Are You Creating “Superior Value” for Your Clients?
Many firms and professionals claim that their fundamental strategic objective is to create superior value for their clients. If you are one of them, so far so good. You are right to focus on value, because clients are indeed increasingly assessing you and your competitors through that lens. But whether and to what extent you are actually delivering superior value? Here is a 4-step guide to answer the question.
Step 1 - Defining the Indicators
The first step is to identify tangible performance indicators for such a broad and fuzzy concept. You can figure out these indicators by asking yourself – and by checking out with your clients as well - what are the visible things that clients do when they feel they are getting superior value. The answer includes a mix of the following:
- They accept your rates and fee quotes, without asking for discounts
- They pay your invoices fully and without discussions
- They do not put you in a competitive bidding process
- They continue to work with you for the same type of work
- They give you more and more work
- They respond to your emails and take your phone calls
- They read your newsletters, memos, and reports
- They attend your seminars
- Top people in the client’s organization are spending time with you
- They spontaneously express gratitude and provide you with positive feedback
- They give you high ratings on satisfaction surveys or debriefing interviews
- They recommend you to others
- You could certainly adapt that list to the specifics of your practice, but it gives an idea of where to look at.
Step 2 - Setting up Measurement
The second step is to figure out how you could measure these indicators. For example, if you wish to know whether your clients are recommending you to others, you should systematically ask new clients what brings them to you: it might be your website, or an article they have read, or – precisely – the recommendation from a client of yours.
Once you know how you will measure your indicator, you need to ensure that measurement will be made effectively. How to get among all fee-earners to acquire the habit of asking that question to new clients? And how to ensure that the answers are properly recorded ? The solution might be, for example, to add an new required entry, with a list of pre-selected possible answers, in the form that fee earners must fill in before they can open a new file. In addition, you will most probably need to overcome reluctance (“I don’t want to ask that question to my clients!”) and to provide training on how to do it right (When and how to ask the question to get the information without bothering the client).
Step 3 - Processing the Data
After you have collected the data, you need to turn them into useful knowledge. There is a wealth of information you could get from processing your data: seeing how the number of recommendations is evolving over time, finding out who in your firm is getting how many recommendations, discovering what clients are recommending you, analyzing to what extent the number of recommendations is increasing after a quality program or a marketing initiative, finding out which fee-earners are asking the question to new clients and which are not, etc.
Step 4 - Taking Action
Collecting information is pointless unless you use it to effectively improve your condition. The actions that you could take as a result of processing the data on recommendations by clients might include sending a thank you card to the recommending client, or inviting the recommending client for lunch to discuss the reasons for their satisfaction and sharing that new knowledge with others in the firm, or promoting a fee-earner who is repeatedly recommended by clients, or intensifying training programs on how to create value for clients when tests show that clients are responding positively by making more recommendations, etc.
I have limited the examples in this short article to one performance indicator: recommendations by your clients. Obviously, the same could be done with all the other indicators. Just go through the list of above, and ask yourself how you could actually measure this indicator, what it would take to create a measuring process that works, what useful information you could get from it, and what decisions you would be able to make as a result.
A Final Word About Billable Hours as Performance Metrics
Note that billable hours are not in my list of value indicators. Indeed, the fact that you are billing a certain number of hours is an indicator of your input, but says nothing about the perception of your added value by the client (The fact that the client will pay for your time without discussions says more, and that is in my list).
However, billable hours remain the number one performance indicator used in most firms. Is it credible to tell to your clients that your primary objective is to create value for them, when your main indicator has nothing to do with it, and when no indicator is in place to actually measure it? Isn't common sense that metrics should be used for what matters most?