Approaches to client management are evolving rapidly. In response to increased demands from their clients, professional firms today increasingly place client management at the forefront of their strategic planning and investment decisions.
Meridian West’s recent benchmarking study of CMOs and Business Development Directors in professional services finds that 46% plan to focus more of their time and resource on improving client management approaches during the next 12 months. In this first in a series of three articles focused on client management we outline the trajectory that many firms are on to professionalise their approach to client management.
The pressure to innovate and differentiate client management approaches is being felt at every level of the market from boutique firms to multinational giants. Clients – especially large corporates and financial institutions with sophisticated procurement practices – have become more forthright in their demand for greater value for money and additional non-chargeable benefits such as free training and seminars. Firms need to respond thoughtfully by being more rigorous and strategic in their thinking about relationships development.
Client management maturity model
Meridian West’s client management maturity model illustrates four stages of development that professional firms typically transition through on their journey to client-focused relationship management.
In larger firms with diverse client bases it not uncommon to find a range of these approaches deployed simultaneously to meet the needs of different clients. For example, international financial institutions may require a more resource-intensive approach than mid-sized corporates or private clients.
Starting out with client management
Historically many professional firms had no formal client management programme. While they may have benefited from a client-focused culture, this was not supported by a systematic firm-wide approach to managing clients. Fee-earner performance was measured on utilisation and on their ability to win work from within their own pool of clients, often with little thought to the opportunities for cross-referrals.
Putting in place a client management infrastructure
Many firms now have some form of client management system in place. Typically this means they have identified a number of key clients who may be supported by business development specialists or nominated account managers. However, these roles are often spread thinly – sometimes one person might be attached to up to 20 important clients – so they have little time to do more than provide administrative support to fee-earners working with these clients. This can create tension: if business development professionals spend little of their time directly interacting with clients they may lack credibility in the eyes of fee-earners.
A more mature approach to client management
The professional firms that have taken strides to invest in client management now occupy step three or four on the maturity model. In these firms designated client mangers spend more of their time out of the office, meeting clients and building their network in the client organisation. They usually have fewer client relationships to manage, and will be responsible for making internal introductions and spotting opportunities for deepening the relationship.
At the far end of the maturity model there is close alignment between the firm’s strategy and culture, its client management approach and the systems and process that deliver client insight and intelligence to fee-earners and business development professionals in the business. In our experience very few firms have reached this level of maturity.
Tough choices, but clear benefits
As professional firms move along the maturity model they must make tough choices. Where will client management resources be prioritised? Which clients will not be targeted? It is important these decisions are taken on the basis of evidence, not just the hunches of relationship partners. Calculating the profitability of individual clients is incredibly important: it is not uncommon for firms to find that high-revenue clients yield low profitability once the high cost of servicing, discounting and added-value extras is calculated.
The firms that have made proactive changes to how they work with client have benefited from a deeper understanding of the opportunities to develop loyal client relationships and enjoy long-term, sustainable growth among their key clients. They are more effective and efficient and cross-referring work based on known client needs. How do they do this? The next article in this series will focus in on specific examples of good practice from across professional services.