Creating More Value in Your Client Relationships
I recently conducted a survey asking 350 senior relationship managers at 18 major services firms about the most important trends affecting their ability to develop long-term client relationships. The number one trend that they cited was: “Client demands for more value for money.” Client executives have been telling me this in interviews for several years. “We'd like to get more value out of our relationships” is their common refrain. This is not surprising. Most corporate executives are being asked to do more for less, and they must continually justify their spending. It's only natural that the pressure on corporate management to increase value for shareholders is being passed on to the firms that advise and provide services to them.
Client demands for more value have produced a great deal of frustration as well as dysfunction on the part of service providers. The frustration arises because it's not actually that easy to come up with new ways to add more value. The dysfunction occurs because a frequent response is simply to offer fee discounts—a path that can become a downward spiral of lower profits, decreased investment in intellectual capital, and a reduced ability to attract the best talent. Unfortunately, it is easier and more expedient for some to simply lower prices (the denominator of the value equation) than to increase benefits (the numerator).
What is value, ...