The Management Challenge
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The Management Challenge

The Management Challenge

The Management Challenge

(Please Note: Today’s blog is written by our associates – soon to be Partners – in the Netherlands.  Interestingly, they have created a burgeoning practice around account management and client retention without having a single in-country referral to rely on.  That’s particularly compelling to us in the US, because referrals are the only way we’ve ever procured new clients – with the exception of our very first ones.  This is the creative and effective way they’re doing it.)

These days we meet a lot of CEO’s and other senior executives. Client retention and maintaining strong margins are daunting challenges in the current economic environment. They are at the top of the agenda in the boardrooms of most companies we encounter. So, with the success we are enjoying, we get invited a lot to share our vision and experience on this matter. Something we do with great pleasure.

Of course, such a conversation leads to talking about the challenges and solutions in their business. Interestingly, these conversations never start with their vision on client retention. The first things that come to the table are strategies that are being designed or implemented right now and how these strategies must or might be the answer.

Asked to challenge these strategies, we prefer to ask them about their vision on client retention. We then talk about the indicators they use to predict loyalty, how account managers report on the account status and what they think it really takes to retain a client.

In an earlier blog we wrote how “Money Flows to Value” (see blogpost dated April 2, 2014 http://clientretention.com/the-blog/page/2/). This rule of economics governs all commercial challenges. Clients spend their money on what is valuable to them in the future. So, when asked to challenge their strategies, of course, this is where we start.

Usually one of these two things become clear to us:

1) The dominant thinking is not about creating relevant value for their clients, but about turnover and client satisfaction, or;

2) When relevant value for clients is the dominant thinking, they do not walk their talk. In other words, they talk about value for clients but have no effective methodology in place to assess its’ actual relevance to their client’s prioritized expectations.

Like most insights form the Clients for Life® client retention process, ‘Money Flows to Value’ is just common sense. But as John Gamble, Tenacity’s founder, is fond of saying; “Common sense is not always common practice”. Once this becomes clear to our conversation partner, we readily agree on a ‘Management Challenge’. This becomes the starting point for new and effective strategies on client and margin retention in a collaborative vision with senior management.

The ‘Management Challenge’ is a two-hour meeting with senior management in which the existing thinking on client and margin retention is challenged by one of our Principals. Our alliance with Tenacity allows us to draw on experiences from all over the world. This is readily recognized as best practices in strategic account management that has been codified from nearly 30 years of working with some of the world’s leading services management companies. We have found it to be an eye opening process and it is very much appreciated by participating executives.

Listed below are just a few common examples of current executive thinking that is readily challenged:

• “Client retention is an outcome of client satisfaction.” No, it is not. Satisfaction is about the past and is not predictive of retention.  Reliance on it is dangerous, in fact. Retention is achieved as an outcome from committing to an account management process that consistently provides and documents relevant value for their client’s future.

• “Account managers can best be managed by results (turnover, margin and retention)”. In fact, results are not the goal of account management. Results are an outcome and therefore, by definition, cannot be influenced directly. But an outcome of what? It’s the value perception of the client that drives the results. So, the goal of account management is to deliver and document relevant value. Turnover, margin retention and client retention are the natural outcomes.

• “We should deliver as contracted. That is what our clients want.” Despite the effort you surely have put in drawing up an excellent contract, the value perceived by the client on the C – Level is not about delivering what you contracted for. Value to a key decision maker is in delivering on their expectations in the existing cooperation and the starting point is in realizing that no more than 10% of their expectations are captured in the contract by SLA’s, KPI’s, and so on (again, we refer you to the blog “Money Flows to Value”).

Do you recognize any of the above thinking? We would be pleased to do a ‘Management Challenge’ for your team too. So don’t hesitate to ask us if you think this will bring value to your organization.  Thank you.

Marco Reijntjens & Martijn Rozendaal

marco@clientsforlife.nl