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It’s client retention, stupid!

With a (self-reported) A/E/C industry repeat work average of 80-85%, it’s tempting to assume that most firms understand client retention. However, if these past few years have taught us anything, it’s that doing good work is necessary, but not sufficient for holding onto clients.

The time, energy and focus required to keep a desirable client coming back can be overwhelming. Yet the economics are indisputable. Consider the wasted pursuit costs of landing a new client when that client becomes dissatisfied and goes elsewhere. Depending on the client, the opportunity, travel, proposal and labor costs, the hours you’ve lost can easily run into thousands of dollars. And that’s not factoring in the difficult-to-measure intangibles, such as the impact that a dissatisfied client may have on your firm’s reputation.

One invaluable way to track what clients truly value and what their hot-button issues really are is client research, both client/prospect perception studies and ongoing client monitoring upon project completion. Here’s some of what I’ve learned over the years from interviewing many of your clients across a variety of market sectors, organization sizes and geographies:

When it comes to client satisfaction, rose-colored glasses are a fashion faux pas. Never take a client’s satisfaction for granted. The A/E/C industry has not cornered the market on conflict-aversion. Some clients will not provide unsolicited feedback. You must develop the skill of asking probing, open-ended questions. (Need some pointers? Check out The Friedman File article: Ask, Don’t Talk: The Art of Open-Ended Questions.) Yet even when given the opportunity, some clients feel more comfortable sharing their experiences and concerns with an independent third party. No matter how you check in with them, be sure that you do.

If you know (or sense) that a client is unhappy, handle it before making requests. Nothing pisses off a client more than receiving an invoice for services they don’t believe were adequately delivered. You should also avoid asking a client to serve as a reference when they’re dissatisfied with any aspect of your firm, whether it’s the end product or your approach to business development, relationship management or project delivery. Have that difficult conversation prior to sending the invoice or asking for a reference. The choice is yours: you can make the necessary adjustments in the short term to retain the client, or take the path of least resistance and almost certainly lose the client in the long term.

Clients don’t like being “turfed.” In this age of doing more with less, beware of overloading PMs to the point where critical functions like project communications are delegated to folks that the client perceives as underlings. Of course, there are instances when this has to be done for logistical reasons (e.g., the PM will be away/unavailable). But the PMs who rank highest in client satisfaction proactively explain these instances to their clients and make sure their “lieutenant” is prepared to handle any questions or concerns.

Skillful project planning and budgeting are essential. Clients expect and appreciate accurate project plans and budgets. It’s now more than the proverbial “staying on time and within budget.” It’s about anticipating the bumps in the road and factoring those into the project schedule, and especially, the budget. As we know and sometimes forget, clients don’t like to be “change-ordered” to death.

Appreciate the complexity of project communications. This vital function encompasses many elements, from communication style, frequency and mode to responsiveness. Most clients want to be kept informed throughout the entire project, especially regarding unexpected bumps and change orders. But rather than adopting a “one-size-fits-all” approach, we must understand the frequency and level of detail that individual clients want. As one interviewee told me, “I want ‘just the facts ma’am.’ What’s the situation, and how much is it going to cost me? I don’t want to know all of the ‘what happened’ and ‘whys.'” Such clients may be the exception rather than the rule, but it’s our job to understand our clients, how they want to be contacted (office/cell phone, e-mail, texting, in-person meetings) and how often.

Speak English. Jargon is another concern for clients. Whether you’re an architect, engineer, environmental consultant or contractor, most clients don’t like “technicalese.” Rather than being impressed, they’re often confused. And this language can cause them worry over how you’ll come across to their leaders, partners and external constituencies should there be a public approval process. The bottom line: communicate directly and crisply, and be mindful of your audience, their ultimate objectives and how they define success.

It’s the PM, not the firm. I hear time and time again in client interviews that clients are loyal to their PM and their project team, not necessarily the firm. Perhaps this is a no-brainer in the professional services arena, but it provides significant cause for pause. The upshot of this is that employee training, development and retention leads to client retention. The bottom line: most clients will follow a stellar PM when that PM leaves your firm for a competitor.

Consider tracking your Net Promoter Score® (NPS). Popularized by Fred Reichheld’s book, The Ultimate Question: Driving Good Profits and True Growth, the NPS is a simple measure of client satisfaction and loyalty. Using a 1 to 10 scale, this metric asks, “How likely are you to refer Firm A to your peers?” Detractors are those respondents rating their likelihood as 6 or less; promoters rate their likelihood as 9 or 10 (those selecting 7 or 8 are considered neutral). Several firms I work with track this metric yearly based on independent (and other) client assessment tools, so they always know where they stand with their clients.

When it comes to client satisfaction, one of my own clients says it best: “We treat the opportunity to identify problems as ‘gold.’ Being able to fix these problems before clients go elsewhere is invaluable.” Imagine cultivating that culture in your firm. How many clients would you avoid losing? Call or e-mail me (508-276-1101; rich@friedmanpartners.com) to share your thoughts, experiences and advice.

 

 

By | 2017-07-18T15:25:21+00:00 July 2012|Business Development, Business Strategy|

About the Author:

Rich Friedman, President of Friedman & Partners, has worked in and consulted for the A/E/C and environmental consulting industries for more than 25 years. Starting out in the trenches as an environmental consultant and business developer for Stone & Webster Engineering in Boston, Rich expanded his reach as the partner in charge of marketing and business development research, consulting and training for ZweigWhite. He also managed a variety of other projects involving strategic planning, mergers and acquisitions, and executive search. Since launching Friedman & Partners, he has worked with firms at all levels, from small niche consultants to large ENR 500 organizations. He’s also conducted hundreds of seminars and workshops for firms, design and environmental industry professional associations and venues, including AIA, SMPS, ACEC, AGC, NSPE, Build Boston/ArchitectureBoston Expo (ABX), WTS and Chief Executive Network.