The Holy Grail of any professional services business must be the longevity of its relationships. Winning new business from new clients is time consuming and therefore expensive, this inevitably has a knock-on effect on profitability.
Received wisdom accordingly dictates that we should focus on our existing clients, since it is reasonably easier to get more work from them that is also more profitable.
So, we all need to get a grip on existing clients and make sure they like us, ensuring that they are not secretly unhappy and about to seek advisers new. Traditionally, somewhere along the line someone enquires of the client ‘How satisfied are you with our service on a scale of 1 – 10…?’ Job done. Except it turns out people will say they are broadly satisfied (seven or more out of ten) and then fire you a month later as they have found someone they are more satisfied with (eight out of ten).
Some clever American people set out to address this conundrum and, long story short, came up with the so-called Net Promoter Score. This, ‘the ultimate question’ in client satisfaction, was originally designed to measure loyalty with the now familiar question of:
“On a scale of zero to ten, how likely would you be to recommend Firm X to a friend or colleague?”
As is the way with simple ideas, it caught on and quickly spawned its own industry. And that simple idea is that if a client scores you at nine or ten, they are ‘Promoters’; seven or eight and they are ‘Passives’; and six or less, they’re ‘Detractors’. So far, so simple.
Where it gets interesting is that research turned up Promoters were not only more satisfied – let’s use a technical term, happier – but also more profitable. Conversely, Detractors were not only ‘dissing’ their advisers to anyone who will listen, but were also far less profitable and sometimes loss making. Only at this point do partners start to take an interest.
Time for some algebra: Loyal clients = Happy clients = Profitable clients. Enough said.
We apply the Net Promoter Score (NPS) to all our surveys. In our recently published report on the legal market, Brand Promises and Service Realities, our five top performing firms for NPS are an eclectic bunch:
A couple points to note: Herbert Smith Freehills not only came out top, they were 17.5% ahead of their nearest rival, Osborne Clarke and 34% ahead of the market average, a stellar result. There are no Magic Circle firms in the top five, although Linklaters were sixth and Allen & Overy in ninth.
And 24% may be the average, but plenty of firms are way down the scale and some may even be underwater – that’s Net Promoter Score speak for a negative score. Those are probably the firms that don’t know anything about NPS, do little by way of client listening and whose focus is correspondingly inward rather than outward. They might want to think about changing that perspective – and fast.
About the author: Tim Nightingale
Tim founded Nisus Consulting in 1996 with the aim of helping professional services firms become more client focused. Tim has an MBA from Cass Business School, is a Fellow of the Chartered Institute of Marketing and a full member of the Market Research Society. See Bio…