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Smarter ways to grow client relationships

April 30, 2015/0 Comments/in Habit 2 - Business, Habit 4 - People /by Commerciality Hub

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

[email protected] / [email protected] / [email protected]

Meridian West

Create clarity not complexity

February 10, 2015/0 Comments/in Habit 6 - Solutions /by Commerciality Hub

Most professionals believe themselves to be great problem solvers. However, our extensive research highlights that professional advisers need to be careful that they are adding clarity rather than complexity to their clients’ issues. We have identified four pitfalls for advisers to avoid:

1. An obsession with risk

The ability to spot potential risks is ingrained in the professional psyche. However, professionals are often accused of focusing on hypothetical risks at the expense of the opportunities that could
arise from accepting some degree of uncertainty. Cloud computing is an obvious example: the data protection and IP risks are great, but so too is the opportunity it brings to conduct business more efficiently across all parts of the world.

Fee-earners can also spend too much time and money focusing on irrelevant risks. Recent research by IACCM (International Association for Contract and Commercial Management) reveals that during the contracting process, lawyers spend too much time drafting warranties and indemnities, whereas the biggest cause of contract disputes – defining the scope – is often overlooked or left to others to resolve.

Why should this be? Historically there has been no clear feedback loop between advisers and the actual outcome of their advice: what risk actually occurred and
what the impact of these were. This means that precedents and templates remain unaltered. However, innovations in legal risk management, which map the seriousness of a risk against its likelihood
to occur, are helping make fundamental improvements on this front.

Building practical solutions is an emotional process that requires advisers to educate their
clients.

2. Not involving clients in solution building

Clients become frustrated when their advisers show up to deliver fully-developed solutions on tablets of stone. This is one of the main sources of dissatisfaction with professional advice, as one general
counsel we spoke to recently suggests: “It annoys me when there is no two-way interaction, when there might be several options available and my advisers only come up with the one that they prefer and
don’t involve me in the decision-making process.”

Most clients of professional services tell us they expect to be presented with a range of options, and to be guided through these to decide on a course of action. Building practical solutions is an emotional process that requires advisers to educate their clients, arming them with the information they need to make informed decisions without overburdening them. By developing a collaborative, open relationship it becomes easier to discuss solutions with a client.

3. Overlooking the unintended consequences of advice

As we saw with the debate surrounding the tax affairs of Starbucks, the unanticipated side-effects of advice – in this case, reputational damage – can be harmful to a business. It is incredibly frustrating for clients when the damaging consequences of a piece of advice are overlooked even if the advice itself is technically sound.

We recently spoke to one pensions trustee who didn’t believe her adviser had thought through the commercial impact of his solution: “Their proposed changes to our pensions scheme would have saved
the company money, but it would also have been impossible to implement and would have resulted in our staff going on strike!” Failing to consider advice within its widest commercial context makes it
more difficult to be considered as a trusted adviser.

4. Delivering solutions that are difficult to implement

No matter how technically brilliant a piece of advice is, if it is too complex for a client to grasp or too expensive to implement then it won’t succeed in fulfilling the client’s objectives. This problem is
most likely to occur when advisers don’t consider themselves to be part of the implementation process. They depart satisfied with their leg of the race complete, while the client struggles alone or has to bring in a new team for implementation.

To successfully build practical solutions, advisers have to work to ensure their clients fully understand the proposed solution, and that it dovetails effectively with requirements during the implementation stage. During M&A transactions, for example, it is not uncommon to have two separate advisory teams – the acquisition team and the integration team – with little communication between them. To deliver a successful outcome for the client, a commercial adviser will think through the full implementation process for their proposed solution and conduct a detailed handover with the integration team and the client.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: The final habit, Habit 7 – Communicate for impact. ]

2015: The year of the re-energised marketing function?

February 10, 2015/0 Comments/in General /by Commerciality Hub

2015 is already well under way: pundits have made their predictions for the year ahead, marketing leaders have discussed their priorities for the next 12 months with colleagues, and by now everybody is
frantically back to the grind trying to turn these plans into a reality. But it is worth pausing for breath to consider whether your firm’s plans and priorities are sufficiently aligned with wider developments in professional services marketing. The 67 responses to this year’s annual PM Forum/MPF and Meridian West marketing benchmark suggest that the marketing community is turning its attention to improving the client experience with renewed vigour.

This time last year I suggested that innovation would be as equally important to marketers as efficiency for the 12 months ahead. 2014 was characterised by professional firms of all hues launching new service lines, experimenting with new business models and joined-up propositions. This trend is likely to continue into 2015, and as it does the importance of fostering greater collaboration with internal and external networks will dramatically come to the fore.

Respect where it’s due

More so than in any previous year, the marketing directors and managers who responded to this year’s benchmark paint a picture of marketing functions that are well-regarded by fee-earners and colleagues in other support functions. More than seven in ten (72%) say that the marketing team has sufficient authority to perform its role successfully. 60% say that the role of marketing is sufficiently understood by fee-earning staff.

However, there is still a significant minority who disagree with these statements, which suggests there is more work to be done to achieve complete buy-in to marketing initiatives within some firms.
Although 72% of senior markets say they are always involved in decisions about targeting new clients and sectors, just 55% are always involved in developing new products and service lines.

Reaping the fruits of growth

2014 saw the profitability of many professional firms exceed pre-2008 levels for the first time. As a result firms now have more income to invest in strategic initiatives. This is reflected in the anticipated
outlook for marketing budgets and headcount this year, at 2.7% and 2.9% respectively
on average. These levels are on par with 2014 and far exceed 2013.
Yet with increased budgets comes increased pressure to demonstrate value. Almost half (46%) of marketers believe it is difficult to demonstrate the ROI of the time and money spent on marketing. This
is troubling: an inability to showcase the value of its activity leaves the marketing function vulnerable to having budget increases frozen or slashed in future years. Colleagues will expect increased resources for marketing to translate into tangible, measurable outcomes.

Plans and priorities for 2015: the client experience

When asked about their specific plans for the coming year, marketers’ responses are multiple and various. Typical responses referenced the desire to become more strategic, to help deliver a differentiated brand and most frequently, to focus on improving the client experience.
Here is one example from the Head of Marketing at a law firm: “Our priority is kick-starting our five year strategy for 2020 by helping the firm to deliver exceptional client service standards and more targeted business development.”

More than four out of five marketers (82%) say they plan to obtain more feedback from clients in 2015 than they did in 2014, and more than three-quarters (76%) say they plan to make more improvements to client service. Indeed when asked about the activity highest up their agenda for 2015, 43% of respondents cite either improvements to client service or obtaining feedback from clients.
Why should the focus be so heavily weighted in favour of the client experience? Perhaps after several years spent competing on price, marketers have woken up to the possibilities of competing based on innovations in service delivery. But more so than this, it is impossible to take strategic decisions about the firm without sufficient data about what clients want and need, and even harder to make the case for internal change.

Putting the plans into action

Focusing on the client experience is one way to re energise the marketing function. It provides a clear goal to rally around, which can also be easily measured to track improvements in performance. However, doing this successfully is not without its challenges. Marketers will need to concentrate on the following three areas to put their plans into action effectively:

Collaboration: The client service agenda can be led by marketing, but it needs to be owned by all
areas with the firm. This means working together more efficiently to design and roll-out client-centric initiatives. 69% of marketers say that greater collaboration between marketing and other functional areas is required in their firm. On a positive note, two-thirds (68%) have a plan in
place to collaborate with HR colleagues, and 57% have a plan in place to collaborate with strategy colleagues over the year ahead.
The right skills: Although marketers say lack of time is the greatest barrier to achieving their objectives, the need to enhance skills may be a more obvious barrier to innovating the client
experience, and one that is potentially more easily overcome through coaching and training. 80% of senior marketers say they would like to improve their strategic planning skills, and 56%
would like to improve their influencing skills. When asked about their team’s skills, 82% think more project management skills are required and 78% believe enhancing commerciality would
be beneficial.
Proximity to clients: Surprisingly, a third (32%) of senior marketers say they do not have regular interaction with clients in carrying out their role. It is difficult to accurately take the pulse
of client needs and expectations when client contact is kept to a minimum. To be instrumental in improving the client experience requires much greater freedom to capture direct feedback
from clients. Without this, you risk basing your plans on speculation or unverified assertions from fee earners.

Planning for the long-term: 2020 and beyond

For the first time, our benchmarking survey asked marketers about their long-term plans as well
as their aspirations for the year ahead. The results make compelling reading: marketers have ambitious goals to make a greater impact on the overall strategic direction of their firm. 55% believe that the role of marketers within professional firms will be very different in 2020 than it is now, and two thirds (66%) think professional firms will invest more in marketing as a proportion of revenue than they currently do.

So what will change? It is a three phase journey. First, 41% say many of the tasks and processes carried out by marketers will be automated. This means much of the day-to-day admin and process can be eliminated or reduced which will free up more time to focus on aspects that really add value to the firm. Second, this change in focus will enhance the status of marketing professionals: 56% believe that marketers will be seen as suitable for CEO roles in professional firms. Third, and as a consequence, clients will reap the benefits of this shift: 84% think the voice of the client will have a stronger presence at the management top table, and so strategic decisions will be more client-focused.

Head in the clouds or finger on the pulse?

Is this portrait of professional services marketing in 2020 realistic? Only time will truly tell, but it appears the desire to move towards a better-integrated, more strategic role is present among a majority
of those currently occupying senior marketing positions. As one Head of Marketing rather bullishly puts it: “Marketers are often some of the most strategic-minded and skilled people within their organisation but rarely get the credit for being so, and rarely put themselves forward to give strategic input.” Assuming this to be true, it seems marketers still have a way to travel before they arrive where they want to be in five years.

What can be done to accelerate this shift? Marketers are clear that aside from new technology, the factors that will have the most fundamental impact on professional services marketing are changing
client demands and obtaining a stronger voice of the client within the firm. With this in mind, concentrating on the client experience during 2015 seems a sensible place to start.

By Alastair Beddow, Associate Director at Meridian West. This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com

[Top tips & case study] Understanding economics

October 8, 2014/0 Comments/in Habit 3 - Economics /by Commerciality Hub

In part three of a series of PM Forum articles on ‘the seven habits of a commercial adviser’, Ben Kent and Adrian Furner discuss how advisers need to demonstrate an understanding of economics. [Habit 3]

What does ‘economics’ mean to you? Traditionally it is a difficult term to grapple with. A formal definition would be ‘the study of the production and consumption of goods and the transfer of wealth to produce and obtain those goods’. For many, the definition of economics goes much wider than this which is why it can be hard for advisers to grasp what it really means to their clients.

Understanding financial documents such as the balance sheet and the profit and loss account is only part of it.
‘Understanding the economics’ means not only understanding how your client makes money, but how the advice that you are providing will impact on this.

Three main steps to economic understanding:

Organisational economics – understanding how your client’s company is structured, how and when it reports its financials, the internal reward structure.
Macro and market level economics – understanding how your client fits into the wider world/their market, now and in the future.
Transaction economics – understanding the economic drivers and implications of the specific opportunity.

A commercial adviser not only has a good grasp of these areas, but is able to articulate them clearly to the client. They are able to identify and articulate the value that they have brought, as well as any potential risks to the client, in financial terms.

To achieve this, numeracy is a key competency. Numbers are the language of business, but many professionals are tongue tied. A lack of financial fluency can put professionals at a grave disadvantage. It excludes them from the serious c-suite conversations and makes it difficult to justify the value of their recommendations. “If you can’t quantify what impact this project will have, why should we pay you £100k?”

In my 25 years of doing this I have met two lawyers who can add up which means it’s difficult for them to be commercial. They delineate between that which is a commercial point and that which is a legal point and shouldn’t. I’m not paying £1000/hr to make all the difficult decisions, I’m paying for someone else to not just advise, but to make a decision. Dr. Robert Easton – Managing Director, Carlyle Europe

A useful way to understand this is by looking at a typical M&A transaction. Ben Kent shares his experience and tips.

M&A economics

I started out my career in the corporate department at a Magic Circle firm. I worked on a series of acquisitions, but my understanding of finance was limited. I now realise that a better understanding of M&A economics would have really helped
me deliver better quality, more focussed advice.
At its heart M&A economics is quite straightforward. Financiers generally value a business by analysing three factors:

The value of its assets
Its ability to generate future profits. Many will use a Discounted Cash Flow model (DCF) to do this
The value of comparable companies.

This will give you a base price, ie. the price of the business if it was sold as a standalone business.

Financiers then look at potential synergies to calculate the benefits of two businesses merging (on the principle that one plus one should equal three). This will push the price up:

Cost synergies include savings from sharing head office costs, rationalising property or shedding staff.
Revenues synergies are the additional revenues you achieve by crossselling additional services to each firms’ customers.

It is critical that lawyers understand the valuation model and which synergies are driving the price. It enables the lawyer to
focus due diligence and negotiation of the sale and purchase agreement on the issues that really matter. For example, if
the deal is driven by revenue synergies it is critical to review contracts with customers and make sure that the sales teams are locked in. If the sales teams leave then the revenue synergies will be nearly impossible to deliver.

Unfortunately many lawyers are not given enough financial training to understand these points and as a result focus on points that are commercially irrelevant.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 4 – Understand the people]

[Top tips & case study] Commercial understanding

September 10, 2014/0 Comments/in Habit 2 - Business /by Commerciality Hub

In the second of a series of articles, Ben Kent and Adrian Furner discuss how advisers can better understand the context of their clients’ businesses [Habit 2].

How much do you really know about your clients? In our recent study, Effective Client-Adviser Relationships, 52% of clients cite a lack of understanding of their business by external advisers as the factor which is most likely to derail the client-adviser relationship.

As we discussed in the Summer 2014 edition of pm, understanding the business context in which a client operates is one of seven core habits that commercially-savvy advisers exhibit. Commercial understanding is now a major factor clients consider when they commission work. When looking to instruct advisers for complex work, 40% of clients place an understanding of their business as among their top three selection criteria. The professional firms that have been most successful in this area have managed to turn their more commercial approach into a brand differentiator: “You must constantly educate yourself otherwise
you can’t deliver successful advice.” Mike Strong, Executive Chairman EMEA, CBRE.

So what exactly do clients expect from their advisers? Reading financial statements and annual reports is useful, but no longer sufficient. Clients are demanding much more: 75% say they expect their advisers to know about their organisation’s strategy and business plan, and 67% expect knowledge of industry sectors and trends. As clients raise the bar, professional firms are expected to jump higher and higher to demonstrate commercial understanding.

Three steps to demonstrating better commercial understanding:

1. Research the style and culture of your clients

Each client has their own language, jargon and way of doing business. Communication styles and risk appetite vary between organisations and individuals. Understanding the personal and emotional factors involved in any piece of work will inform how to best position advice to ensure it gains traction. Top tips:

Map out the key stakeholders for any engagement, and meet with them to discuss their personal views and objectives.
Keep in touch throughout the duration of an engagement and afterwards. Informal meet ups work well, particularly at the client’s premises.
Be inquisitive about a client’s strategy. Don’t be afraid to ask for strategy documents that would help contextualise your advice.

2. Share best practice and case studies

Clients want to know from their advisers how other organisations, especially those in the same sector, have undertaken
similar engagements. Sharing insight on what does and doesn’t work, and how pitfalls can be avoided, is a key attribute
of trusted advisers. Top tips:

Capture the knowledge that you build up from different clients. Write down the key learnings and actively share with junior colleagues.
Develop a checklist of questions to ask when attending initial meetings with a new clients.
Prepare relevant case studies to show clients ahead of meetings, and talk to colleagues to gather more examples.

3. Keep one eye firmly rooted on the future

Clients also highly value foresight on trends likely to reshape their sector in the future. CFOs and GCs are time poor and so look to external advisers to offer a view on the issues that might impact their business over the short and long-term. Top tips:

Read blogs and thought leadership, and attend industry events and networking sessions to keep abreast of sector developments and issues.
Attend seminars and workshops delivered at client organisations to understand the in-house dynamic.
Send short, personalised emails to clients drawing their attention to issues you think are relevant to them.

Case studies: fostering business understanding
The talent management strategies of professional firms are at a turning point. Firms now recognise that business understanding
is as important as technical understanding. Sector groups, key account plans, and knowledge managers are a good starting point. However, more innovative firms have taken further steps to build business understanding into their culture:

Simmons & Simmons has created a highly successful mini-MBA for trainees joining the firm that teaches young lawyers essential business skills.

Thomas Eggar, a law firm based in the south of England, sends its lawyers to do a day of work experience at their client’s retail outlets.

The Big Four accountancy firms and large consultancies have high developed knowledge management systems that allow fee-earners to share insight and collaborate across practice areas.

[This article originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 3 – Understand the economics]

What keeps your clients awake at night?

August 22, 2014/0 Comments/in General, Habit 4 - People, Habit 7 - Communication /by Commerciality Hub

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?

[Top tips & case study] How can advisers better achieve their clients’ desired outcomes

July 4, 2014/0 Comments/in Habit 1 - Outcomes /by Commerciality Hub

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.

[Excerpt from an article that originally appeared in professional marketing magazine. For further details go to www.pmforumglobal.com. In the next issue: Habit 2 – Understand the business]