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What impact on practice profitability does this have:
“Despite ongoing efforts to improve service, positive customer experience levels decreased significantly across the world”
This was from a report released a little while ago on the performance of the insurance sector globally, and it highlights a real dilemma for practitioners.
Can we improve service levels at the same rate (or better) than customer expectations of service rise?
At what point should we not even bother trying to improve service levels?
When it impacts too adversely on profitability!
There seems to be some pretty strong correlation between how highly the business relationship is valued, how satisfied a customer is, and the profitability of the firm. That seems to be a strong enough case for us to be interested in rising customer expectations and finding a reasonable balance.
One of the major issues in pursuing increasing levels of customer satisfaction without regard to the other factors is simply the cost of doing so kills profitability at some point. Increasing communications frequency, or the method of messaging (e.g. using video), or having more humans available to provide personal attention, all come at considerable cost to the professional service firm. Simultaneously we have increasing resistance or pressure on what costs can be passed onto the consumer directly. There is even the prospect of perhaps entire remuneration models such as commission being under threat of extinction forcing firms to reappraise how they can charge, and who they can afford to work with.
Advisory firm’s margins are seriously threatened. At the extremes, entire business models are seriously threatened. The net result is that it is all too easy to be continually chasing ones tail for continually decreasing profitability simply because we are trying to achieve the impossible of meeting or exceeding the rising customer expectations without the ability to charge accordingly. However the root of the problem is that whatever improved or increased level of service a firm provides rapidly becomes the “new normal” for the client. The more a firm does, the more that is considered the new “standard” level of service. Exceptional service can rapidly be considered the minimum right of the client, so a new level of exceptional is set, which becomes the new normal, and so on and so on….
One of the major customer satisfaction challenges is therefore the Catch-22 of continually improving service levels and thereby laying the foundation for future expectations to not be met.
Nevertheless, we must find some balance if we are to stay in business. It is after all a service business.
Having said that, it is becoming more apparent that the real value lies not in the technical delivery of the service firm, or even its client service levels. The real value lies in the relationship of trust founded upon the intimate knowledge of the clients hopes, dreams and aspirations.
A great professional adviser knows more about what is going on inside a client’s mind and what their hopes are than most of the clients’ best friends.
Right there is the opportunity to exceed client expectations and be highly valued. Service levels matter, but they just don’t matter as much as the relationship level.
This leads me to think that the smartest investment in raising service standards within a firm are to focus on personalised services that enable the relationship to be deepened and strengthened at the individual client level. Giving away calendars or a bottle of wine at Christmas time, or running a few technical update wine-and-cheese evenings might be nice, but spending the same money on sitting with the client at a a sports game or the theatre and getting to know more about them individually, and deepening their trust and knowledge of you would seem to be far more likely to result in happy clients that stick with you for the long term.
In other words, rather than investing in newer and fancier “services” it is probably a better return for the practice by spending the money investing in “time spent with clients”.
The practice still neds to have service levels of course. Meet the minimum communications and technical service expectations, and deliver those services very well. Incorporate the personal touch everywhere you can while doing so. But then focus the bulk of your marketing budget and time on creating personalised experiences whereby you have the opportunity to strengthen the relationship – that is way more valuable to the client than service standards at the end of the day.
I think that will reward firms and practitioners better in the long term.
Related: The 9 Business Building Blocks Which Will Stand the Test of Time