Situation: A company has learned that a competitor has cloned their client development approach. This approach enabled the company to gain early market share. They have since moved up-market and have enhanced their sales tactics. How should the company respond to the competitor’s tactic?
Advice from the CEOs:
Reconnect with the market contacts that got you where you are. Be sure that they are aware of your track record, the value that you provide your clients, and reinforce your current market development focus. Now that you are established, position yourself as the proven producer who consistently produces results.
Study what the competitor is doing, who their target customer is, their close rates, and what if anything they are doing to enhance their close rates. Learn from them and copy or improve on their practices where this will yield benefit.
If your sales development is based on referrals, enhance the rewards to contacts who bring you new business in your prime target markets.
Your principal concern may not be your client base, which is likely unaware of the differences in your versus your competitor’s approaches, but in the referral structure that is your primary source of new business. Focus effort and resources to shore up your relationship with your referral base.
Focus on your strengths – performance and excellence in managing client relationships.
If the competitor is focusing on down market accounts that you no longer cultivate, then expect them to succeed in this market. Become the provider of choice to up market accounts and the natural referral choice for these accounts. If the competitor stumbles, you may pick up unexpected business.
Situation: A company provides staff for a client. Overall the client has been pleased with the staff provided, and only a couple of individuals have had to be replaced. The client was recently presented with an individual that they seem to like; however, the company has since developed reservations about this candidate. How do you inform a client about a potential problem?
Advice from the CEOs:
Meet with this individual face to face or via video conference. During the interview, tactfully ask questions that will either disqualify the candidate or satisfy your concerns. Only continue to present this candidate to the client if you are thoroughly satisfied that they can meet the client’s needs and will represent you well.
Ask the client for their impression of the individual. If they do not express any concerns, then your own concerns may be overblown.
The client will require the candidate to be trained by them prior to fully bringing them on-board. This will provide another opportunity for the client to say yea or nay. If the individual completes training to the client’s satisfaction, then once again your concerns may not be justified.
In any communications with the client, take care to voice only concerns that you can substantiate. Otherwise, you might expose yourself to suit by the candidate.
Independent of this situation, adjust your selection process to require face to face or video conference interviews. This will prevent the recurrence of future situations like this one.
Situation: A company’s clients are demanding increasingly faster response times, particularly in areas that historically have not been considered mission critical. Clients also want faster answers to technical questions. Is this a common occurrence, and would you adjust pricing in response? How do you handle demands for faster delivery?
Advice from the CEOs:
If clients are demanding faster delivery, it’s entirely reasonable to tier your rates for different levels of service and delivery. Create cost / ROI breakdowns for different options, and let your clients make a business decision about the level of responsiveness that they need.
When brining on new clients, do a worst case down time analysis for the prospect as part of your evaluation process, then provide price options and let the prospect evaluate what is important to them. This is similar to different price / deductible levels with health or car insurance.
You will need to educate your current client base on what you are doing for them, and when they are reaching the upper levels of service provision under their current contract.
When you provide remote service, communicate what you have done.
Email individualized update reports to client contacts.
When you meet clients face to face, have a printout of service provided and toot your own horn about your service and delivery.
Be aware of the needs of clients who have distributed locations across time zones. A two-hour response time on the West Coast at 8:00 in the morning, translates to a half day for an East Coast location because they can’t call you until 11:00am Eastern time.
Situation: A company wants to upgrade its presence in social media to improve client interactions. Before engaging in this exercise, they are curious as to how others are successfully using social media as part of their overall marketing and client service strategies. From your experience, how do social media change client interactions?
Advice from the CEOs:
The Web and the emergence of social media have enabled a much broader range of communication and collaboration options with clients, vendors, and others in any marketplace. In contrast to classic “push marketing” the Web and social media enable interactive marketing tailored to the individual needs, likes and dislikes of individual customers.
One of the most important changes is the opportunity for customers to post feedback and opinions about a company’s products and services. In the new reality, if you don’t have a place where customers can post feedback – both positive and negative – they’ll find somewhere else to post it.
Web 2.0 is generally defined as interactive, dynamic web sites that get updated frequently. From a consumer standpoint we think of eBay and Amazon.com. However, this also includes web-enabled collaborations between company members or company and client, for example collaborative project management.
Using cameras and built-in microphones that now usually come built-in with new monitors and laptops you can communicate less expensively and with higher quality than with traditional telecommunications. Web-enabled team meetings are virtually the same as being in the same room.
Through your web site you can provide digital video content at different levels of sophistication to potential and, with password protection, verified customers.
An underutilized resource which is truly win-win is available through local colleges and universities that can provide state-of-the-art expertise in web enabled communications through student projects in internships.
Special thanks to Dean Lane of the Office of the CIO (http://www.oocio.com) for his insight and input to this discussion.
Situation: A company acquired an office in a new geography at no cost – just a commitment to keep the office going. The immediate challenge is transferring the previous owner’s client base to the new owner’s service. The people in the distant location are OK, but it will take coaching for them to deliver the new owner’s level of service. However, these people are proud and resistant to change. How do you eliminate a them-us cultural divide?
Advice from the CEOs:
Involve the person who facilitated the acquisition in the integration process. Get his opinion of what is needed.
Your prime commitment is to the client base and past practices that built the client base. Maintain or surpass this level of service. As long as the team meets this level of performance, they are serving your objectives.
You and the key manager of the newly acquired office should meet with their most important clients. Help the manager convert those clients for you.
Your other implied commitment is to the manager and employees that you inherited through this deal. Educate them on your approach – “we will do all that we can to create success for our clients.” Connect with the manager, understand how this person serves clients, and coach the individual.
Be fair – the fairest method of managing is a meritocracy.
Manage by results, not process – if the core values between the two sites are similar, allow for cultural differences in local practice.
If all this doesn’t work and you want for “them” to become “us” you will have to have someone from the home office move to the distant office and manage it.
Situation: A company has a long-term employee who recently joined a new church. Based upon the guidance this individual is receiving from their new minister, they have begun to evangelize at work, upsetting both co-workers and clients. Both employees and clients have spoken to the CEO with a request that this behavior be stopped. How do you respond to preaching at work in a compassionate, legal and appropriate manner?
Advice from the CEOs:
You need formal guidelines that are not discriminatory and do not impinge on freedom of speech. Augment the employee handbook – with appropriate legal advice – to specify what is and is not appropriate in communicating strongly held beliefs at work. Use neutral language, addressing political, religious and other strongly-held beliefs. Specify a line that divides appropriate from inappropriate communication. Communicate these guidelines to employees and manage to them.
Conduct internal discussions and training as necessary to communicate to all employees what is and is not appropriate expression of strongly-held beliefs. Emphasize the need to respect the beliefs of all employees. Clearly spell out the line that divides appropriate from inappropriate expression of beliefs.
As situations arise, be aware of the impact that they are having on the team. Address individual situations one-on-one, referring back to the employee handbook and training and discussions that occurred in employee group meetings.
Be particularly careful if you feel it necessary to terminate an employee for repeated violations of company policy in this area. See legal advice to avoid wrongful termination suits.
Interview with Norman Boone, CEO, Mosaic Financial Partners
Situation: Many entrepreneurs who started companies in financial services and other industries are now 55+. They may be ready to move on, but not necessarily ready to move out. What questions should they be asking as they plan their exit strategies?
Advice from Norman Boone:
The most critical question is what you want to do with the rest of your life. Most people don’t give this enough thought. It all starts with what is most important to you.
Start with a self-inventory assessment – what are your resources, options, and what do you want to do or accomplish?
Discuss with your significant other or partner what will work for both of you.
Answering these questions helps to lay out the alternatives. Now, thinking about your company, what is important to you? Is it legacy, the future of your employees and business partners, the future of your clients? Does your business continue, or to you see a sunset?
If your business will continue, do you see an internal succession, or sale or merger of the company? If internal succession, here are the issues.
Who will be the new leadership? Do you have good candidates on staff, or do you need to hire someone who will take over?
Be careful not to expect your successor to be a mini-you. They need to be able to bring their own talents and perspectives to the leadership role, not try to duplicate you.
Do you need to beef up the training of current staff to increase their managerial capacities?
Is an employee buy-out an option? There is a variety of choices to investigate.
What will be your role during and after the transition? Will you accept that new leadership may take the company in new directions?
To be most effective, this needs to be a 5 or 10 year process. Ideally you will have two to four successor candidates to evaluate.
Do you sell to the highest bidder? Many of the questions here are like those above.
Will you sell to the highest bidder, or to the bidder who seems the best fit for your stakeholders and clients?
How much voice, if any, will you offer your employees and / or clients in the selection process?
What due diligence will you do on potential buyers?
Do you merge with a similar company?
If you can find a compatible merger partner the combination may be the best of two worlds.
What is the culture? If different, what will be the impact?
A merger of like companies may assume that the other party has a commitment to ongoing operation: but this is not guaranteed.
What will your role be, and what is the transition plan? How will you involve your key people in the transition?
The other option is to sunset the company. Here you must have enough in savings so that you can forgo future income from the business.
What about the other stakeholders and clients who’ve invested their careers and business in you?
Try to time your exit with the expiration of leases and other obligations to minimize exit cost.
How will you assist the transition of stakeholders and clients to new opportunities and providers?
Situation: A company has a long relationship with its initial client, which provides the company with key intellectual property. This client handles all marketing, sales and distribution for the company’s principal products, but only accesses 20% of the market. The client is concerned about having its image associated with expansion into markets that the company wishes to pursue. How do you structure a deal that enables you to access the broader market without offending the client?
Advice from the CEOs:
The issues for the client are public relations and liability. They don’t want to be associated with certain segments of the larger market as it may compromise customer perceptions of their core business. Further, they want to be indemnified should they face damages from your forays into the larger market. It is important that you address their concerns.
Sit down with the key client. Pose a problem that will generate the solution that you seek and let them solve it on their own. Then seek an agreement with the client on carve-outs within the larger target market with which they are agreeable.
Build an external company with different branding to approach the larger market, without jeopardizing the relationship with the key client. If ownership and management of the two entities are the same be aware that this is a thin veil.
You may increase opportunity for success if you build your own successor product – one tailored for the larger market – while your key client is paying you for current business. Once the product is built, ask the client whether they want to be involved and if so, on what terms. This enhances your bargaining position and reduces your downside risk.
Expand your offering, where current products are part of a larger offering. You have two alternatives: go there anyway, or go there with the client. If the client decides that they don’t like what’s happening and opens the market this could be ideal for you.
Situation: A company’s primary objectives are to hone their business model and establish their first satellite office as a model for future expansion. An opportunity has arisen from a trusted source that could rapidly expand both business and opening of satellite offices by providing service to a single national client. How do you evaluate the tradeoffs between these options?
Advice from the CEOs:
What is the impact of this new option on client diversity? One of Porter’s fundamentals of strategy is to not have too much of your business dependent on any one customer.
What is the impact of this opportunity on your personnel, time and resources?
Are there areas in which this opportunity will save time and resources, for example by consolidating some back-office functions like billing and accounting?
If this opportunity will take an inordinate amount of time and focus, consider starting a new entity to take advantage of this opportunity.
Use a decision-making grid to evaluate the new opportunity versus your present strategy:
Identify the most important factors of both your current strategy and the new opportunity.
Weight the importance of each factor as a percent of with the total adding up to 100%.
Rank each opportunity against each factor.
Multiply the factor ranking times the weight for each ranking.
Sum the weighted rankings.
See whether the summed rankings support of contradict your gut feeling, and further analyze depending on the result.
Once you have identified the risks in this proposition, determine contract provisions that will reduce risks to acceptable levels. If the potential client is unwilling to yield enough of these points in the contracting stage to acceptably mitigate your risks, then walk away from the deal.
Don’t risk your entire company for one opportunity. Financial rewards are only a scorecard.
Situation: One client represents a majority of a company’s revenue. They have multiple contracts with this client. A new purchasing agent is on a mission to reduce purchasing costs, and claims that other suppliers cost less. What’s the best response?
Advice from the CEOs:
Spend time with your true client – the employees and managers who have chosen your product. These people stand to gain the most from an ongoing relationship with you and may be able to reduce the pressure from purchasing.
Assemble testimonials and metrics from the client to show that you produce a better result at lower cost than they can get from other suppliers.
Simultaneously, reduce your overhead so that if you must cut prices to retain the business, you can afford it.
If you must cut prices, you have other options:
Reduce the cost of resources producing the product and service. Let your client contacts know that you are being forced to do this. This may prompt them to argue that they need more senior experience from your team at the higher rate.
Offer lower prices in exchange for higher volume and longer term purchasing commitments. This can lock out the competition by reducing the frequency of contract renewals.
Remember that the job of the purchasing agent is to reduce costs. The agent who is hounding you is hounding other suppliers as well. If they can negotiate savings from 30% of the suppliers, it’s a big win. Get your ducks in line so that you aren’t in that 30%.