Archive for March, 2013

Preventing Success Bias in Client Priority Lists

2013-03-04 17.35.08An interesting question came in on our discussion of client priority lists asking “Isn’t there an inherent success bias built into any client priority list?”. This is a great question and great observation. There is definitely a built-in bias with these lists because by nature they tend to include accounts that have either the biggest production or the biggest upside relative to the rest of the client base. Also these lists tend to be modified continuously to add accounts that have recent increased focus and to remove accounts that are proving difficult to realize their opportunity. These factors lead to lists that are artificially positive/successful and are also difficult to track their overall success.

I have some guidelines to help address these problems.

1) Set a schedule on when lists can be modified. Ideally lists shouldn’t change very often, maybe once or twice a year. Any more and it would be difficult to allow for any traction of new prioritization and it will make the list difficult to track and evaluate.[more…]

2) Define clear rules around how and why a list is modified. In the most formal form, a committee can be created to evaluate the composition of the list and the details of the service offering. The committee should be comprised of representatives of all client-facing groups and all should have a voice. Make sure that any addition or upgrade in the list is matched with a deletion or downgrade in order to keep consistency in service across the platform, and prevent the list from continuously growing.

3) Measure and track the performance of a list like an investment portfolio in order to track the success of the program overall. The “performance” of the program can be viewed as performance year-to-date, over 1 year, over 2 years, etc. Performance of dropped/downgraded accounts should factor into the overall performance over time. It’s important to realize that what you want to understand is not only the impact of an account being on the list, but also whether all the components of the program are working to promote the programs goals.

4) Although this final point may be overkill, it has proven useful when testing new client prioritization programs. Each time a new priority list is created, it should be labeled and tracked separately. For example, you could have 1H 2012, 2H 2012, 1H 2013, and 2H 2013 as separate lists. Overall this is a good benchmarking exercise to help test assumptions about the list and component parts.

There’s usually a concern that by putting too many rules around client priority lists, the organization loses flexibility in targeting resources to potential opportunities. Managers need to find a balance between that flexibility and a structure that allows visibility into priority list’s effectiveness.

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Implementing a Client Priority List

2013-08-10 15.39.42I received a lot of interesting comments from my post last week on client priority lists. I didn’t think this was a topic that would have such broad interest. Most of the comments were along the lines of “sure, this is what you should do, but how do you actually do it”. I’ll attempt to provide a bit more detail on actual implementation here, driven off of specific comments I received.

“How do you create one list when you have competing purposes and objectives for different accounts?”

It is simplistic to assume that one list with a simple purpose is going to satisfy all needs for client prioritization, especially at larger firms. When creating your list, we recommend implementing a combination of different tiers and a series of qualifiers that designate the kind of accounts they are and what kind of service they require to achieve a specific objective. It’s important for the organization to all be on the same page on who the priority accounts are, but also have an ability to see what specific service model to apply.[more…]

“How do you go about defining, articulating, and communicating differentiated levels of service?”

We recommend putting together a service charter that describes three things: (1) what the differentiated level of service is for each tier and client type, including non-tiered accounts, (2) who is responsible for providing a certain service and what the expectation is on them, and (3) how each point of service is going to be measured and monitored. This charter should be part of the communication of the client priority list when this gets published.

How formal the communication is depends on the size and nature of the organization, but could include emails, laminates, teach-ins, or discussions in team meetings. We recommend having a forum where staff can ask questions to make it crystal clear what is being asked. In our experience people end up with very different interpretations of the asks, so anything that mitigates confusion helps.

“How do you get your resources to follow the new focus?”

People are generally much more comfortable engaging with their usual clients in a usual way. It has to be made clear that the expectation is that behavior needs to change to provide more focus on priority accounts. It has to be made clear that the organization is OK with a deprioritization of non-priority accounts given that there is only a finite amount of capacity available.

What becomes clear very quickly when implementing a client prioritization plan is that some organizations don’t have the right capacity, skills, and relationships in place to execute the plan effectively. These might need to be developed (through training, senior mentorship) or acquired if it becomes clear that they can’t be effectively nurtured in-house. In many cases, it may be most effective to acquire personnel with already established relationships and skills. In the harshest sense, this would call for an upgrade of existing staff.

“How do you ensure compliance and how do you track the success of implementing the list?”

A client priority list isn’t a static document. It should be part of the day-to-day life of the organization. To the extent possible, it should should be systemized and included in the any routine reporting, including:

  • Inclusion of a priority indicator for a given account in any dashboards, reports, and screens used by staff and management.

  • Periodic monitoring of services provided and communications to priority accounts, through a CRM or similar systems.

  • Benchmarking performance and activity of these accounts, against different tiers as well as non-priority accounts.

  • Monitoring of changes in depth of relationship and penetration over time.

In the end, the success of the list will be measured on the absolute increase in performance of these accounts, but also in the relative outperformance of the rest of the client base.

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Developing Effective Client Priority Lists

Photo Aug 28, 4 42 35 PMIt’s often quoted that 80% of revenues originate from 20% or less of clients. To focus on these clients, It’s common practice in most businesses to create lists of top accounts to establish which accounts are most important and designate different service models for these clients. These accounts should get elevated service relative to other accounts, including preferred pricing, priority access to services, coverage by the most experienced team members, and more intense engagement by senior management.

It’s not as simple as creating a simple list of top clients and sending it out to sales and service teams. There are many things that need to happen in order to ensure that there is a meaningful change in behavior regarding these clients and that the client’s themselves understand their status.[more…]

Defining the List

The first step in creating a list of priority clients is to define the purpose of the list. Although this might seem self-evident, many firms find that the less clear the objectives of the list, the bigger and more convoluted it becomes. Is the list’s purpose to identify the largest revenue-generating accounts and insure that service remains high to protect these revenues; or is it to identify largest unrealized wallet opportunities; or is it to identify accounts in later stages of a sales pipeline with high probability of conversion? Probably the most common mistake that we see are lists that intermingle cash-cow accounts and opportunity accounts with little differentiation in service defined.

Service Differentiation

Once the purpose is set, then a model has to be put in place to define a differentiated level of service for priority clients. I can’t stress enough the importance of this step. A lot of managers just assume that an “increased intensity” will be provided to accounts on the list, but the teams in the front lines are often unclear on what’s expected of them. Each client-facing team’s tasks need to be clearly defined, not just for priority accounts but also for non-priority accounts in order to establish the difference. The differences in behavior are what make priority list meaningful.

Examples of service differentiators:

  • More resources/more content

  • Preferential pricing / offers

  • Premium access / higher touch service / bespoke resources

  • Priority level of engagement/ timing of engagement (first call status)

  • Senior relationship management / higher experience coverage

  • Further resources/analysis to better understand the account (Internal)

Client Communication

It’s important that clients are made aware of their priority status to the extent that is practical, and doesn’t jeopardize the relationship or relationships with other clients. Clients are very willing to engage with certain counterparties as strategic partners because they feel the value generated through a deeper relationships can be mutually beneficial. I’ll write more on this in a future post.

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