The Hindu Business Line : Consider return on relationship investment

THE future of professional services is all about people, knowledge, and relationships, wrote Ross Dawson, CEO of Advanced Human Technologies, in the preface to the first edition of Developing Knowledge-Based Client Relationships, from Elsevier (www.books.elsevier.com) . Now, in the second edition of the book, he emphasises that you need to lead if you want to make your clients recognise the value you create for them through "deeper level of engagement."

Knowledge and relationships are where almost all value resides in today's economy, and these two are "the only true sources of sustainable competitive advantage," states the intro, categorically. You'd agree that professionals apply deep specialist knowledge within client relationships, but they witness all-round commoditisation, what with competition driving down prices.

To escape losing out, "Engage in knowledge-based relationships," advises Dawson, so that "the client is different as a result of the engagement." Both knowledge and relationships are ultimately about people, says the author, because "only people have knowledge, and all high-value relationships are based on individuals interacting."

Professional firms can fox the competitors by pooling their capabilities with those of the clients "to create results they could not achieve individually." This is no `black box' approach to professional service delivery — opaque in nature and thoroughly commoditised, so that the client only receives an outcome, and does not see the process involved. Dawson's advice is that you lock in your clients positively, by consistently creating more value for them than your competitors can. The opposite, the negative lock-in, makes it expensive to clients to leave you!

To achieve positive lock-in, you need knowledge: "Knowledge of your clients, your clients' knowledge of you, and the ability to create knowledge together." That is: first, you know your client better and also "apply this knowledge in customising your communication and service delivery," plus continuously work to enhance that client knowledge; second, customers align their processes with yours, and so are able to easily apply your services internally; and third, get embedded, that is, "become an intrinsic part of your clients' work processes."

At every level of the firm, you should consider the return on relationship investment, insists Dawson. If your large clients don't respond to your efforts at relationship, but insist on maintaining you as a commodity, the author's daring suggestion is that you better concentrate your efforts on "firms that may not be as large or prestigious but are open to giving you greater scope to create value," and thus position your firm as one that selects its clients.

As an antidote to information overload and the pressures of attention economy, add value to information, exhorts Dawson, prescribing processes such as filtering, validation, analysis, synthesis and so on. Also, add value to client capabilities, through education and training. An example cited in the book is of CIBC World Markets, the investment-banking arm of Canadian Imperial Bank of Commerce, which has established the School of Financial Products to train its clients and prospects in the use of financial derivatives.

There are valuable inputs in chapters on relationship channels, co-creating value, and value-based pricing. The book concludes optimistically that, despite digitisation and the power of information technology, "what will remain as a source of differentiation are the things that are most human."

Useful knowledge that you'd benefit relating to!

BookMark@thehindu.co.in

D. Murali

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