Imagine you could:
• Drastically reduce the number of client relationships each project manager must handle,
• Skyrocket individual project profitability and overall revenue growth,
• Offer clients a superior experience working with your firm, and
• Drastically decrease the risk of key talent burnout (or worse)
– all without doing a large-scale hiring of new project managers? Would you doubt me? Well, I am here to tell you that it is possible.
When I had this conversation recently with a prospective client, I decided it was time to share some strategies we’ve seen work to accomplish this goal. Let me share a case study of a firm we’ve worked with for the past ten years. Here’s the strategy in a nutshell:
Focus your efforts on a small group of strategic clients.
When the company realized they were overworking their Project Managers, with each manager responsible for 40-50 client relationships of various sizes, they understood that their team and clients were at risk.
After they identified and better understood the situation and realized a change needed to be made, we worked together with them to develop a plan to address the challenge.
Here are the steps they took:
Step 1: Do they like us? How do we know?
By implementing a feedback loop with their clients, the firm identified what they do best, according to their clients. They quickly saw their team strengths and the clients that most valued what the firm offered.
They used their client's Net Promoter Score to assess the likelihood of the client wanting to engage in further work with them. By combining this information with the feedback they received from their clients, they gained measurable insight into which clients could be considered strategic and have the potential to increase revenue.
Step 2: Identify stable, profitable clients
Having clients that are strong promoters is good, provided your firm makes positive and consistent profitability on the projects you work on with them. By identifying the clients with a positive perception of their firm and measuring that perception against profitability, the firm could make strategic business decisions about whom to engage in strategic, profitable relationships.
Those clients who loved the firm's work but were not consistently profitable were re-evaluated for an increase in fees. Download an article by Mike Phillips, AIA, IIDA, titled Firm Metrics + Client Metrics = Best Success here.
Step 3: Keep clients satisfied without giving away the farm
Clients don’t always appreciate the little extras we give them on projects. Sometimes that gold-speckled toilet seat is just a bit of an excess. And often, that excess comes out of your profits. One of the advantages of Step 2 is the ability to look at real data comparing perception and profitability.
In all the years of data we’ve collected, we’ve seen many Project Managers giving away those gold-speckled toilet seats while losing money on projects (and they are burning out their team by trying to work long hours to minimize the impact on profitability). They were in a great position to sustain and build on their relationships by consistently understanding client expectations.
Step 4: Measure how employees are responding
Helping the employees understand why the business model was changing wasn’t easy. It started with some honest conversation and by using an internal 360 evaluation.
The firm leaders learned some important information from this effort. It turned out that many employees felt they were stuck within one narrow area of the firm’s work. They wanted the chance to work on other projects but were so busy getting work done and trying to win new work they didn’t have the opportunity to learn and grow.
They also felt they could not approach some of the firm leaders for help on projects. And, because they were so overwhelmed themselves, they felt apprehensive about referring friends to join the firm. With that feedback, the leaders acted.
The Results
The decision to identify key clients and seek to do more work for fewer “key” clients was an important decision. The firm took the time (almost a year) to culminate data and interview clients. When they were done, they had culled down a list of strategic accounts they wanted to retain, grow, and build partnerships with.
The firm re-aligned its office structure, removed silos, and created a more collaborative environment. They continued to implement a project-based client listening program, focused on identifying challenges early and aligning expectations between the client and the firm.
Was it easy? No. It took a lot of firm introspection. Their leader was a visionary. And his vision for the firm has paid off. With a smaller, strategic client group, the firm has increased profit margins to 30%, increased its proposal win rate to 60%, and reduced staff attrition by 40%. They have ecstatic clients, employees, and shareholders.
Discover how Client Savvy can assist your firm in its effort to quantify what your clients say you do best, to identify stable (and profitable) clients using integrated metrics, and to create raving fans without giving away the farm. Contact us today.
