Resetting the Client Loyalty EquationProfessional service firms must strike the right

balance between meeting client expectations and

going the extra mile.

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No doubt you’ve

heard the directive:

“We have to delight

our customers!” After all,

your willingness and ability

to respond to clients and

do whatever it takes can

separate your company

from the competition.

What could be wrong with always trying to exceed your customers’ expectations? In today’s digital and social media world, companies like Zappos, The Ritz Carlton and Nordstrom have received a lot of press and positive word-of-mouth about the extra lengths they’ve taken in order to delight their customers. The trouble is, for the vast majority of business interactions, going above and beyond can be costly and, somewhat surprisingly, has little or no impact on loyalty.

In 2010 researchers at the Corporate Executive Board (CEB) upset the customer delight apple cart. For most companies, they argued in a Harvard Business Review article,1 customer loyalty is not driven by exemplary service. After analyzing thousands of call center and self-service interactions, they found that loyalty correlates more closely with meeting people’s basic desire for minimal effort, not with exceeding

their expectations. In addition, when it’s difficult or a time-wasting ordeal for customers to get what they want, or to have an issue resolved, that’s a huge driver of disloyalty.

Obviously, call center operations are different from professional services, where loyalty and contract renewals revolve around long-term relationships and performance reviews. But that doesn’t mean reducing client effort and minimizing hassle won’t pay dividends.

For this management briefing we talked with top executives from a cross-section of professional service firms about how they drive client loyalty, and what role creating an experience that requires minimal effort may or may not play in achieving that objective.

Loyalty has to be earned on multiple levelsTrying to delight your customers is a laudable goal; it’s just very hard to operationalize. “If you ask the folks who work with customers what it means to delight the customer, you’re going to get 50 different answers,” says Nick Toman, Managing Director at CEB. Toman was one of the co-authors of the HBR article and subsequent book2 detailing the results of their research.

In contrast, customer effort can be measured at the transactional level. Businesses can track how difficult and time consuming each interaction

is, and then figure out ways to mitigate that effort, he explains.

Many retail and consumer-oriented companies from banks to amusement parks have taken CEB’s insights to heart and started working on ways to make their customer interactions more effortless. For example, in addition to other consulting services, West Monroe Partners helps financial service providers, banks, credit unions,

“The number one loyalty criteria for the senior people who sign the contracts… is how their team feels about them.”

— Nick Toman, Managing Director at Corporate Executive Board

Executive SummaryRecent research has found that consumer loyalty is driven less by exemplary service and achieves more success by minimizing effort and hassle for customers. Professional service firm leaders should consider how this insight applies to their businesses. Ease of doing business should always be a top objective because the senior leaders who renew contracts base their decisions in large part on the attitude that their team has toward the service provider. When it comes to client relationships, it’s critical to strike the right balance that ensures exceptional service while building client loyalty.

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utilities and healthcare organizations, measure customer effort in their call centers, on their websites and at their retail locations. The results are highly actionable compared to more traditional customer service metrics.

“Clients can drill down tactically and find specific tasks that are very difficult to do. Especially ones that are difficult to do compared to the industry norm, and then focus on those areas for improvement,” says Dave Nash, Director of West Monroe Partners’ customer experience practice.

Of course, such discrete interactions may be less common in professional services. Ease of doing business, however, is still worth pursuing, even if it’s not a major differentiator at the beginning of a relationship. As in the consumer space, the difficulty of working with your firm can be a driver of disloyalty. Key processes that professional service firms need to execute well are contract reviews, invoicing, credit approval, and other interactions between your firm and your client’s finance and legal departments.

According to CEB’s research, what actually matters most for client loyalty is what the client’s operational team thinks of a particular provider. That’s why loyalty has to be earned multiple times at different levels and touchpoints.

“What we know from our data is that the number one loyalty criteria for the senior people who sign the contracts, who cut the checks and determine who the company does business with, is not how well the company delivers on its services,” says CEB’s Toman. “It isn’t how good they are in the marketplace. It’s how their team

feels about them. Does their team like doing business with them?”

This dynamic applies to the evaluation phase as well, he adds. Today, more and more stakeholders are involved in the evaluation and approval of service-provider proposals and final agreements. At the same time, companies are becoming increasingly risk averse. Having more people involved who don’t know how to assess and manage risk bogs down the decision-making and purchasing process. “You see it in any type of decision that companies are trying to make, not just purchasing. The speed and quality of decision making continues to deteriorate,” says Toman.

There is an effort-related opportunity here, he adds. Firms can differentiate themselves by making the purchase experience easier, and by not bombarding potential clients with a bunch of information they don’t need. Those firms that can teach their clients how to make a consensus-based decision—how to select the right accounting partner, for example—can simplify purchase experience and accelerate it.

Align client expectations with service deliveryBased in Des Moines, Iowa, Businessolver manages the customer experience on two levels. The 500-plus employee company provides benefits administration services. The core of its service is an online portal that the employees of client companies use to sign up and manage their employment benefits. It also operates a call center to provide assistance to the employees of client companies when needed. As such, Businessolver manages both business-to-business and business-to-consumer relationships.

The key to managing both types of relationships successfully, according to President and CEO Jon Shanahan, is clearly defining what success looks like up-front with each new client, and calibrating the type of service they provide accordingly. For example, some clients want their employees to have a more personal touch with a lot of hand-holding as they go through the benefits sign-up process. Others want to push employees toward a more self-service approach.

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Businessolver’s customer service representatives interact with employees from multiple clients. To maintain alignment with each client’s expectations, the software informs the representatives of the targeted service levels when people call in.

“We learned all of this the hard way,” says Shanahan, explaining that their business began with the software. They added the call center later in response to client requests. “Everyone looks at customer service so differently.”

The real estate management division of CBRE also goes through an annual client calibration exercise. They also have quarterly review meetings to maintain alignment with client expectations. Based in Los Angeles, the 44,000-employee company manages over 3.5 billion square feet of property worldwide.

Sharing their general knowledge of industry trends during these client review meetings enables CBRE to shape expectations and contribute to their clients’ success on a higher level, and thereby earn greater loyalty. Suggestions might include opportunities for streamlining processes or making other facility usage improvements. According to Jim Hayden, Executive Managing Director of CBRE’s healthcare real estate services, this type of guidance is especially welcome in the U.S. healthcare sector because of the current cost-cutting pressure on hospitals and healthcare systems that’s being driven by the Affordable Care Act requirements.

“At a certain level we just have to meet expectations,” explains Hayden. “Last night, if it snowed in Cleveland, we need to make sure that the driveway was cleaned off.

That’s a given. To have long-term sustainability and grow with our clients, we have to bring some strategic input as well.”

CBRE continually works to make resolving any day-to-day issues more effortless for their clients, Hayden says. Easy communication is a major part of this. From a central call center they manage and prioritize responses to issues as needed, whether it’s a light bulb in a closet or a problem in a surgical center. Use of smart phones and similarly connected devices makes it easier for client representatives to inform CBRE of issues and to communicate their response.

Maintain a personal touchDoing the assigned work and executing projects well are essential to maintaining customer loyalty. But that’s table stakes really for professional service firms. Client relationships themselves also have to be managed proactively. Doing that is a matter of communication.

“We try to have many touchpoints with our clients throughout the year,” says Jeff Agranoff, Chief Operating Officer of Friedman LLP, a top-50 accounting and advisory firm based in New York. “Most accounting and professional service firms generally only have contact with their clients during peak periods. In our case it’s usually during tax filing time. But we’re reaching out to our clients at least once a month.”

Agranoff adds that in-person meetings are critical in a world where many companies rely on email to maintain some semblance of regular contact with their clients. His firm makes sure partners and key account managers meet with clients

in person multiple times throughout the year. Such meetings are built into their performance assessments.

“Your best sales leads are from your existing clients and contacts,” says Agranoff. “In a lot of the client conversations that we have, they may ask us about an issue that they have coming up, and about who could handle it. About two-thirds of the time it’s work that we can do. It’s an immediate business driver.”

When it comes to the day-to-day work for its clients, the firm does a number of things that are intended to maintain client engagement and loyalty. The first is a “no excuses” mentality when it comes to meeting project deadlines. They also strive to maintain client teams, which

“If you’re only focused on one-off transactions, that’s a really tough way to grow our business and be successful and get paid for the value that we think we deserve. Then you’re just a commodity to some extent.”

— Adam Weissenberg, Chief Client Experience Officer at Deloitte Touche Tohmatsu

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preserves personal relationships and knowledge of the client’s business. Finally, when they are on-site at a client location, they end the day with a debriefing to review what was accomplished that day.

Minimizing client effort and maintaining a personal touch can also be baked into your business model, especially for a smaller-sized firm. “At the end of the day, customers don’t want services they didn’t pay for. They just want their problem solved on time and on budget,” says Max Aulakh, President of Miamisburg, Ohio-based Mafazo Digital Solutions.

Mafazo is a growing cyber security firm that works with clients in the defense sector, including the U.S. Air Force, as well as commercial businesses. They help clients protect their data from hackers and respond to security breaches. Their expertise and tight focus reportedly drives both loyalty and referrals.

“Our fundamental principle is that our clients hire us to fill a specific need. We don’t ever advise them to do more than they have to. Our measure of success is how well we

are filling that need alone before we worry about anything else,” says Aulakh.

Long-term client relationships build on positive experiencesClearly, there are times when all that’s required is responding to clients’ needs quickly and with minimal effort on their part. But in most professional service client interactions, that’s a short-term perspective, says Adam Weissenberg, Chief Client Experience Officer at Deloitte Touche Tohmatsu, a global consulting firm with affiliate offices around the world.

“If you’re only focused on one-off transactions, that’s a really tough way to grow our business and be successful and get paid for the value that we think we deserve. Then you’re just a commodity to some extent,” he adds.

Part of Weissenberg’s role is to oversee the firm’s executive development programs for corporate leaders and executive teams. Deloitte hosts these programs in well-appointed leadership centers, which it calls “greenhouses.” It designed the centers and learning experiences, or “labs,” to help its clients cultivate and nurture new ideas and solutions, and work through organizational changes and transitions.

“As a professional service firm, we’re in the business of creating long-term relationships,” says Weissenberg. “Most of our clients, particularly individuals, will move from one role to another within a firm, or from one client to another. We want them to think about us in the long term.”

Because these programs take senior leaders away from their highly demanding jobs for a day

or more, they have to be better than time well spent. “We want everyone to leave every one of these experiences and say it was phenomenal,” says Weissenberg.

To deliver an exceptional experience, not only does the environment in these leadership centers have to be a far cry from a traditional classroom environment, the content must be superior. Deloitte has full-time teams dedicated to the labs, its senior partners participate regularly, and the firm brings in exceptional outside speakers. All told it’s a major investment, for which the firm is just beginning to calculate the return.

Of course, when it comes to delivering a phenomenal experience, the bar keeps getting higher. What was exceptional eventually becomes expected, so you have to keep innovating. It’s a challenge that Weissenberg embraces. “We’ve been doing these for years, and invested a lot of time and energy. Sure someone can catch up with us, but by that point we’ll be on to the next thing,” he says. In this case, exceeding client expectations does drive long-term loyalty at the decision-maker level, according to Weissenberg.

When it comes to day-to-day execution, professional service firms have to balance exceptional service with highly competent work and minimal transaction burdens, all of which contribute to long-term satisfaction and loyalty. When it comes to client relationships, it’s critical to strike the right balance that maximizes your client loyalty equation.

1. “Stop Trying to Delight Your Customers,” (Harvard Business Review, July 2010).

2. The Effortless Experience: Conquering the New Battleground for Customer Loyalty (Penguin, 2013).