Innovative Business Ideas

Strong Client Relationships

06 March 2012

Strong Client Relationships

Edwin Sim comments on “The Paradox of Excellence” a best seller that explores the need for senior executives and business owners to remind their loyal long term customers about the value and impact they’ve had on their customers.

A business’s primary purpose should be acquiring and keeping customers. Determining what your customers value and focusing on always pleasing them maximizes customer satisfaction and creates shareholder value.

A most vexing problem for many senior executives and business owners, that have run successful and profitable businesses for decades, is how to remind loyal long-term customers about their value and impact they’ve had on their businesses.

“Forgetting this rule of thumb could result in the loss of so many things both valuable and important to us; our customer relationships, our market share, and our strong reputation amongst our peers,” said David Mosby and Michael Weisman in their best seller “The Paradox of Excellence”.

Creating a profitable and sustainable competitive advantage

The authors said businesses can create profitable and sustainable competitive advantages by understanding their own businesses and services through the customer’s eyes and reinforcing the real costs of failing to match these services with value perceptions.

Moreover, service providers that continuously provide services for years to their customers may become “invisible” as they develop into an integral part of the client organizations. These same service providers also frequently become scapegoats when something goes wrong.

In many cases the better a service provider does a job, the more its performance becomes invisible.

“Improved performance does not necessarily translate into higher perceived value. In fact, it is more likely to shift the customer’s view of commodity performance upward and view any new improved performance for granted,” they said

All businesses therefore should clearly understand that expectations and satisfaction are dynamic and interdependent.

It is simply not enough to be excellent and allow customers or especially competitors to define the playing field. “Organizations must constantly provide the context for which they want to be judged.”

A common error of vendors who perform extraordinarily well is setting customer expectations so high that is often difficult to sustain. “It often leads to service-providers allowing a single negative situation to characterize and define an entire relationship between itself and its customer.

Most importantly, services providers and all businesses must learn how to manage client expectations. “Excellence is critical to victory, of course. But it’s not sufficient alone,” they said.

Companies must work as a team to identify, understand and manage ever-changing customers’ expectations.

They must also reinforce the importance of constantly reminding clients of the value-added they are contributing to the organization and provide continuous positive reinforcement of their distinguishing value and determine how they are going to communicate that unique benefit.

“Try not to be a man of success but rather a man of value,” the authors quote Albert Einstein.

Performance and its value must be proactively kept visible because in many cases perceptions can be declining while performance is improving,

We must also constantly reinforce our excellent performance with our clients, not only when marketing to a new client or competing for a specific opportunity but continuously while we provide services.

A common error of many vendors who perform extraordinarily well is setting customer expectations so high that it is frequently difficult to sustain. “It often leads to service-providers allowing a single negative situation to characterize and define an entire relationship between itself and its customer.

Companies must always reinforce their distinguishing values to the clients by providing timely and socially acceptable reinforcement of the distinguishing value delivered. We must make our invisible, high quality services visible to our customers.

How do we re-enforce our value to our long-term customers?

The key is establishing visibility of our value on an ongoing basis to our important customers by continuously communicating what’s unique and relevant about what we provide – the core point of our service differentiation.

These objectives can be achieved by simply redesigning IT systems and our sales teams and clients reports and by regularly updating our marketing materials.

Many companies don’t do enough to expose their performance levels because they mistakenly believe it’s more important to communicate with potential new clients rather than with long-term customers. They also assume that customers can easily observe any service improvements and readily recognize why they are a cut above the market.

We must remember that our long-term customers need context for evaluating our performance and the longer they stay with us, the more difficult it is to put our accomplishments into a competitive context.

Edwin Sim may be reached via edwinsim@humancapitalalliance.com

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