Customer management is critical for any business. Without doing this right, no organization can grow. My book, “Growing IT Business via Better Client Management,” looks at this subject in detail and gives simple, practical tips on how to make it happen.
It is estimated that repeat business constitutes almost 40-70 percent of the total size of the software industry. This means that close to $200 -$300 billion of revenue earned by the software companies all over the world is repeat business. Repeat business, in simple terms, means additional business from existing clients.
Clearly, managing the client is critical in order for any software company to survive, grow and succeed. Winning new business from an existing happy, satisfied client is many times cheaper and easier rather than winning business from a new client.
Client management, generally considered to be an art, can be structured so that employees can be trained in developing this skill, as well as converted into a process such that it becomes repeatable and a part of the culture of an organization.
Developing a relationship with your client facilitates knowing and understanding a client, which helps in determining the client’s needs, thus helping better manage the client. Client relationships are also important because it makes it easier to handle complex business situations. It will help make your business more predictable and help you grow the business faster.
Not every client is equally important and, therefore, does not necessarily require the same level of focus. You can determine a client’s importance based on various factors such as revenue and revenue potential, profitability, reference potential of the client, etc.
What is client management?
This question usually generates a lot of varied thoughts. It is different from sales. It is a long-term process and not just a single action; it has a long-term focus. It is a structured method that includes accounting planning and execution and involves developing a relationship with a client. It comes by discipline, practice and proper coaching/mentoring. And it requires resources; hence, it needs to be done only with select clients.
Client management requires commitment of time and resources as well as mental and physical effort. Most people in organizations accept the importance and need for it; but when it comes to actual execution, often much is left to be desired.
It is critical to sell the client to your own company first before you can sell your company and its services to the client. The driving force in every company, at all levels (seniors, peers and juniors) to put in the kind of commitment required is “What is in it for me, my group / department / function?” Understanding that and playing on it is the key to selling the client to your own company and ensuring that you will get the active help and support you need to develop a successful client relationship.
Customers are humans and are of different types, e.g., professional, unreasonable, angry, micromanagers, poor decision makers, unsure, etc. While it takes considerably diverse methods to deal with difficult clients, some common approaches that generally work are strong listening skills, building rapport through empathy, a calm demeanor, ability to negotiate and patience.
In business, some clients turn out to be profitable and some unprofitable. If the client is profitable, you need to take maximum advantage of it by expanding your business with the client as well as using that good reference to engage with new clients. However, if the client is not profitable, a detailed analysis of the reasons, a frank discussion with the client and taking the help of experts could be a way to figure out the solution.
A successful client relationship is more than one that satisfies an explicit or implicit need of the client. The relationship is a win-win for everyone. Both parties trust each other and back up each other when problems develop.
Communication is key
Communication is often misunderstood as the ability to read and write in a language. In fact, it is that plus the ability to comprehend both what is said and unsaid. This is an important skill for a businessperson and particularly very critical in the software business, which typically happens across geographies, cultures and languages.
How can you develop this skill? By accepting the need for it, by preparing, by being fearless and putting yourself into situations where you have no choice but to communicate. Initially, you may not be able to do a very good job; but the key is not letting it go, learning, re-preparing, re-trying and subsequently to keep going through this loop until you develop the confidence, ability and skill to do it effortlessly.
Informal communication is as important as formal communication. Informal communication comes in handy in developing a relationship with a client, identifying new business opportunities before your competition does, knowing what is going on in the client’s mind and becoming a part of the client’s planning process.
When the relationship doesn’t pay off
Not every business relationship pays off. As a wise business practice, one should evaluate relationships and make an educated business decision. However, once it has been decided to call it quits, don’t leave the client in a lurch. In fact, breaking off a relationship professionally will earn you more brownie points, both with the client and the industry, than ruining a relationship.
Here is how to do it. Plan a reverse transition, which gives the client sufficient time and ensures that their business does not get impacted adversely in any way. Then talk to the client, tell them frankly that the relationship is not making business sense to you and you would like to move out. Present the reverse transition plan, clearly stating that you don’t want the client to suffer; then tweak it to make sure that the client is on board. Finally, execute it like a proper project plan.
It’s OK to say “no.” It’s also very important to know how to say it.
This brings us to the question: What is an account manager and what kind of a person is likely to succeed in this role?
Here is a definition: “An account manager is like an entrepreneur who manages the company’s internal as well as external relationships in order to build and expand the business of the company he works for.” To achieve this, an account manager needs to have the following personality traits:
- Ability to be like a lubricant to smooth out relationships, situations, etc.
- Excellent communicator
- Negotiator
- A pleasing, professional and flexible personality
- Good with numbers
- Results oriented
- Ability to sense / smell / fish out opportunities
- Well organized
How to develop a client-focused culture
The most critical actions for an organization to succeed is to develop a culture of client focus. Here are nine steps to do it:
- Define goals for client management
- Align jobs and job descriptions with the goals
- Agree on measurement criterion; what you measure is what you improve
- Provide top management support; this is critical for success in any initiative
- Decide on a change agent who will lead this movement within the organization
- Identify key clients
- Assign account managers
- Implement the program
- Measure, improve, measure and improve again
Finally, be ruthless towards achieving the nine steps above.
Retaining a client and generating business from it is the key to success. Figuring that out and making it happen is the litmus test of the success of an organization.
Download the book, “Growing IT business via Better Client Management,” here (in the US) or here (in the UK).
Manoj Tandon is CEO of TMTC, an IT consulting company based in Noida, India, with offices in the US and UK. He is also currently engaged as an advisor to India’s government initiative of Digital India, to enable a better government and citizen interface. He has over 29 years of operational leadership experience in the IT industry in the US, UK, Europe and India.