Case Study 16
Client Relationship Management Best Practice in Professional Service Firms
Introduction
Relationships with customers are central to all businesses. For service businesses this extends way beyond customer data and analysis: the relationship between the company and the client and the quality and nature of the service are necessarily a major part of the product proposition and the client's experience.
This is true above all for professional services (such as law firms, accountancy practices, consultants and other business advisers). The impact of effective CRM is potentially huge and, conversely, the risks and penalties of mismanaging - or failing to manage in a conscious, planned and informed way - can also be enormous.
The centrality of CRM to professional service organisations and the essential simplicity of their business model mean that their experience can be helpful to organisations in other business sectors.
Professional service firms as a model
Professional service firms present some unusual characteristics that create interesting management challenges:
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As partnerships rather than companies, those that have the prime interface with clients (the partners) often enjoy a high level of autonomy and normal management authority is reduced: new initiatives and programmes have to win the support of partners if they are to have any chance of being implemented;
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Partners often have a strong sense of personal ownership of client relationships and are unused to taking a team approach;
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Any non fee-earning activity can be seen as a distraction;
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There is often a general suspicion of management initiatives and a strong dislike of business jargon;
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In some professional service firms - in particular traditional law firms - a lock-step system of remuneration (whereby financial rewards are determined solely by length of service) removes the possibility of offering financial incentives for involvement in CRM programmes or for the achievement of specific goals.
While these characteristics are particular to partnerships, they do mean that an approach that succeeds in such a challenging business context may well have something to offer a more conventional and receptive business environment.
Objectives and key elements of CRM in professional service firms
In professional service organisations CRM programmes tend to be concerned with finding ways of maximising the long-term value of client relationships by:
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Identifying key clients and those that have the potential to become so - this may include targets who are not yet clients;
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Identifying what these clients want, need and expect both in terms of products / services and in service delivered and ensuring that these requirements shape the service they receive. Requirements and expectations may not be consistent across the client base, and it is likely that a segmented approach will be appropriate;
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Setting up programmes to develop business opportunities and optimise client satisfaction;
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Establishing an infrastructure and process to allow this all to take place effectively and to realise process efficiencies.
The approach: what is involved
1. Define the benefits: the starting point for any successful client focus initiative is developing clarity around what benefits the programme should deliver both to the client and the firm. People often understand different things by client relationship management, and may not fully appreciate what it can and cannot achieve. It is also important to manage expectations around the speed at which measurable financial or other benefits will be apparent. A clear and common view of the benefits will also allow an appropriate set of performance metrics to be developed.
The principal benefits (which are of course inter-related) are likely to include:
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Financial results: increased revenues (both overall and in specific markets or product areas); improved profitability; prompter payment of bills;
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Greater client penetration (products and markets);
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Higher levels of client satisfaction;
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Customer referrals;
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Increased share of the client's spend (and in aggregate of all clients in the programme);
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An improved client base overall;
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A shift in perceptions of the firm and a strengthening of the brand;.
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Cultural change within the firm, becoming more client (as opposed to internally) focussed and creating improved teamwork and internal integration;
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A deeper understanding of clients' needs which can assist in developing more effective and relevant products and services.
There are also softer, less measurable benefits, like enabling disagreements or problems to be resolved more quickly.
2. Analyse the market and client base, and segment it: the programme should of course focus on those existing or target clients where the long term return of such an investment in likely to be greatest. This will in part be informed by an analysis of internal financial data, but this needs to be supplemented by additional quantitative and qualitative analysis of clients' (or target clients') potential to deliver the benefits identified. Factors to be considered may include: size (e.g. market capitalisation or estimated spend in the product / service areas provided by the firm); the extent of the client's presence in key geographic or product areas; product mix; the client's own ambition and financial performance; the client's receptiveness to a managed approach.
The firm should consider what kind of segmentation is useful both in terms of measuring progress towards objectives and for structuring and managing the programme. Types of segmentation to consider include geographic; industry sector; whether the aim is defending share or business growth; size; the complexity of the client organisation and its structure (and therefore the number and diversity of interfaces with the client); the client's culture and, in particular, their receptiveness to a structured partnership type relationship. The segmentation should be used both to help determine appropriate levels of investment for each segment and to shape the content of the programme at different levels.
3. Identify champions: in a culture where there is often scepticism about new initiatives and discomfort with the unfamiliar, it can be very helpful to identify influential partners who have bought into the CRM concept and who are themselves highly regarded for their own client skills, to act as champions within the firm.
4. Seek out and listen to the voice of the client: any client programme should of course be shaped not only by the firm's objectives and requirements but by a deep understanding of the client's perceptions and priorities. Client research and feedback can also be very powerful in persuading sceptical partners of the need for CRM and demonstrating that what they value and what their clients value can be very different. Feedback may need to be obtained at many different levels within the client organisation, and in relation to both the overall relationship and to specific areas of work.
5. Define and implement the programme: the programme is likely to include the following elements:
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Define roles and responsibilities for those directly involved in the programme;
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Establish client teams for each client in the programme whose role it is to manage the relationship with the client (drawing as appropriate on the wider resources of the firm), to set objectives and prepare and implement a business plan ;
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Set overall targets and define business measures. It is essential to ensure that management treats this as a real priority and demonstrates commitment through personal involvement, in particular resolving problems and supporting client teams. It is also essential those involved in the programme are held accountable for delivery against objectives and targets;
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Identify and remove any barriers to the success to the programme. These may include, for example, the availability of resource or the existence of individual or business unit financial targets which are incompatible with investing time in activity which does not generate fees directly;
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Establish a communications programme so that staff throughout the organisation are aware of the programme and what it is trying to achieve and understand their own role in it;
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Provide training. This may encompass building an understanding of what CRM entails as well as skills training;
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Establish a client research / feedback process. There are many possible models and methods for this. The key is that information is provided to inform the content and focus of the programme, to help direct individual teams and to track progress being made in client satisfaction;
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Set up the necessary infrastructure. This will include systems, management reporting, human resources management, and both client development and analytical marketing support, as well as administrative support to the programme overall to the individual client teams.
6. Define service standards for all staff: the strengthening of client relationships will generally require the delivery of consistently high levels of service, not only by professionals but by all within the firm whose work affects the client directly or indirectly. Staff therefore need to understand and be held to account for meeting service standards consistent with client expectations and the firm's own objectives.
Making it work
While the quality of thinking and analysis at the outset, the design of the programme and the systems and infrastructure that support it are all vitally important to any CRM programme, most critical of all is gaining the support and long-term commitment of those throughout the organisation that must make it work. In professional service firms this is typically achieved by:
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A clear business case. The need for such a programme and the potential benefits need to be clearly demonstrated;
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Strong leadership and management support. It has to be seen as a business priority and be treated as such through its incorporation into objective setting and measurement processes, and by clear example of the firm's leaders;
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Involvement of partners in the process - both in identifying strategic clients for inclusion in the programme, and in the developmental stages of the programme;
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Practical support to client teams in particular from Business Development / CRM specialists;
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Budgetary support both at programme level (for example for client research and for training) and for individual client development;
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Flexibility. There is a need to accommodate (albeit within a common framework) differences in style and detail. The old cliché applies in this sector: one size does not fit all;
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Communicating success both anecdotally and through showing progress against key objectives and measures;
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Accountability. As in any other area of activity where significant progress needs to be made, accountability is key. Formal and informal mechanisms need to be identified at the outset and rigorously applied.