Mart about their attempts to reverse negative blog postings by recruiting blog fans of the company.