What clients want, according to Ram Charan
In the new book, What the Customer Wants You to Know, Ram Charan describes how the internet and the global economy are changing the way customers think, and what it means to people who sell.
The basic issue is that clients “are under enormous pressure to deliver value to their clients and their shareholders. They are compelled to use the newfound power of transparency and overcapacity to drive down prices...” The result is that the traditional tools of business development – “long-term relationships... golf games, skybox seats, and theater outings...” – are losing their power (p. 4).
While Charan does not talk directly about the legal profession, lawyers have certainly seen these forces at work in many ways, including price pressure from procurement departments, the increasing importance of RFPs, and the unrelenting demand for increased value.
To succeed in this changing game, Charan says that sellers must find better ways to help their clients. “No longer do you measure your own success first. Instead you measure how well customers are doing with your help.” (p. 6) This will require a solid understanding of how your clients make money now and how they will make more money in the future.
As Lou Eccleston, the former president of Thomson Financial, put it: “If you can’t impact the customer’s performance in a positive way, then you’re going to be a commodity product and you’re going to get commodity prices.” (p. 22)
To accomplish this, Charan says, you need to understand key clients in depth, including their opportunities, customers, competitors, and how they make decisions. Not to mention their culture, values, goals, and priorities.
That sounds like an enormous investment of time and energy, and it is. But in the current economy Charan argues that the only alternative is to lower your rates. And then lower them some more, when your competitors cut theirs.
For professional sales teams, Charan recommends creating a Value Account Plan for each client that defines business benefits “in quantitative measures such as cost reduction, revenue growth and cash flow improvement, and qualitative measures such as sustainable market share and brand image.” (p. 51)
I don’t expect law firms will go that far any time soon, but the good news is they don’t have to. In selling, you just need to be a little better than your competitors. As long as your competitors focus on maximizing the number of hours they bill associates at the highest possible rate, it should be easy to provide more value than they do.
A digression about Ram Charan: If you are curious about the lifestyle of super-consultants, don’t miss the Fortune magazine article “The strange existence of Ram Charan.” It calls him “the most influential consultant alive,” but you could say Charan is homeless. If that term applies to someone who earns up to $20,000 per day for his services and spends most nights at five star hotels. Charan does not have a wife or children. But he does have an assistant who FedExes him a box of clean clothes every Monday, Wednesday and Friday. “They toss in toothpaste, razors, shampoo, a shined pair of 9½ EEEE shoes, whatever he needs (‘He doesn't buy anything himself,’)... the box comes back two days later filled with dirty laundry.” Near the end of the article, Charan told the Fortune writer that he is so tired of people asking about his home that he finally got an apartment in Dallas. But when the writer asks when Charan will move in, he replies “Maybe never."