How can professional firms keep their clients happy, employees engaged and still make a profit? For those that missed Meridian West’s recent seminar on ‘The Golden Triangle’, find out more:
Smarter ways to grow client relationships: taking account management to the next level
Account management has become an arms race for professional firms in the effort to attract and retain clients. Added-value services that would have been considered novel and differentiating five years ago are now merely the norm. “There is huge demand for more client management resources,” observes Michael Michaelides, Associate Director of Business Development at Allen & Overy. “This comes both from partners at the firm, and clients themselves.” Allen & Overy’s experience of increasing demand is far from unique.
When executed well, account management can have measureable impact on a firm’s profitability and client satisfaction. But as the account management arms race escalates, firms needs to ask themselves two important questions: does their account management programme actually add value to client relationships, and does the investment in time and resource actually pay back to the firm in generating more business?
To answer these questions, and to establish what the ideal account management programme for professional services firms looks like, Meridian West assembled an expert panel to discuss their experiences at a roundtable event in partnership with RBS and the Account Managers Network. This paper summarises the main points arising from that discussion.
The Meridian West account management panel:
- Bruce Macmillan, general counsel at Legal Practice Technologies and previously senior commercial legal counsel at VISA;
- Greg Bott, heads the Client Development Centre at Addleshaw Goddard and is writing a PhD on account management;
- Eddie Bowman, formerly Global Marketing Director at EY;
- Michael Michaelides, Associate Director of Marketing & Business Development at Allen & Overy, and
- Ian Bennison, Marketing Operations Director at TMF Group.
Two dramatic shifts form the backdrop to the account management debate. First, there is a shift away from a traditional model of account management whose purpose was to demonstrate to clients that their business was valued by the professional services firm to a new model where the client has come to expect tools which are genuinely and practically useful. Clients now expect added-value above and beyond paid-for engagements.
The second fundamental shift is from account management as an added extra which resides with the business development department of professional firms to account management as an essential part of firm-wide strategy, which requires cross-functional teams to collaborate to deliver it successfully.
In the light of these fundamental shifts we explore four practical steps your firms can follow to take its account management processes to the next level.
1: Change your approach from reactive to proactive
To be truly effective, value-added extras should be offered to clients proactively rather than reacting to changes in client needs after they have occurred. Michael Michaelides cites as an example the amount of resources which are currently being spent by CRM teams at law firms on reporting requirements for banking sector clients. “Law firms’ systems are often not able to produce the information requested efficiently, so reporting can consume a lot of a CRM team’s team – taking them away from other value-added activities,” he says.
The solution is to become more proactive in understanding exactly what clients value in order to eliminate a lot of the admin time required to service their reporting demands. Without a more open conversation about this at the outset, the risk is that CRM resources are used in the wrong way.
Proactively finding ways to standardise your firm’s account management infrastructure as much as possible can free up resources that can be reinvested to deliver genuine value elsewhere. Creating templates for meetings, reporting and internal comms also make it much more straightforward for fee-earners and other internal audiences to engage with your firm’s programme.
2: Really understand your client
There is little doubt that understanding client needs is an area where firms have improved, but could still do better. As a senior buyer of legal services Bruce Macmillan explains that there are many levels at which a firm needs to understand its clients: “I want my advisers to understand me, exactly who I am as an individual. Then they need to understand my team, my technology platform, and my business environment as well. Understand who I am addressing, my internal clients, and the wider market I operate in.”
|“I want my advisers to understand exactly who I am as an individual, my team, my internal clients … as well as the wider market I am operating in.”
– Bruce Macmillan
A more detailed and personal understanding allows a firm to tailor its account management offering towards things that will really add value to individual relationships. For example, an innovative new technology solution to mapping contract risks may offer excellent functionality which could really benefit the client, but if it cannot be integrated with their current systems then it is wasted time and resources.
The most effective way of developing this understanding is to integrate direct feedback from clients into account management processes. For key clients this may be through regular in-depth relationship reviews, whereas for less important clients an annual online or telephone questionnaire may suffice. Embed this insight – about client-specific needs and preferences as well as firm-wide trends – into account management decisions about where to prioritise future investment.
3: Take a focussed approach
In reality there is always a balance to be found between providing a resource-intensive, bespoke account management package to every client and a cheaper, but less flexible, standardised offering. A segmented approach works best with firms sparing no expense to provide a premium account management experience to its very top clients, while smaller clients receive a set-menu of account management offerings.
Eddie Bowman explains this approach: “We decided that there are somewhere between 250 and 300 accounts in our business which are special: they have to be generating about £25m in revenue now and be capable of generating £50m worth of revenue by 2020. Once we identified these organisations, we had to align the organisation behind focusing its resources on these accounts.” In practical terms this means providing enhanced or bespoke sector insights, access to the firm’s expertise and customised account management options to key clients.
For clients designated non-key clients, firms need to commit to offering a lesser, but still tailored, level of resource otherwise risk over-servicing theses smaller accounts. “At EY I think we were quite brave in saying that these other accounts are not going to get the same level of resource as the top 250,” says Eddie. “Instead what those accounts get is determined in a more local way. Often this means providing a set of self-service tools for everybody else that allow local teams to meet client needs but take the strain off central delivery teams.”
4: Make account management an integrated part of your firm’s strategy
Our panel agree that one of the most significant challenges of account management is how to allocate responsibility and accountability. At present account management is most likely to still reside within CRM teams and is not properly embedded across the organisation. Yet account management cannot remain the concern of only one team, but must be integrated from the top down as a vital part of the firm-wide strategy for winning new business and developing existing client relationships.
|Aligning business strategy with account management is a vital step in moving towards a more client-centric operating model.|
There are two reasons why this is the best approach. First, without an integrated programme it will by almost impossible to provide a consistent approach to managing client relationships across departmental and geographic borders. Second, aligning business strategy with account management is a vital step in moving towards a more client-centric operating model where the firm is driven by the wants and needs of clients not just partners.
As Ian Bennison of TMF Group has found, a lack of consistency in account management means that one bad experience, even if only very small, can have a major impact on a client relationship. “Our big clients tell us that although they may love what we do for them in 25 different countries, if one country lets us down it puts that relationship at risk.” Often the best way to overcome this problem is to have a strong executive or heads of departments of country offices who work very effectively together and with account managers to take a more strategic, holistic view of how best to support client relationships.
“Key account management works best where it taps into the client care culture of a given firm,” says Greg Bott. “This means a strategic view is required. For example, does a firm’s remuneration structures drive behaviours that support or work against effective account management? Who are the best people to take responsibility for owning and growing key accounts? This may not always need be a fee-earner.”
A virtuous cycle for account management
Critical to running any client-focused firm is to understand the needs of clients and to deliver effectively on these needs. This requires moving beyond excellence in the provision of core technical services to developing more consistent, and sophisticated, added-value offerings and account management frameworks.
Best-in-class account management is a virtuous cycle that builds in continuous improvement. The leading firms take a proactive approach to maximise the impact of their account management spend. They recognise that understanding clients is a multi-layered process, and that spend should be proportionate to a client’s current and future value to the firm. Most importantly they consider account management not as an added extra, but as a key part of their firm-wide strategy.
Despite the challenges, good account management can deliver dramatic rewards. Bruce Macmillan cites one example: “One firm went from generating no revenue from me to £200k worth of revenue in the first quarter, to all of my revenue across Europe and Asia in the second quarter, and to be on the path to taking over work outside of my area from other divisions within six months.” How did this happen? “An account manager came over from Vancouver to set up something that they had done before in Vancouver for an American client which one of my team knew about; essentially they invested in setting it up a SharePoint solution for me and a project manager to make it work. This really helped how my legal functional worked on this area of law and how it communicated with and worked more effectively with the business.”
By understanding the client’s individual and business needs, showing a commitment up front, and a willingness to invest for the long-term term similar opportunities are available to any firm prepared to rise to the challenge of implementing a best-in-class account management programme.
Ben Kent, Alastair Beddow, Joseph Minchin
firstname.lastname@example.org / email@example.com / firstname.lastname@example.org
In part four of a series of PM Forum articles on ‘the seven habits of a commercial adviser’ Ben Kent and Adrian Furner discuss how relationships drive business success. [Habit 4]
What was the last big business decision you made? Even when we believe we are making logical decisions, the very point of choice is arguably always emotional. Understanding people in business is critical to success; business is a social activity and relationships are fundamental. Professional firms are knowledge based businesses providing advice, in this type of people-based industry the importance of relationships is enhanced. The impact of advice, and the value that it can create depends on how it is delivered, and crucially, how it is received.
Being able to understand the people, their styles and drivers is fundamental to being able to successfully navigate the complex world of business and deliver success in terms of the desired outcomes. Whether we like it or not business is mainly about managing people and politics.
So how can advisers do this? A traditional approach is to perform some form of stakeholder analysis mapping the client team that we interface with, and potentially their internal stakeholders. This is a good starting point, but client expectations have changed. Clients now expect advice built on a deeper understanding of the context in which they operate and of their desired outcomes.
Advice must often be dovetailed with that of other advisers and stakeholders, both internal and external to the client. Not only who they are and their personal objectives, but how they work: what their processes are; how they will be using the advice; and how they will interpret it.
Carry out your stakeholder analysis, mapping the client team that you interface with and their internal stakeholders as early as possible after the kick-off meeting. Keep this updated as a live document and most importantly share it with your team.
Find out about all aspects of a business situation. It is easy to think of a particular client as a collective represented by your main point of contact, rather than individuals with different views, motivations and thought processes. What does it mean not just to your clients business, but to them personally – does their promotion depend on it?
Do your research
The ‘soft’ more personal aspects of a business situation can have a significant impact. Build up profiles of each team member. There is so much information at our finger tips spending time googling individuals or using LinkedIn is time well-spent. It can be really useful to capture initial observations from meetings and keep track of any side conversations that have happened. Don’t forget to ask if anyone from your organisation has worked with members of the client team before.
If you have a good idea of the position other advisers will take in a negotiation, use this information to anticipate and resolve issues that may arise ahead of time. Be open and collaborate with the client exploring scenarios together that drive the negotiation towards the desired outcome more quickly.
Understanding people is an art not a science. Simple actions such as taking time to meet individuals off the project for coffee can often be the most effective way to find common ground and build trust. This will set you apart as a friend or partner to the client, rather than a stumbling block to the client’s desired outcomes. Take a moment to think about relationships with your own suppliers, who are you more likely to work with and why?
A ‘trusted adviser’ is not someone you meet once a quarter in a meeting room. By getting to know your clients, you are much more likely to deliver advice that meets their expectations and achieves their outcomes.
Build a better understanding of your client’s needs through active listening. Check out our practical top tips on how to became an active listener.
If you had to write down the top 3 things that keep your client awake at night could you do it? Before you read further write them down …
If you were able to do it, then question yourself whether you have tested your view, and if you couldn’t then you are not alone.
In a recent meeting with a FTSE CEO we asked what were the big decisions that he had to make this coming year. In his mind, there were only two, and they could be articulated in an elevator pitch. That’s not to say that these were the only vexing decisions that he and his board would make this year, but the two were the ones that were fundamental to the future success of the organisation.
Nothing we were told was confidential or secret, but by asking the question, we were able to get an insight that is immensely valuable. An insight that not many people, probably including most of the organisation’s employees, would have access to.
So why is this insight so valuable? In short, as a professional services adviser, it gives us contextual insight which will, if we use it well, allow us to provide more ‘commercial’ advice. For example, if we were advising on the structure of a new business venture for the client, then we may be able to use this insight in recommending which solutions would support and hinder the strategy.
The secondary value in the above example is that whilst you may have been able to identify the same issues from other publicly available material, having it from such a direct source adds credibility to the knowledge.
In addition to the direct benefit of allowing for more ‘commercial’ advice, there is also an indirect benefit. If we know the most important issues for our client and if we marry this with our ‘thirst for knowledge’ discussed in an earlier article [Do you have a thirst for knowledge?], then we can make connections between knowledge that we gain and our client’s needs, which may allow us to build the client relationship outside of specific engagements with relevant knowledge and discussions.
So when was the last time that you asked your client what keeps them up at night?
There has been a fair bit of research done on the behavioural and intellectual traits of professionals and in particular lawyers. One of the traits that often rises to the surface is that there is a high level of intellectual competitiveness.
Professional training both leading towards, and post, qualification leverages this to ensure that qualified individuals have a deep and robust technical understanding.
Increasingly, the progressive professional services firms, in particular legal firms, are marrying this up with investments in putting lawyers through ‘mini-MBA’ programmes to help provide a wider context to the business world. Whilst this is a major help to increasing the commerciality of practitioners, it isn’t the whole solution.
In the world of L&D there’s a much used ratio of 70:20:10, in that raising competency comes from:
- 10% – courses & reading (formal learning)
- 20% – from people – mainly the boss (peer to peer learning)
- 70% – from taking on tough tasks (experiential learning)
In successful people, one thing that runs through all three of these is an inquisitiveness, and a ‘thirst for knowledge’. It’s this that drives them to deliver success.
Having undergone a formal piece of training, they will look for people and opportunities that will allow them to apply and test their learning. Or maybe if they get put on a new client account, they again look for people and knowledge that will build their understanding of the sector or the client.
For these people gaining knowledge is something that never stops, they are always looking for new insights and opinions, making connections, and questioning.
This ‘thirst for knowledge’ is a key attribute of commerciality, the world in which we live and work in is constantly evolving. Irrespective of whether your clients are: individuals; corporates; or 3rd sector organisations, they all inhabit dynamic worlds and for you to be able to give advice in context, ‘commercial’ advice, you’ll need to understand their worlds as well as they do.
Arguably, you need an even greater ‘thirst for knowledge’ as you have to remain a technical expert as well as a client context expert. It’s lucky therefore, that as a professional you’ll have a relatively high level of intellectual competitiveness. If you can focus this and balance it between the professional/technical, and the business/client context areas, then you stand a good chance of success.
The challenge is can you unleash your inner thirst for knowledge?
Research conducted by Meridian West and Financial Times shows financial professionals are perceived by their clients to be less commercial than other advisers. 34% of senior executives say legal professionals are excellent at providing advice that shows commercial insight, compared with just 15% for accountancy and finance professionals.
Why should this be? With their grip on the numbers, financial professionals are close to the heart of any business. Yet external advisers are becoming increasingly specialised – able to give clients a view on the intricacies of transfer pricing in Eastern Europe, say – often at the expense of being able to share a broader, more commercial perspective. Compared with lawyers, accountants are disadvantaged by regulation such as Sarbanes-Oxley, which create barriers (both real and perceived) about offering business advice.
With increasing frequency, information about other organisational priorities – risk, talent, technology, innovation and customer – are being given equal attention alongside financial data when boards take business decisions. External advisers need to respond to this appetite for forward-looking metrics and non-financial KPIs. One way to stay ahead of peers and keep ahead of changing client expectations is to embrace Commerciality.
What is Commerciality?
Commerciality is a much used, but ill-defined, term. Yet the nub of Commerciality is simple: it involves focusing on business outcomes when providing financial information and advice. To do this successfully means understanding the context in which decisions based on that advice will be taken. This is an area where many professionals struggle. Pride in being technically correct can lead to inflexibility. Lack of clarity about desired business outcome can lead to results that don’t quite hit the mark.
Take tax planning: this is an area rife with complexity where technical and specialist knowledge is vital and advantageous. To benefit from tax efficiencies it might make good financial sense to advise a company to operate a foreign subsidiary. However, a solution that is technically sound on paper may in reality throw up many operational challenges such as an increased cost of workforce mobility, and have a negative impact on corporate reputation by not being seen to pay a fair share of tax.
A truly commercial professional balances these competing demands to find a solution that helps an organisation achieve the best possible business outcome. This may require problems to be framed in new ways. In the above example, rather than dive straight to a technical tax-planning solution, it may be possible to achieve the desired outcome – freeing up cash for investment – through means that fewer reputational or operational drawbacks.
Commerciality in practice: seven habits
Commerciality is a mind-set. Yet this does not mean it cannot be taught to new graduates or honed further by experienced professionals. To translate Commerciality into practice it is important to focus on behaviours. Identifying behaviours that frustrate clients, consciously eliminating these and replacing them with more commercial ones through practice and repetition is the best way to ensure lasting improvements are realised.
Based on extensive research among thousands of finance professionals and their clients, Meridian West has developed a framework to help professionals identify, communicate and improve Commerciality. The seven habits of Commerciality framework can be applied by finance professionals to any client engagement, regardless of their area of expertise. [More on the 7 habits]
Virtuous habits in practice: three examples
First: understanding the people. Business is mainly about managing people, relationships and politics. Being aware of individuals, their competing interests and motivations is therefore imperative not only for determining the solution to a given problem, but also how the rationale for that solution is communicated.
For example, one firm spends time creating relationship maps for all of its client engagements mapping out all individuals within their own team and the client team. This includes stakeholders such as the CEO and NEDs, not just the direct members of the finance team they liaise with on a daily basis. It is important to pay close attention to the competing interests and preferences of this wider group of individuals who may have power of veto over any decisions made.
Next: agreeing the scope. When deadlines and resources are tight, it is tempting to launch straight into a piece of work to complete it as quickly as possible. This leaves little time to think through the strategy. The most commercial advisers set goals and metrics about what a successful client engagement looks like, communicating information about desired outcomes, tasks, resource and timelines.
Scoping is critical for external advisers grappling with a move away from traditional ‘time and materials’ pricing to fixed or success-related fees. Having a clear scope of works agreed up front helps accurately price an engagement to avoid writing-off large amounts of work when client needs change.
Lastly: communicating with impact. A common complaint we hear a lot from time-poor executives is that financial reporting is long, technocratic and has to be translated for non-financial audiences. They want information which is easy to understand, quick to assimilate and highlights the key points in complex or contentious issues. Simple changes such as prioritising risks, explaining implications clearly for non-financial audiences and communicating visually make a big difference.
The payoff: why bother with Commerciality?
Meridian West’s Mid-Market Monitor, an annual study of buying behaviour in the audit and advisory market, shows that Commerciality can be a significant differentiator when clients choose which external firms they work with. Being able to articulate knowledge of sector trends, provide foresight on relevant issues, and be proactive on scoping and project management can boost pitch win rates and the profitability of engagements.
One firm that has tackled this challenge head on has reengineered its delivery of pension advice to adopt an approach based on Commerciality principles. In doing so they have been able to virtually eliminate an average 20% write-off in fees for subsequent engagements.
So what next for finance professionals?
The seven habits of Commerciality framework focuses on virtuous habits that have both short-term pay off (greater efficiency or profitability) and long-term benefits (improved competitive positioning). Developing a strategy sheet for an engagement, creating a stakeholder map, or focusing on outcomes need not be a tortuous experience.
Any adviser can benefit from spending just a few minutes being more thoughtful about Commerciality and what this means for their interactions with clients. Small changes matter. At the beginning of an engagement have the courage to ask Commerciality-focussed questions: Who are the key stakeholders? What form of communication is preferred? What kind of solution is being sought? What is the desired outcome? The answers might just surprise you.
[By Alastair Beddow, Associate Director and Ben Kent, Managing Director at Meridian West. A version of this article first appeared in the July issue of ACCA’s Accounting and Business magazine. ACCA is the global body for professional accountants.]