By Tim Williams
NOT EVERY CLIENT GETS TO FLY FIRST CLASS
Do the people in your firm complain about an overwhelming number of simultaneous priorities? Does every task and client request have an ASAP attached to it?
A culture in which everything is important is one of high stress, low satisfaction, and likely suboptimal profitability. In professional services, one of the key drivers of this unsound behavior is the common internal refrain around ultra-responsive client service. This philosophy, which seems like a sensible business practice, teaches that any and every client request should be acted on immediately.
The best and all the rest
This internal mantra seems innocuous enough. Except that it’s a shortsighted and unsustainable way to run your business. Not every client has paid the price of a first-class seat in your organization, and your organization doesn’t have the human or economic resources to lavish first-class service on clients who only paid a coach price.
This isn’t to say that some clients should be coddled and some ignored; every client deserves a basic level of polite, attentive service. Just remember there is a large gulf between your firm’s very best customers and those who are paying you to complete a project. The former likely view what you do as a growth driver; the latter regard it as a service.
In the airline business, first-class customers are much more likely to be repeat customers. They’re frequent travelers who value the loyalty program and don’t mind spending a little more money to get a better seat, a better meal, and priority boarding. Even Southwest Airlines, arguably the creator of the discount airline business, now offers the equivalent of a business class ticket that allows customers to board first and improve their odds of getting a good seat and adequate luggage space.
Not every client is created equal
The practical application of this concept for professional service firms starts with segmenting your market. Market segmentation has been practiced by most businesses dating back to the Bronze Age, when enterprising traders segmented trade routes based on geography and local tastes and customs. As trade grew in sophistication, one of the main objectives of market segmentation was to enable sellers to distinguish between favored high-value customers and unexceptional one-time purchasers. The storefronts of some 17th-century retailers featured a window opening onto the street that allowed the sale of common goods to common people without inviting them inside the store. At the same time, wealthier customers were invited to a back room of the store that displayed a showcase of the retailer’s best goods.
Unfortunately, most professional firms largely bypass the foundational practice of market segmentation and simply lump all clients together on the same alphabetical list. When a new client appears on the horizon, the internal discussion usually revolves around “Which team has capacity” rather than “What level of expertise and attention does this client require?”
The point here isn’t just to segment clients based on the size of their budget. Even the most basic segmentation strategies should consider:
Industry segmentation, meaning the business sector or industry classification of the client organization.
Needs-based segmentation, which identifies and predicts the types of professional services needed by the company. This can best be answered by probing the question "What are the types of problems this company is trying to solve?"
Firmographic segmentation, including such factors as company size (revenues), budgets for professional services, etc.
Geographic segmentation, which looks at the location of company headquarters, number and location of offices, outlets, or sales channels, languages involved, etc.
Attitudinal segmentation, which considers company management’s views about the role of professional services.
Behavioral segmentation, including the number of similar providers of professional services, the average length of relationships with professional firms, etc.
Using the above factors and more, one company grouped prospective clients into five buckets: Price Fighters, Range Buyers, Delivery Buyers, Quality Fanatics, and Traditionalists. To optimize the way you work with these different types of clients, each segment needs to be approached quite differently — especially when it comes to pricing and project management.
”Where would you like to sit on our plane?”
Once you’ve identified the segment in which a prospective client belongs, you can develop several different “program levels” for your client’s consideration. These program options feature different levels of outputs (deliverables), but also different grades of day-to-day service. For example, your economy Option C might feature, “Direct access to client service and project managers during regular business hours via phone and email,” whereas your deluxe Option A would also include “On-demand access to the top leaders in the firm for advice and counsel.”
Other variables in constructing different program levels can include:
- Involvement in the development of strategy vs. fulfilling an existing brief
- Peak vs. off-peak execution and implementation
- Start-to-finish involvement vs. hand-offs to internal resources
- Short- vs. longer-term completion date
- Degree of sell-in meetings and presentations to client management
- Access to specialized resources and services
- Access to digital assets and archives
- Degree of competitive monitoring
- Degree of reporting and record keeping
- Degree of analysis and results measurement
Whether we're talking about an airline or an advertising agency, consider the economic consequences of providing first-class services and resources to every single customer regardless of where they sit on the customer spectrum. Besides being an untenable model that will burn through revenue without producing profits, it will burn through the patience and goodwill of your staff as well.