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|How to Build and Foster Client Relationships in Times of Conflict and Mistrust
A top tier accounting firm was busy celebrating another year of fee income growth from one of its major audit clients, a large telecommunications business. The audit had run smoothly from the accountants view, despite some hiccups on delivery times and quality control, but overall, the advisers felt happy with the depth of the relationship and their position to retain the plum business.
So, when the client called for an internal review of the account service to negotiate a revised audit fee for the next three years, the accounting firm was naturally bemused.
The client opened the meeting by stating that they were generally happy with the relationship but wanted the lead partner removed from the engagement team and sought to reduce the total audit fee by 15%, a negative impact of $185,000 on the accountants.
So, how did the accounting firms negotiating team react?
They had essentially two options available — co-operative discussion or competitive challenging.
As a co-operative partner they could explore the areas of concern and identify the real issues. In a competitive stance, they would assert their integrity and authority to test the validity of the clients complaints.
The accounting firm chose poorly. They adopted a competitive stance, feeling confident about the work they had performed to date, resulting in an acrimonious climate in the meeting which quickly degenerated into a dog fight. After an hour and a half of mud slinging, the client advised that they were not only going to cancel the audit contract, they would be withdrawing tax and consulting projects currently in the pipeline, a total value to the accounting firm of around $1.6 million. A costly error for the accountants.
So what really happened here? Why did things get out of hand so rapidly?
This hypothetical scenario demonstrates what can happen when we assume we know what the other party is thinking, but not explicitly saying.
What the accounting firm didnt know was that the client was about to undergo a major restructure of its business, sell down many of its non-performing assets and acquire a new business in a related industry. The managing director simply wanted a new partner on the audit account who had a deeper knowledge of the new industry segment the business was buying and the audit fee reduction was to reflect a simpler business structure.
The accountants were guilty of breaking the golden rule of negotiating trusted relationships: they ignored the needs of the other party and failed to get all the facts on the table.
This negotiation should also never have been the flashpoint that it became. Had they known the true, but unstated facts, the meeting would not have got out of hand.
If the accountants had been proactively managing the relationship from a process (whats happening in the relationship) viewpoint, instead of a content (the audit) perspective, the meeting may never have taken place, or at minimum, the groundwork for the meeting would have been undertaken weeks beforehand, with a vastly different outcome arising.
The lesson from this example is that professional advisers are engaged in negotiating the relationship dynamics with their clients everyday, not simply at a contractual renewal or crisis point. By then, its often too late, The negotiation is all but over, decisions made and positions locked-in.
Effective business relationships are concerned with an ongoing demonstration of trust and predictability, which must be negotiated at every interaction between client and adviser.
How often have advisory firms celebrated large tender successes thinking that the relationship has been won, and "as long as we deliver the content, we have the client in the bag."
The harsh reality is that the hard work of negotiating resilient, successful client relationships happens as soon as you win the account and is an ongoing, daily interaction of value exchange.
The mistake that many advisers make is to assume their authority as a subject matter expert allows them to avoid negotiating the traverses of the relationship.
Client relationships are undulating, rarely smooth. Yet unwise advisers only address issues and concerns to clients when there is a consequence, such as the threat of the loss of a contract or economic relationship.
If advisers use a consistent and systematic approach to negotiating the client relationship, as a daily behaviour, they will build more resilient client partnerships which actually sustain harmony, foster greater understanding and avoid skirmishes.
When differences inevitably arise, the resilient relationship will overcome turbulence and survive due to the negotiated, shared understanding of each others needs.
So how can advisers develop a negotiating approach to managing client expectations? Here are the seven golden rules of negotiating resilient relationships based on ENS Internationals 25 years of negotiating experience:
Expert relationship managers know and understand that managing expectations is a daily, ongoing skill and that every interaction with clients is a negotiation, an opportunity to positively influence clients perceptions about your value as a trusted adviser.
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|Copyright © 2003, Keith Peel|
|Copyright © 2003, The Negotiator Magazine|