article options:      send feedback

Meet the MasterMinds: Andrew Sobel on the State of Client Relationships

Andrew Sobel is a management consultant and a thought leader on the subject of client relationships. Sobel has spent more than twenty years as an advisor to senior executives in more than thirty countries.

He’s the author of the bestsellers Clients for Life: How Great Professionals Develop Breakthrough Relationships and Making Rain: The Secrets of Building Lifelong Client Loyalty.

Sobel worked for fifteen years with Gemini Consulting, co-founding its international practice. He served as a senior vice president, managing director, and member of the European Management Committee.

McLaughlin: What is the “state” of client relationships today?

Sobel: I think the headline is that client relationships are harder than ever to build and sustain but they’re also more important than ever.

From a client’s perspective, relationships reduce risk and enable the client to move faster. And if they are the right relationships, the professionals add more value to the client’s organization.

From the consultant’s perspective, of course, long-term relationships allow you to have more impact, they’re personally satisfying, and they’re economically rewarding. In my work with consulting and other professional firms, I can tell you that the growth and profitability of those firms is still very dependent upon their ability to manage and grow key relationships.

But things are getting tougher. There’s more client resistance to paying fees because the clients we’re working with—senior corporate executives—are under a whole new set of pressures.

McLaughlin: So it’s more difficult than it has been in the past to establish a productive client relationship?

Sobel: Yes. I think that the hurdles to establishing new relationships are higher, partly because clients are increasingly using competitive bidding and procurement processes to select consultants.

Now, the upside of that is that the opportunities are more transparent. There are two sides to the procurement coin. One is that you’re slugging it out against other firms for every opportunity but, at the same time, some of the really big projects are made public and transparent and you do have a chance to win.

McLaughlin: What’s been the consultant response to those hurdles?

Sobel: You see more spending on sales and marketing and intellectual capital today. You’ll also notice firms using more channels to communicate their messages than in the past.

The result is a lot more noise in the market, which means more demands on clients’ attention. That, in turn, makes it even harder for clients to separate the wheat from the chaff.

But even with the increased spending, I don’t think consultants have really changed the way they do business. One result of that is that they appear undifferentiated in clients’ eyes. Everybody pretty much writes the same proposal.

McLaughlin: Do you think clients view “relationship building,” which is a key marketing strategy for most professional firms, as just another way to sell more to them?

Sobel: Each year, I interview quite a handful of C-level executives in corporations on this topic, and I would say that most of them are very interested in long-term relationships because they understand the potential benefits. They are also demanding that consultants re-earn loyalty as they go.

The problem is that consulting is a discretionary service, which creates a natural tension between consultants and clients.

In other words, consultants must continually add value and continually invest in their clients. The problem is that consulting is a discretionary service, which creates a natural tension between consultants and clients.

Consultants would like long-term relationships that are economically remunerative because then their selling costs are lower. Clients sometimes want a break from consulting, and they are under enormous pressure from their own organizations to deliver more value for money. They’re looking to consultants and other outside providers to help them do that. I don’t think clients are cynical about it; they’re just practical.

McLaughlin: How essential is it for consultants to understand the pressures and common challenges clients are facing?

Sobel: As I said, the typical corporate executive today is under relentless pressure to do more for less, and we consultants have to understand this. In every organization, practically everyone is being asked to do more with the resources they have because that is an inexorable demand from shareholders.

After many years of this pressure, corporate executives are looking outward and saying, we’ve always gotten cost savings and value increases out of our product suppliers—like automobile parts, sheet metal, or stationery—what about services? The last cost-saving frontier for companies is to squeeze more value from people who are providing services.

The consulting industry is doing quite well right now, but there is this push to increase the value we bring and more price resistance on the part of clients.

A corollary to the pressure to get greater value for money that corporate executives are experiencing is how to achieve the highest value for an investment of personal time. The average senior executive could fill his or her day two or three times over.

This is a difference from ten or twenty years ago: every senior corporate executive I work with or have interviewed is looking at their calendar and saying is this an hour well spent? Is this aligned with my strategic agenda? What they’re saying is, “Why should I spend half an hour with you today?”

Now if I have a deep relationship with you, I know that you’re going to add value in that half hour. If I don’t know you that well or if I don’t know you at all, forget it, good luck. If I know you a little bit, I’m willing to give you some time but you’ll have to justify it with a concise agenda that grabs my attention and aligns with my concerns that week.

I see this trend as pervasive. As consultants we really have to rethink how we approach client meetings and how we use our client executives’ time. If we have thirty minutes, we’d better make that thirty minutes really worthwhile.

McLaughlin: If you were to look at the way consultants typically structure such meetings, what might you do differently?

Sobel: Of course, it depends on the situation, but let me make a couple of generalizations.

I think most consultants over-prepare their own analytical material for meetings but under-prepare in terms of pre-meetings with the client and understanding how the client is going to react to their findings.

They don’t do enough of what I’ll call—borrowing a term— co-creation of the product with the client. When you sit down to talk about it, your client’s fingerprints should already be all over it so it’s a joint product.

I think that we spend far too much time calculating numbers to the third decimal point and far too little time actually working collaboratively with the client, whether it’s the implementation program or findings about their strategy. We do far too much telling. I still see many consultants going in with big PowerPoint decks—they’ve got a one-hour meeting and they present for forty-five minutes.

An alternative to that is to go in with a deck that you put off to the side, and give the client a five-minute verbal summary—no slides—of key points. Then you sit back and ask, “Which parts of this are most important to you and what do you want to spend time on?”

McLaughlin: Besides time and value for money, are there other client pressures we should keep an eye on?

Sobel: Yes, and I’d begin with speed. Clients are saying we have to move faster. I don’t think consultants always appreciate how quickly general managers are expected to get things done today.

The old model of consulting is this whole process: we’re going to do lots of interviews and look at a ton of data, and then write detailed reports. That is out of sync with our client managers’ need for speed.

Another issue is fiscal responsibility. Client executives must demonstrate to their organizations that they made the right choices. Otherwise, selecting a particular consultant looks like a sweetheart deal. That’s where I think consultants are encountering friction in terms of the use of procurement and RFP processes and feeling that their clients don’t value relationships.

McLaughlin: Let’s come back to the comment you made earlier about the lack of differentiation among consulting firms. How can a consultant find a strong point of market differentiation?

Sobel: I think there’s an opportunity for firms and individual consultants to take a fresh look at the total client experience—the end-to-end experience that a client has working with you, how it feels, and what the client remembers about that experience.

Consultants should rethink how they prepare for initial interactions and meetings. It could be the extremely intelligent and provocative questions you ask, or the fact that there’s no paper in those initial meetings, no slides.

It could be that you are focused on value and how you communicate it—the way you forecast, track, and measure value. It could be the follow-up that you do for engagements.

I think we should take a page from the consumer businesses that create extraordinary consumer experiences. I used to be very jaundiced about that and feel that clients are totally different from customers. But I think consultants could learn from some of the highly focused consumer businesses.

McLaughlin: Why hasn’t this concept of the client experience been embraced?

Sobel: Given the success of many firms, there’s not the impetus to redefine the client’s experience. Some experimentation is going on around the world, and we are seeing some new practices. But I think that everyone ought to sit down and think long and hard about the client’s experience. It doesn’t mean you have to do twenty things differently. It may simply mean that you do three new things that become your trademark.

McLaughlin: If you could give a consultant one piece of advice on managing relationships in this environment, what would it be?

Sobel: Consultants need to do a better job of focusing on what’s truly valuable to their clients. People talk a lot about adding value and value in relationships, but much of it is just talk. The very first step when you’re discussing a potential project is to answer this question: what really is the value that the client is seeking and that we’re going to create in this process? When you are able to determine that, price becomes much less of an issue, I guarantee you.

One more thought. Most consultants do a good job of understanding their clients’ business goals and strategies, but they do a poor job of understanding their clients’ personal goals.

The best advisors go to great lengths to know their clients as people.

The best advisors go to great lengths to know their clients as people. They serve organizations as consultants, but they are also trying to help their client executives on a personal level. And you can’t do that unless you really understand them. What are their aspirations and goals? Where do they want to go next in the organization? What’s most important to them in life?

The really great consultants know those answers. But I think it’s something a lot of us shy away from because it’s unfamiliar territory to ask somebody what their aspirations are in life. But you know what? There’s a time and a place to do it when it’s not just appropriate, but your client will find it very engaging to talk about that.

McLaughlin: Terrific. Thanks for your time.

Visit Andrew Sobel at www.AndrewSobel.com to learn more about his books, and check out his free newsletter, Client Loyalty, and other services.