We have worked with very successful law firms, accountants / tax advisors and management consulting firms over the past 25 years. Combined with my personal experience of leading two professional service firms (PSFs), I have outlined some insights and observations to help you differentiate and grow your firm. One of the first questions PSFs seeking growth opportunities should ask (but often don’t) is “how do I stand out from competitors when we all have similar capabilities and prices?” One answer is to become a trusted advisor.
Clients want more
Many organisations are turning to professional advisors to keep them ‘on-side’ in these uncertain times. Faced with increasingly complex multi-disciplinary, multi-jurisdictional transactions, companies want more than a single-issue technical specialist. They are seeking a trusted advisor. Objective, empathetic and knowledge-based, an advisor creates value in ways that competitors with a transactional mindset and product focus can’t.
Advisors that build trust with their clients become a ‘go-to’. They help to shape their thinking and inform decision making. They create value because they share insights and advice around their client’s most critical business challenges. Challenges that get more complex as our working lives get more complicated.
Partners and senior players at PSFs elevate client relationships in this way by focussing on defining the problem before finding the right solution. Trusted advisors draw on their business acumen and knowledge outside of their technical specialism. And they tap into the expertise across their firm.
Advisors do their homework on their client’s organisation to unearth its opportunities and the challenges it faces. They have an ability to analyse the latest trends and market developments to identify competitive threats. They know that technical expertise is important. But, they also know that this on its own, in most situations, won’t make the difference (we outline the reasons why later).
Most professional services firms are the same, why should I buy from you?
In this article we show how you can stand out and go from vendor to trusted partner by creating your own distinct value and building trust. This requires a shift from a transactional mindset and sales approach to take on a strategic role which helps clients to deliver better outcomes – for their business, employees, customers and owners. We explain the competitive significance of all of this for professional services firms and share insights from our client work to bring this thinking to life.
Technical expertise isn’t enough
Some of the most successful and enduring business partnerships are built on trusted relationships. But the reality is most PSFs are stuck in selling mode as partners scrurry around to hit their period-end financial targets.
Take UK law firms for example. Leading firms all offer pretty much the same range of services, arguably with very little to differentiate one from another. Lawyers rightly pride themselves on their deep knowledge in what is often a fairly narrow branch of their area of law. Technical expertise in their specialist area ranks first with broader commercial acumen and business insight a distant second. This description equally applies to the major audit / tax / consultancy firms.
But corporate buyers and executives have changed. While technical expertise is top of mind for PSF partners, clients want commercial wisdom and business acumen to help them address their challenges. Technical expertise is not enough to win business. It’s just a table stake to get your firm into play.
“While technical expertise is top of mind for PSF partners, clients want commercial wisdom and business acumen to help them address their challenges”
Becoming a trusted advisor
We don’t want to engage in a maths exercise here. But there are two important (and overlapping) equations we use in our work to help clients identify where and how they can differentiate in sectors steeped in parity. With professional service firms, both equations, between them, hold the key to creating value and building trust.
Perceived value
The ‘perceived value’ equation identifies the three factors clients consider when evaluating the value they receive from suppliers. They are:
- Product quality (PQ) – for example, litigation completed, transaction agreed, audit finalised and returns submitted
- Service quality (SQ) – how the client is served including reliability, assurance (engendering trust), empathy (providing individualised, personalised support) and responding with speed and urgency
- Total cost to the client – the total of the fees they are prepared to pay, plus the implicit, hassle factor cost. If your company is not easy to do business with the hassle factor costs increase. These costs could include anything from the time and cost it takes me to understand your invoices – through to submitted reports I have to rework to make them fit for purpose for my organisation
Professional service firms can increase the overall value delivered to the client by increasing the quality of the offering or by reducing the total cost to the client.
Building trust
The ‘trust’ equation (pioneered by David Maister in his book The Trusted Advisor) states that trust is a function of:
- Credibility – the client knows that we are authoritative in our area of specialism
- Reliability – we do what we say we will do
- Intimacy – we never violate the client’s trust
- Self-orientation – the degree to which we focus on our own interests ahead of the client’s
As with the value equation, trust can be increased by ‘dialling up’ credibility, reliability and intimacy or ‘dialling down’ the degree of self-interest we display.
Let’s recap on what all of this all means for professional services
Our experience, best practice and cutting-edge thinking tells us that there are five things PSFs should prioritise in order to differentiate:
- Focus on service quality – with technical competence and reliable delivery a given, the opportunity to differentiate is in the area of service quality, particularly assurance and empathy. Providing assurance in a way that builds trust in you and your team, and displaying empathy and genuine interest in the specific challenges and opportunities faced by your will help you build a strong relationship – a trusted advisor relationship – with your client
- Do your homework – the more research you are able to do the better you will understand your client’s needs and the clearer you will be about how and where to add value. Try to uncover something that is important to your client but which is not in the public domain
- Balance enquiry and advocacy – research has shown that a high quality conversation that strengthens a relationship contains a balance of enquiry and advocacy. Enquiry is about asking great questions that stimulate insights and ideas. High quality questions, based on your research, will differentiate you from the competition. Advocacy is about offering your view. A great conversation contains an appropriate balance of the two
- Bring fresh, innovative ideas and solutions – show you understand your client’s challenges and opportunities by sharing new ideas and perspectives that are personalised and relevant to your client. And don’t be afraid to offer advice and recommendations
- Reduce the hassle factor – PSFs are often difficult to do business with because they have not paid much attention to this aspect of their client’s ‘customer journey’. Reducing hassle factor costs frequently represent an area for improvement that is important to clients
The four most common mistakes we see
- Relying on technical competence – there are exceptions, but for the most part technical competence isn’t a differentiator. A client wouldn’t invite you to the office without it
- Leaning on reliability – the same is true for reliability. It’s a table stake – it’s what clients expect
- Being self-interested – ensure clients perceive that their needs are upper most in your mind. If they sense that your interest in them is transactional or that your advice is self-serving, they won’t trust you
- Horsetrading over fees – getting drawn into a negotiation around fees when a client says “we like your solution, but your fees are too high”. Haggling over fees is the wrong place to start that conversation. The response should be to discuss the scope and specification of what we proposed and see – through the lens of the value equation – how we can better match our deliverables to the client’s requirements. This discussion could result in a scope reduction which in turn could justify a reduction in total fees. This outcome is very different from doing the same for less or slashing your rates
A final word on prospective, or new, clients
Existing or former clients will have seen the extent to which you do add value as a trusted advisor and differentiate yourself from the competition. Much more difficult however, is building a relationship with a prospective, or new, client. All of the principles described in the ‘perceived value’ and ‘trust’ equations apply in a new business situation.
However, demonstrating them to a potential, or new, client before they have seen you at work is difficult. So you need to find other ways to create value pre-appointment. We call this “advance signals of value” and I will look at this in more detail in an upcoming post. Meanwhile, we hope you find these insights useful.
