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:
In the first of a series of articles, Ben Kent and Adrian Furner explore how advisers can better achieve their client’s desired outcomes. [Habit 1]
Success needs to be defined by achieving the client’s outcomes rather than excellent inputs or outputs.
Too often advisers confuse deliverables, with outcomes. This mismatch arises because professional services firms tend to adopt pricing models that reward their advisers for providing deliverables, whereas clients’ businesses are usually only rewarded when they achieve certain outcomes. In the context of the 7 Habits of Commerciality, being truly commercial means being able to bridge this gap. Advisers need to focus more diligently on how their advice is used in the boardroom during the decision-making process.
Focus on the client’s objectives, understand what success means for them
Take an M&A transaction as an example. An adviser is accustomed to providing advice and support for the negotiation of the opportunity, focusing on the execution of the sale and purchase agreement. However, for the client having this document drafted and signed is merely a milestone en-route to success. Success often does not occur until many months or years further on where the final objectives – achieving cost synergies, expanding the company’s geographic footprint, and bringing together IP to launch a new product – are fully realised.
Realise that the desired outcome is often personal and rarely contained in the brief!
It is often not taken into account that the reasons for a desired outcome may also be personal. A commercial adviser
acknowledges this and tailors advice to help the client get to their individual outcome.
Ask the right questions
With modern account management tools it is easy for advisers to assume that they know their clients well. However, the real skill is to truly understand clients in the context of the advice being given. Why is a given matter or engagement important to them? How does it link to the corporate strategy? What are their plans for the future? It is these types of questions that can give true insight into what matters to the client.
Be closer to clients, before, during and after – collaborate
Much of this understanding will only come from being closer to clients, before, during and after they need an adviser’s technical services. Professional advisers are often only brought in when there is a transactional need for their skills, by which time the client is often a significant way along in their decision-making process. Being closer to clients earlier in the cycle can really help advisers to better understand desired strategic outcomes. How many advisers really know the timing of their clients’ strategic planning cycles?
Help the client implement their advice by offering implementation services or handing over well to the implementation team. The Big Four accountancy firms have now developed post-merger integration capabilities.
Don’t rush in, build in space and time so that things are not overlooked
When trying to understand their clients’ desired outcomes, advisers often rush towards the solution almost immediately, often feeling that that they are offering the client value for money by converging on the solution from day one.
In the drive towards the solution, opportunities may be missed and the need to understand and test the solution against the client’s desired outcomes may be overlooked. Increasingly in complex and interconnected transactions, space and time needs to be built in to allow for more divergent thinking.
Case Study: What can strategy consultants teach the professions?
The top strategy consultants have a reputation for being extremely results focussed. What can they teach lawyers and accountants about commerciality?
We recently interviewed an ex-partner from one of the top three strategy consultancy firms. He believes that the rigorous professional training that young lawyers and accountants undergo can be a hindrance. “It is very easy if you are a lawyer or an accountant to believe that the only thing you provide is technical advice, and you probably feel nervous outside that space. They rock up and show off their technical expertise. Strategy consultants don’t have the crutch of a professional qualification so this forces them into a different space”.
Three techniques are particularly powerful:
1. Problem statement – At the outset of the project define very clearly what is the ‘problem statement’, i.e.. what is the problem you are trying to solve for the client, and how can the benefits be quantified in terms of ROI? Make sure that the consultant’s activities are focussed on achieving the outcome and cut the fluff.
2. Value proof letters – At the end of the year this partner’s team would write a value proof letter that said “over the last year we have worked on these three projects, this is the value of the work we have delivered to your organisation relative to the fees we charged. We were looking for multiples of twenty times our fee rate.” This forces consultants to focus on implementing change rather than just delivering a report. Without change there is no value delivered to the organisation. It also creates a mind-set shift: “It takes people away from focusing on the technical and towards the business outcome,” he says.
In his experience clients absolutely love this approach, and it overcomes the complaints that advisers get about deliver a presentation, going back to their office and leaving the client with a turkey. “It becomes the basis for a meeting with very senior people to say this is what we do, and this is how you felt. It completely opens up real honesty in the relationship.”
3. At-risk fees – “We often put part of our fee at-risk. We are paid the full fee if the results were delivered and the client was delighted. There is a discount if the client is only satisfied.” In the right circumstances, it is a terrific way of ensuring that the client’s and consultant’s interests are aligned. At-risk fees work best when success can be measured.
In our personal life, whether in the digital world, or the physical world, we often chose services, in a large part, based on how easy they are to use. This ‘ease of use’ is often driven by how supportive they are of us achieving our desired outcomes.
Let’s take an example, buying a camera. People buy cameras for many different reasons, it could be they want to record their family growing up, they could be going on a special trip, or be a passionate wildlife photographer. Each of these people will have different desired outcomes, which in each case isn’t buying a camera, it’s producing great pictures to show to people.
For a retailer, understanding these desired outcomes could be the difference between making a sale, or not and therefore it’s important piece of the jigsaw.
With the advent of e-tailers we have seen a significant consolidation of the number of physical camera shops on the high street. Those that have survived have done so by creating very loyal customer bases. Often what they can provide over the e-tailers, is the ability for buyers to seek pre and post purchase advice. This is often focused on their needs and context, and helping them achieve their desired outcomes. In return they’re willing to pay a premium for this, and will likely buy additional items and services from the retailer over time.
So why is it, that in the context of professional services do we often miss the target in relation to being ‘easy to do business with’, or making our advice ‘easy to use’? After all, as with personal life often it’s this ‘ease’ that creates positive customer feedback, repeat business, and customer loyalty.
How much time do we spend really understanding the client’s desired outcomes? How our advice will be used? The audience and users for that advice?
And even if we do spend time understanding these, and other key issues, how often during the creation of the advice do we come back and check our advice against them?
So what can we do about this?
Often the answers are all around us if we look for them. Think about your favourite brand, or shop, or airline. What is it that they do that keeps you coming back? How do they understand your needs? Your desired outcomes? And how do they adapt their service to you?
Finding ways to really understand your client’s desired outcomes is fundamental to commerciality as it links to some of the other habits such as: agreeing the scope; creating practical solutions; and communicating for impact.
So, just step back for a few moments and think about the last few engagements you’ve worked on. How easy do you think your client found it to use and apply the advice you gave?
If you can’t answer this question quickly and easily, then it may be that a focus on habit 1, understanding your client’s desired outcomes, is a good starting point for you to increase your commerciality.
From experience, many in-house legal, finance, contracting teams often feel, and often are, peripheral players in their organisation. Common complaints include, “we’re not involved early enough”, and “we’re always fighting a rearguard action to protect the company”.
Yet increasingly c-suites view functional teams as key enablers to value creation and innovation. Yet being a peripheral player can often undermine achieving this.
Moving in from the periphery can take considerable time but there are things that you can do to improve the situation.
Central to most businesses is their strategy, but often when you’re on the periphery, there can be many individual links to get back to that strategy.
Just think, how long is it before your whole team is briefed on the strategy (if at all)? How many layers does it go through to get to your team? And what is the impact of the ‘lag’ and ‘distortion’ that this all potentially creates?
When it comes to enacting the strategy, are you able to articulate why you’re going down the particular route? If you can’t then how can you brief, and get value for money from the external advisers without being able to?
Creating a strong 2-way ‘line of sight’ from your organisation’s strategy to individual actions is fundamental, yet many functional professionals feel uncomfortable in this area, and would struggle to give a three minute or 30 minute presentation on the organisation’s strategy?
Without this ability, it’s unlikely that you will be able to deliver optimal advice and solutions that support the organisations strategy. Equally it makes it even more difficult for your external advisers to provide advice that is meaningful in the context of what you’re trying to achieve and which meets your desire for value for money.
Creating your, or your teams, ‘line of sight’ is a key activity that can have a disproportionate impact both for you and your team but also in demonstrating to the wider organisation your commerciality.