Stick or twist: Will your clients stay with you through 2024?
At a time when uncertainty is weighing heavily on clients, we might assume they’d want to stick with a tried and trusted professional services firm. After all, a firm that knows its clients well can be a source of stability when you don’t know which macroeconomic card you’ll be dealt next. But with a quarter of clients saying they want to work with new firms, where are those incumbents going wrong?
We used Source’s latest research to look at which firms clients want to work with, and while 40% preferred to partner with firms they know well, the remaining 60% wanted to include new firms in the mix.*
The top reasons that clients had considered changing their advisor are revealing, and hint at proactive competitors seeking out new opportunities: Seventeen percent had been approached by a firm with interesting ideas and another 17% had been impressed by the research or material a firm had produced.
This data is supported by the similar explanations given for why some clients ultimately did take the leap and use a new provider. Two of the top three reasons were about firms offering something new, whether that be better ways of working or fresh insights. Clients chose firms that had more innovative technology to support their services and those that had shared thought leadership that they found useful. The other top reason for moving was that the new firm was easy to deal with, and this speaks to the ongoing importance we see being attached to client relationships and account management.
At the other end of the scale was price, with only 20% of clients selecting this as one of their top three reasons for moving to a new firm. This may be reassuring to firms, many of which have raised fees in recent times. It suggests that clients value firms that can bring something new and innovative to the relationship—and are willing to pay for it.
If those are the pull factors, what about the push side of the equation? What behaviours are driving clients away? The two most-cited responses speak of firms that are sitting back and taking client relationships for granted. Businesses complained of firms that were inflexible and hard to work with and those that had stopped coming to them with anything new—another call for firms to be more proactive. The third reason was about delivery: Twenty-five percent of clients said they had stopped using a firm because the return on their investment wasn’t good enough.
The historic wisdom is that while clients may look around, most will stick with their existing advisors. And clients certainly say that working with someone familiar, who knows their business, helps to reduce internal politics and get things done. But this preference isn’t because they are emotionally attached—and if you stop delivering, they’ll be off, as shown by the importance attached to ROI.
We might assume that clients will return after they discover that the grass isn’t always greener. But the data doesn’t bear this out. Of the clients who chose to move to a new firm because they felt it had more innovative technology available to support their services, 83% had their expectations exceeded or met, and only 1% were disappointed.
Other movers had positive experiences too: None of the clients that left to work with firms that seemed easy to deal with later regretted their decision, and of those lured away by useful thought leadership only 2% were disappointed—indicating that not only does great thought leadership help firms cut through noise in the market but also that most firms then seem to deliver on that brand promise. And, equally persuasively, when clients were asked to reflect on the biggest difference between their old consulting firm and the one they had moved to, 26% (the top answer) said the new firm was more innovative.
At a time when clients say they are considering working with new partners, they are being approached by firms with big ideas and impressive thought leadership. Incumbent consultants that want to compete must make sure they can support their service delivery with innovative tech, be easy to work with, and demonstrate a strong return on investment. Most of all, they must be proactive. It’s no good waiting for the next card to be dealt by your competitors, you must pitch in with your own strongest hand first.
If you would like to explore more of the data we have on what clients want from firms, then please get in touch.
*And for more insight into why clients are looking to work with new consulting partners and how firms can respond, read the latest report in our Emerging Trends programme: Go-to-Market Strategy, which is due out in April. Register your interest here.