By Andrew Sobel and Olivier Jacob
How many of your customers think you are essential to their growth and profits? How many of them, on the other hand, see you as a cost to be carefully managed? The difference is huge. When customers see that you contribute to their growth and profits, they can't do without you. But when they see you as a cost - a commodity - they will try to minimize your costs and reduce them whenever it suits them.
This distinction goes to the heart of the challenge of developing lasting, trusted partnerships with customers, of retaining customers for life. Perhaps never before has there been so much pressure on the ability of companies to acquire and retain customers.
Let's look at these forces and then look at a set of strategies designed to combat them and consistently increase your clients' revenue each year.
Six trends that impact your customer relationships
There are no fewer than six major trends that make it more difficult than ever to build mutually beneficial customer relationships:
1. Requests for more value.
Customers want more value in their relationships. Their own customers and shareholders are asking them to do more with less, and that pressure is being passed on to you.
2. Refinement and transparency.
Customer executives are more sophisticated than ever. They usually know more about their own business than you do, and in many cases, they know a lot about your business as well. Information about you and your competitors is usually widely available.
To get better value, many companies use procurement processes to buy high-end services. You are now in the same boat as the person selling copy paper or sheet metal.
4. Limited executive access.
Leaders are running out of time. They could fill their day three times with people who want to see them. So just having access and time with them to be able to build a relationship is very difficult.
5. Competitive Expansion.
Everyone has targeted the same attractive market segments, dramatically increasing competition. Companies that once faced only two or three major competitors now find themselves facing half a dozen or more, some of which have come from completely unexpected directions.
Corporate clients are significantly increasing their use of external service providers and consultants. One large bank went from 700 different training firms to 70. Another company reduced the number of consulting firms from which it sought services from 20 to four. In short, if you want to be a strategic provider, you need to sharpen your relationship management skills considerably.
Yet despite these powerful trends, customer relationships are more important than ever to your success. Client executives still look to outside vendors and service providers they know and trust. They stay with partners who have proven their ability to deliver on the requested mission. Despite the increasing role of procurement and the use of competitive bidding, relationships play an absolutely crucial role in winning and retaining customers.
Reinventing customer relationships
Due to the above trends, the old models of customer development are insufficient. That's why we call our approach Building Your Customers for Life. It's not enough to simply tweak the existing customer development model, you have to rethink it. Today, a "relationship" means much, much more than having a good personal relationship with an executive. It's something you earn by continually adding value and creating a deep reservoir of trust based on quality delivery and personal integrity.
Based on twenty years of our own research into the right ingredients for lasting customer relationships, we have identified the strategies and skills that make organizations and individuals extraordinarily effective at every stage of the customer development process. The good news is that many of the changes required involve mindsets, skills and best practices that can be learned and quickly adopted.
There are two key dimensions to retaining clients for life. First, there is the role of the individual professional. Are you an expert for hire, a negotiable commodity? Or are you an indispensable client advisor who has a seat at the table?
The second dimension is the corporate relationship you share with the client. Does it cover a single department and hold its relationship with a single executive? Or does it cover a large part of the business and base its relationship on multiple executives? When the latter happens, you have transcended the role of any one individual and established your customer relationship.
If you put these two dimensions together, you get the Customer Growth Matrix, shown below. This framework illustrates the journey from a commodity expert to a trusted advisor or partner to the customer.
Develop your customers for life
For the first project or transaction, you are considered an expert. You have not yet established enough trust to be considered part of the client's inner circle. The challenge is to get out of that box quickly enough, or you will remain a commodity. No matter what field you work in, there are always other "experts" (or alternative products and services) that a client can hire to do the work. In this lower left quadrant, you will potentially be subject to price competition and competitive bids, and you will never have a seat at the table with your client where you can learn - before your competitors - about their upcoming plans and priorities.
Bringing deep expertise to your client is essential, it's your ticket to entry. But over time, you need to evolve your role in order to have a greater impact and build more loyalty with your clients.
When you move into the lower right quadrant of Trusted Advisor, the client sees you as a trusted resource who knows their business better than anyone else and helps them achieve important business goals. If you work with a company that offers a broad enough range of solutions, you may also move into the upper right Trusted Partner quadrant. When you are a trusted partner, you have established multiple relationships with multiple people which makes you a strategic supplier.
In both cases, when you are on the right side of the matrix, the result is more sole-source business, greater loyalty and the ability to have a greater impact on the customer.
From expert for hire to customer consultant
In order to move to the right along the X axis of the matrix, you need to surround your deep expertise with additional skills. Based on our study of more than 10,000 high-performing professionals in many different markets and personal interviews with more than 1,000 C-Suite executives about their most trusted advisors, we've identified a specific set of skills that will help you leverage your expertise and become a trusted client advisor. These skills are taught in our online learning program, Building Clients for Life.
The first step is a change in mindset. Most professionals are subject matter experts, as they should be. But this deep and narrow expertise can become a major barrier to building good client relationships. Experts often become myopic and can't see the forest when they look at the trees in it. They focus on their own solutions and expertise at the expense of building a deep understanding of the client's problems. They often dig so deep into their own specialty that they are unable to see the broader context of the client's business.
The table below illustrates the skills of the expert in relation to the broader capabilities of the advisor.
Remember, this is a complementary skill set, not a completely different skill set. The client advisor is also always a deep expert. The difference is that he or she has developed a skill set. These skills help them build trust, place their expertise in the context of the program that is most important to the client, bring a broader business sense and add more value.
By using the right strategies and developing the right skills, it is possible to dramatically improve the depth, breadth and quality of your customer relationships and ultimately revenue growth. It takes constant effort and a willingness to invest and learn, but the returns are worth it.
About the authors
Andrew Sobel is the leading authority on the strategies and skills needed to develop clients for life. He is the world's most published author on the subject, having written eight best-selling books on customer relationships, including the international bestsellers Customers for Life and Power Matters. More than 100 leading companies, such as PwC, Citibank, UBS, Booz Allen Hamilton, Cognizant, Deloitte and many others have used his book Clients for Life to develop trusted advisor skills and increase revenues for their clients.
Olivier Jacob has decades of expertise as a coach, trainer, and conference facilitator on the topics of management and sales. Author of the book "Make your business grow" and passionate about personal effectiveness, strategy, sales, commitment and new technologies, he created Inéa Conseil in 2008 to help companies sell more and better, and managers better mobilize their employees.