Thinking about relationships and loyalty in professional services

There is evidence that a successful firm is one that builds strong long-standing relationships with its clients. In fact, according to Harvard Business School research[i] conducted in the 90’s, an increase in client loyalty by 5% will lead to increases in profits by 25% to 95%. But are the days of the truly ‘loyal’ client over?

The professional service industry has seen significant changes in the competitive landscape; small, mid-tier and larger firms are all competing for the same client dollar, as a result firms are seeing an increase in movement, and client retention is reducing.

Despite these changes, client loyalty is not lost; in fact, it is as ‘easy as abc’…

You’ve worked with a client for several years, built rapport, and then they decide to move on. All of a sudden you have received client transition documents from another firm or received a ‘request for tender’ document. It can leave you feeling shocked, even betrayed…after all you had a ‘relationship’ with this client, right?

We understand that there are some situations that are relatively out of our control as providers but there are several reasons THAT ARE;

Any of the above sound familiar?

When we look at the areas outside of our control, and inside our control, there are 3 key areas, to manage and increase retention:

  1. Understand the clients business
  2. Develop relationships
  3. Build emotional involvement.

We have worked with firms that have seen the power of the ‘relationship’ even over the most price-sensitive client. When we talk about ‘building’ relationships we don’t mean taking for a ‘round of golf’ once a year (we will cover that in a few weeks when we look at ‘key account management – not another round of golf’).

Ask yourself a simple question; is your client a ‘transactional’ or a ‘relationship’ client?

Transactional: Get in, get the job done, get paid!

Relationship: Take the time to understand your client, their business, and their needs; developing a relationship.

 ‘Communication is the basic component of business relationship initiation and development, besides it is a variable that is frequently measured in order to estimate relationship development’ (Andersen 2001).

Then there is emotional involvement; building the deeper connection with the client (often with more than one partner, and across service lines) so they are so entrenched to you and the firm that it makes it difficult for them to leave, and they don’t want to!

You can develop a process, not clinical but a conscious effort to developing strong relationships, and emotional involvement with your client. We have developed a basic ‘relationship’ test for you:

  1. List your top 10-20% of clients (write them down)
  2. Classify: Transactional or Relationship?
  3. Identify where relationships need to be developed
  4. Critique your own performance, rate yourself against each client on the following criteria be true to yourself:

If you answered yes, to all of above…or, if you answered no, there is still some work to be done!

There is positive correlation between client loyalty and firm success; key to this is understanding your clients needs, developing relationships and building emotional involvement.

How will you know if your clients are loyal? Just ask! We will look at that in our next blog, where we look at ‘Do you really want to know what your clients think – NPS, client loyalty and success!’



[1] “Zero Defections: Quality Comes to Services,” Harvard Business Review, September-October 1990

Andersen, P.H. (2001) ”Relationship Development and Marketing Communication: An Integrative Model”. The Journal of Business and Industrial Marketing, Vol. 16 (3), pp. 167-183.


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