Professional services firms invest a lot of time and energy into their existing clients. Indeed, having the right Customer Experience (CX), Customer Relationship Management (CRM) or whatever you want to call it, programme in place is important to ensure that you look after and nurture your existing clients. However, this shouldn’t be at the expense of trying to win new clients, as there is a finite amount of revenue that can be gained from your pool of existing clients.
It is understandable why many firms put their growth plans into cross-selling initiatives, which are often couched under the banner of “CRM” or “key client programmes.” However, one of the main aims of these programmes is to increase revenue by encouraging cross-selling initiatives. That’s no real surprise, as the cost of winning work from new clients has traditionally been seen as costing five times more than gaining revenue from new ones.
Yet, if your firm is going to realise its growth ambitions, it will need to invest in acquiring new clients. In fact, if it is to be sustainable, you will also need to know how to win new clients. Through any cycle of 3 years or more you will lose some of your existing clients. You’ll lose them to a host of reasons, it could be that your client has been acquired, or is going out of business, and these are completely out of your control.
The main question regarding how much more you can squeeze out of your existing clients, really starts by understanding why your cross-selling initiatives fail.
Why cross-selling doesn’t work.
The five reasons why cross-selling doesn’t work in professional services firms are: a lack of complexity/size within your existing client base; poor reward/recognition schemes for those who sell others’ services; a lack of understanding of other service lines; overly competitive individuals within an organisation not wanting to help others succeed; and finally, a weak relationship with existing clients, which makes it hard to introduce other colleagues to these clients.
Let’s explore some of these reasons and a few others in more depth.
Lack of size/complexity in your client base.
If your existing clients consist of SMEs, early-stage start-ups etc., there is a limit to their budgets and also the number of professional services they actually need. They may well be best served with a more generalist approach i.e., one accountant or lawyer. This means without clients of a certain size or organisational complexity, the amount of cross-selling you can do within your client base may be limited.
Why the individuals in your organisation prevent your cross-selling initiatives from working.
Professional services firms, and particularly those that operate in a partnership model, can be a mixture of different silos and individual opinions. This has an impact on your firm’s cross-selling initiatives and ultimately causes them to fail.
Breaking it down, there are a few simple reasons why your cross-selling initiatives don’t work, and how the main Relationship Partner for the client, let’s call them ‘Partner A,’ will ensure they don’t.
‘Partner A’ doesn’t trust their colleagues in the adjacent offices, or in a different service area. They believe that introducing their colleagues to work for their client (‘Partner A’ views the client as theirs, not the firms) is too big a risk to take. They feel that any mistakes from the firm they work at, won’t be forgiven by their client.
‘Partner A’ doesn’t actually have as good a relationship with the client as they let others within their firm believe. This means they are far more concerned with protecting their existing patch rather than growing it.
‘Partner A’ has a great relationship with the client, but only with one person, or people in one department. To grow the revenue would mean getting a referral and trying to meet with someone else within the client. This means they’ll have to build a brand new relationship at the client. They most likely view this as either too scary, or an activity which might endanger their existing relationship.
‘Partner A’ doesn’t understand what their colleagues do. Therefore, talking about an area of expertise they are not experts in, is too intimidating a concept for them to do. They don’t want to be viewed as ‘not’ being an expert, by their client.
‘Partner A’ sees no real upside in cross-selling. In short, the firm’s structure means they are either not properly recognized or rewarded for passing referrals internally. Therefore, they don’t see it as a valuable use of their time.
Some of these reasons are also why your content marketing initiatives aren’t as successful as they could be, as professionals are reluctant to share their colleagues’ articles.
You can only squeeze so much out of your existing client base.
As I mentioned at the start, CX and CRM programmes are essential for any healthy client-focused professional services firm to implement. It absolutely pays dividends to nurture your existing clients, and some of the obstacles above can be overcome once they are identified. It isn’t a quick process by any means, but definitely a worthwhile one.
Why you should prioritise chasing new business.
The best way to grow revenue is often to win work from new clients. It’s a great way of growing your market share. In a potentially shrinking market due to an economic recession, it makes sense to start gaining new clients. As more of your competitors are now investing in their digital marketing presence, your existing clients will be exposed to more choices than ever.
The advantage of developing new client relationships from scratch is that a person you have never met before has no current perception of who you are, and what you do. This means that you can build a new relationship from scratch, and in doing so, introduce your colleagues as part of the onboarding process. It is somewhat counterintuitively easier to win a new client with a multi-service offering from scratch, than it is to effectively cross-sell.
It also pays to have a ‘winning new work’ programme in place. For a sustainable business to exist, if you are continually hunting and gaining new clients every year, you’ll most likely grow, and in other cases replace what you’ve lost. If you wait until your revenue starts to shrink, it will be an uphill and highly pressurised situation in which to hunt new work. It also pays to maintain this discipline, as the habit of winning new clients is a great one to have.
Focus on gaining new clients and nurturing, not squeezing, your existing ones.
A final point on this. The “do you want fries with that?” approach to selling is, in many ways, what cross-selling can feel like to your existing clients. Thanks for trusting me to do this work for you, how about we do some more as an add-on with my colleague? If broached wrong, the client will feel like you are only investing in your relationship with them to see how much you can squeeze out of them. And that’s certainly not a good look!
Therefore, I’d urge you to invest a good chunk of your BD time and money into winning new clients. Personally, I find winning new work the most fun, and also the most rewarding. It is one of the best ways to grow any professional services firm quickly. It just takes the right research, a sensible approach, and a good dose of courage and resilience.