The client spends a few million per year on accounting services.
As the managing partner, and with contract renewal approaching, your retention strategy is already in play.
Your team has excelled and client is happy with performance over the period.
You’re confident in re-signing this client for another 3 years, even though a new manager has recently taken over.
It will just come down to the rates, inclusions and KPI negotiations, to shape the final agreement.
Your presentation highlights how:
you have assisted the client in achieving their business outcomes
you have met or exceeded every agreed KPI
your delivery relies on proven processes, with a quick work-flow overview.
During the work-flow overview, the new manager begins to realize a large part of the service is emailing templated spreadsheets to their geographically dispersed offices, to be updated and emailed back.
This is part of the ‘data request’ process.
You see this as normal.
It’s the basic process large accountancy service providers have used to service major clients for around two decades (in 1999 there were approx. 400 million email users with business email accepted as standard practice.)
There have been advancements along the way. Largely with Microsoft products, digitization, storage, document management, access security, email collaboration and cloud based services, to name a few.
Accounting software also improved and internet became faster.
Better internet allowed clients access to accountant portals, however for various reasons they didn’t achieve any real success in transitioning internal personnel and clients away from service delivery email, therefore the basic email ‘data request’ still remains today.
It doesn’t take the new manager long to grasp an opportunity in achieving her own ‘cost control KPI bonuses’ as she starts questioning the cost-value of what is being provided.
The new manager is not looking to pull the contract.
But she is making noises around a failure to understand the high charge rates against costs incurred in generating these services, therefore expecting deep cuts for the renewal.
This judgement may seem superficial, as it’s not a reflection of the service performance.
It is however a reflection of the new manager’s perceived expectations and her experience, that it doesn’t require a lot of professional skills or highly paid people to project manage an email group, therefore part of the service appears over-priced.
In her mind there’s no special intellectual property or technology investment. There are probably many providers who could supply the same, at a lesser cost.
She is now also thinking there’s bound to be other service elements overpriced as well, so best dig a little deeper on everything.
This problem resulted because the work-flow process was not what the manager was expecting to encounter, in a service costing a few million dollars and providing critical company reporting outcomes.
Her perceived expectation was a more sophisticated and technically advanced process, not an email group.
She could imagine her explanation to her superiors, and how her superiors would choose to interpret her explanation, should there even be a problem - "basically were paying a few million a year for an email group".
This antiquated email process is not what was expected and wanted, regardless if the service is capable of fulfilling KPI performance requirements only specified a few years ago.
What’s needed is a state-of-the-art process, that performs and also addresses many of the critical concerns around operating within today's global environment.
These concerns did not have the same critical relevance five years ago as they do today, even though they were present.
Today governments and corporations are experiencing mass global data and privacy breaches. Ransomware attacks.
Cyber supplier payment frauds. Instant social media reputational damage risks. Targeted hacking by governments and organized criminals gangs trying to steal trade secrets and gain future commercial advantages.
Increasing litigation risks against ever increasing security costs and compliance laws.
And the problem is that mistakes by business email users play a large part in being the catalyst towards facilitating security breaches and these concerns.
A different outcome may have been achieved if during the renewal presentation there was focus on the firm’s in-house Services Delivery System.
"With an on-going investment into client data security and by improving efficiency in managing service delivery, it provides the ability to scale, therefore maintain competitive rates for our clients".
Meeting a client’s expectation is critical, even if it may seem superficial.
It’s what their image represents, the minimum acceptable value projection. It’s what they are willing to pay for.
It’s the reason the client chooses to procure services from a Big4, rather than select a lower tiered competent and more economical firm.
What's wanted is the brand projection of a Big4 associated with them. They never want to be questioned about their choice and the brand integrity in using Big4 services.
The realization a yesteryear email group was at the heart of their service delivery broke the brand-integrity association nexus.
It’s not 2010
Your major clients have spent a decade investing in infrastructure and technology to produce better and more efficient customer outcomes, and expect the same from their suppliers.
Improvements in protection and security have been a large part of that investment.
It is no longer commercially viable to be provide a 2010 process with inherent security risks, that doesn’t scale well to improve costs and charge rate efficiencies.
If competition were highlighting to your client that their services delivery platform provides a more secure environment, especially with regards to reducing human errors, for example such as mailing confidential information to the wrong recipients...
what would your response be - that it doesn’t happen in your organization?
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Hopefully this article has been thought provoking.
Thank you and regards.
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