Getting
Inside Clients' Heads
By Abhay Padgaonkar
“If you want loyalty—get a dog.” -
Grant Fairley
Is client loyalty still relevant in this day and age when
clients can switch at the click of a mouse? Like electric
windows, anti-lock brakes, and air bags, what is innovative
and sets you apart from the competition one day may be commonplace
the next.
As competition becomes more intense, clients view your
services as a commodity. When low-cost, low-frills competitors
enter the market, buyers become unwilling to pay for an
undifferentiated product or service—leading to price
compression. Loyalty to the best value replaces
any previous loyalty to a supplier.
In such an environment, client loyalty is even more
important. Fred Reichheld, author of The Loyalty
Effect, argues that loyalty is still the fuel
that drives financial success—even, and perhaps especially,
in today’s volatile, high speed economy. The cost
of replacing a profitable client is extremely high. By contrast,
client loyalty brings revenue growth, cross-selling opportunities,
increased efficiencies, referrals, and price premiums.
Short-Cuts Don’t Cut It
However, very few companies put their money where their
mouths are. They don’t invest in understanding and
measuring client relationships and emotions. Instead, they
take comfort in some generic, mechanical, and impersonal
client satisfaction survey results or anecdotal information.
They further compound the problem by having sales or business
development people masquerading as account managers.
According to a Leadership IQ Inc. survey of over 1,000
board members, 28 percent of CEOs were fired because they
ignored customers. For B2B suppliers, the implications of
this finding are profound. The tell-tale signs of a deteriorating
client relationship typically appear after the damage is
already done. That’s when the diving save, the search
for the guilty, and vows of “never again” begin
in earnest.
There is increasing evidence that emotionally satisfied
clients contribute far more to the bottom line than rationally
satisfied clients, even though they appear to be equally
satisfied. Neurological research by Gallup Organization
(“Manage Your Human Sigma” – Harvard
Business Review, July, 2005) showed that the
brains of customers who had the strongest levels of emotional
attachment to a specific company also had significantly
more activity concentrated in parts of the brain related
to emotion when thinking about that company.
More striking was the strong correlation between emotional
attachment and self-reported share of spending. In other
words, there seems to be an underlying neurological mechanism
that links emotional attachment and subsequent client behavior.
Share of Mind
As Robert Half said, “When the customer comes first,
the customer will last.” To be able to put the customer
first, however, you need to provide more than just lip service.
Unfortunately, mass client satisfaction surveys can hardly
tell the difference between merely satisfied versus truly
engaged clients. So how does one stop worrying about a share
of wallet and focus on getting a share of mind?
Start by gaining a true, unbiased understanding of your
clients. You’ll find answers with objective, third-party,
holistic relationship reviews through key stakeholder assessments.
If these reviews are personalized, in-depth, and conversational,
they can collect a lot of rich information that is impossible
to collect through mass surveys. While one size doesn’t
fit all, you can objectively test for emotional connections
by asking open questions in four key areas:
- Integrity: Do you mean what you say?
- Reliability: Do you do what you say?
- Consistency: Can clients always count
on what you say and do?
- Interdependence: Do clients feel that
“we are in this together?”
The value of the information gathered in this way can be
enormous. A deeper understanding of how much clients trust
you in these critical areas of emotional connection can
be a mirror to see yourself—if you choose to look.
By knowing how well you are meeting the clients’ current
needs, you can change your approach to account management,
relationships, contracts, servicing, information technology,
and reporting.
It is also about looking forward and anticipating needs
rather than just looking backward. By getting inside your
clients’ heads, you can chart out the future direction
for new product and service offerings. Depending on the
strength of the emotional attachment, you can know who your
high-value clients are and what you need to do to acquire
and retain them.
Our experience has been that clients are far more willing
to participate in these personalized relationship reviews—sometimes
lasting several hours—than they are to take an impersonal
satisfaction survey. Clients also reported these interviews
to be thought-provoking, worthwhile, and helpful in clarifying
their own needs and expectations. Further, the investment
made by the strategic partner in understanding the nuances
of the relationship in an unbiased manner created definite
feelings of goodwill.
So whether you are a lone wolf or a large professional
services firm, gain an unbiased understanding of the value
versus price equation as your clients see it—ideally
through third-party relationship reviews. Prioritize the
opportunities, find solutions, and take action. And most
importantly, invest in continuously monitoring the emotional
engagement of your clients. If you want loyalty, you can
either get a dog or be proactive about providing superior
value.
After all, like beauty and contact lenses, value is in
the eye of the beholder! How healthy is your client franchise?
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A management consultant, author, and speaker, Abhay Padgaonkar
is the founder and president of Innovative
Solutions Consulting, LLC, which provides strategic
advice to major clients such as American Express.
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