On Managing Customer Relationships

One of the challenges associated with Courageous Leadership and achieving Excellence by Design is knowing how to effectively manage customer relationships.

In the consulting environment, there is generally a measurable connection between client satisfaction and the revenue trajectory of an account (whether that’s expressed as stable annuity or growth over time).  In a perfect world, this is ideally driven based on a blend with how you are managing the relationship and the quality of your service delivery.  In the corporate IT world, it is a little more difficult to measure, but certainly there are indicators on whether a business partner is satisfied with the support they receive, whether it is expressed in feedback processes, involvement in critical strategic discussions, the collaborative dynamics of the relationship, etc.  In both cases, whether a consultant or an IT leader, the goal is generally to be a “partner at the table”, which is a very often used, but rarely achieved situation.

 

Describing What “Good” Looks Like

At an anecdotal level, some simple litmus tests on the health of a customer relationship:

• Does the customer involve you actively when ideating or forming a business strategy?
• Would the customer or a neutral third party refer to you as more of a “partner” or an “order taker” in business discussions?
• Are conversations when issues arise handled as a fact-finding and joint solutioning opportunity or as a beat down/”do what I say” discussion (conceptually)? This is normally very perceivable in the tone and direction of the discussions as they occur.
• Does the customer openly seek feedback and input as to how new/advanced technology can drive innovation and adjust plans accordingly?
• Are prioritization discussions occurring when new opportunities arise as part of a larger portfolio management process? Are those conversations collaborative?  Are initiatives stopped or deferred as an outcome of the exercise, or are portfolio discussions largely a snapshot of all the work that has come through the demand management process and is planned for delivery?
• Is the delivery environment sustainable from a utilization and pace of execution standpoint?
• What are the average hours worked per employee? Is there time being spent in learning and talent development?  Are technology standards and strategies being implemented or set aside in deference to critical “priorities” on an ongoing basis, resulting in accumulated technical debt?

Worth noting, I’m calling out a number of dimensions above intentionally and not leaning on “the customer said they are happy” for a reason… namely that, there are many situations where customer satisfaction is largely based on a sense of having control over priorities and actions in a relationship and where no effective partnership exists.  Again, the simple test for this is: what happens when the parties disagree and, in those circumstances, what percentage of the outcomes are ultimately what the customer originally wanted?  I don’t know how to estimate this with any precision, but if the answer to the question is directionally something like 80% or more of the time, and the consulting/IT team taking on more work without any remedy or accommodation, it would be hard to argue there is much “partnership” in practice.

 

Where The Best of Intentions Creates Challenges

It isn’t news that being highly motivated in a delivery environment is a blessing and a curse.  On the positive side, motivation and a passion to deliver is what can propel an individual and those leading teams to achieve sometimes incredible results, despite the odds that otherwise could undermine their success.  On the flip side, a belief that anything can be accomplished can also lead to issues when leaders view tradeoffs or compromises as an inherent sign of failure or weakness in their customer’s mind and they take on too much when they should be seeking balance in the overall situation instead.

In practice, organizations often sign up for too much, stretch beyond their internal capability to support the volume of ongoing work effectively (with critical skills and knowledge where it is needed) and ultimately create an unsustainable environment.  This is generally FAR more costly than taking a reasoned, fact-based approach to portfolio management and prioritizing the mix of ongoing work effectively (something I will likely write about as part of Operating with Agility).  The resulting effects of this situation are fairly prevalent in my experience across many organizations and clients in the last 30 years, namely missed delivery commitments, technical debt, poor quality, lack of value realization, employee burnout (and ultimately attrition), and unhappy customers.

Overall, a healthy and credible customer partnership should be created by establishing mutual trust and respect, acting with integrity, and making fact-based decisions in the interest of maintaining a sustainable environment that delivers quality solutions with agility and speed at scale.  Admittedly, that’s quite a lot.  Easy, right?  Of course not, but what in that statement isn’t the aspirational end state?  If that level of partnership and delivery environment isn’t the goal, what is?  That might be a discussion worth having from a leadership standpoint.

 

Some Examples to Consider

Having been in both consulting and corporate environments, I’ve seen a number of situations where managing customer situations has been challenging.  To share some examples:

• Where the skills were insufficient
  • Having completed a lengthy engagement with an existing customer, I was asked by the account exec on a strategic account to speak to a prospective client about a potential new portfolio of work related to data warehousing.
  • In the call, the client walked through where they were, the work done to date, the forward-looking plan, makeup of their team and areas where they could possibly use some assistance.
  • Overall, the project was thoughtfully organized, fairly complex, and the areas of opportunity were outside our organizational capabilities because the depth of skill and experience required was beyond anything we had. Subcontracting those capabilities also wouldn’t have offered any material benefit to the client that they couldn’t obtain by contracting the skills directly on their own.
  • As a result, I thanked the client for the opportunity but said we weren’t well positioned to help. The prospect’s response was literally “I’ve never heard a consultant say that before” and they thanked me profusely for being candid about our ability to meet their need.
  • As you might expect, the account executive, on the other hand, called and yelled at me for some time given I was meant to sign the client up for work, regardless of whether they needed our help or not, with the implication being that a very informed customer “didn’t know what they needed”, which is why we needed to sell the work.
  • In a positive twist, the prospect went back to their leadership and gave such a positive review of the conversation and us having done the “right thing” that they ended up offering up a different piece of work that was in our wheelhouse to deliver.
  • Was the conversation a mistake? Not in my mind.  Would I do the same thing again?  Yes, for certain, because I’d rather accept what we can and can’t do successfully than sign up for everything and ultimately have an adverse impact on the work as a whole.
  • Probably to this day, the account exec would argue that I messed that situation up, but unfortunately that’s the nature of consulting at times when revenue goals cloud matters in relation to ethics and integrity. The account team was primarily incented to reach a target, not a healthy client relationship and sustainable delivery environment (which is not unusual in consulting as a whole).

• Where the timing wasn’t right
  • Coming out of a successful delivery engagement with a new client, our executive sponsor referred us to a peer, who had recently assumed responsibility for the integration of an acquired organization. We were asked to help develop a strategy and some new customer-facing technology that would bring together and align the existing and acquired company products into one cohesive solution.
  • With the best of intentions, we started into what was a roughly an 8-12 week scoping and visioning activity, engaging teams from both the parent company and new acquisition.
  • What we rapidly realized was the major challenges and headwinds associated with being engaged so early after the transaction had been announced and nearly every deliverable we had planned for the early portion of the engagement fell very far behind schedule.
  • In preparation for our first sponsor checkpoint (~week 4 as I recall), we realized the probability of completing the engagement within any reasonable timeframe was extremely low and we decided to pivot to providing an update on where we stood in addressing the various challenges we were facing, such as the lack of a brand strategy, team dynamics, technology integration issues, major strategy decisions that would need to be made, etc.
  • In preparing for the checkpoint, we reached out to our prior sponsor who had referred the work to us for advice on how to approach the situation. His guidance was, thankfully, to be open and direct with where we were.  Whether he ultimately gave our new sponsor a heads up in advance of the discussion, I don’t honestly know, probably because I was too young and inexperienced at the time to think of that possibility.
  • In any case, we met with our sponsor, talked through the challenges, and his response was to pause and ask us “so, you’re saying it doesn’t make sense to do this right now?” to which we responded, “yes”. He expressed appreciation for our candor, the project was stopped in-flight, and the client spent time focusing on the integration of their teams before trying to proceed further on any implementation work.
  • As it happened, the sponsor also left the organization relatively soon thereafter and, based on the impression he had of us and our work, contacted us from his new place of employment to explore opportunities to engage us again.
  • Our actual project had only lasted around a month and didn’t deliver anything, and yet built enough credibility for the customer to come back from a completely new direction.
  • In retrospect, while I believe we handled the situation correctly, we should have had a sidebar with the sponsor to give him a heads up ahead of the checkpoint so he knew what was coming before we got to the meeting itself. Thankfully that didn’t blow up in our face, but it would’ve been a more thoughtful way to handle the situation than what we did at the time (largely out of inexperience between me and other people in the account team at the time).  Overall, I consider the project a successful failure because we didn’t waste the client’s money on an outcome we never would’ve accomplished in a reasonable timeframe.

• Where the solution made no sense
  • As part of an internal team reviewing another engagement, the delivery team introduced us to a project they were about to initiate with their existing client. The overall engagement was going very well, and the opportunity to create a “management tool” came up as an adjunct to the larger program in motion.
  • For those of us outside the account, the proposed solution seemed immediately problematic and we challenged the team on why they were pursuing the work at all, given the complexity of what was desired, the likely cost of the project, and the questionable amount of value they could ultimately produce IF they figured out a way to do what the client was requesting.
  • The response from the team, not surprisingly, was that the client was “very excited” about the project, they were eager to sign the agreement and kick off the effort, and we should be more focused on how to help the team solution by comparison with asking why they were doing the project at all.
  • As you might expect, the engagement team ultimately had the authority to move forward with the work (and business), we noted our concerns in the review material for our industry leadership and the project got underway.
  • I don’t remember how far along it occurred, but somewhere after at least a couple months of execution, a change in client in leadership occurred, the new leadership reviewed the in-flight projects, and immediately questioned the nature, scope, and value of what the team building this tool was doing. The project was stopped, the account team took a major credibility hit, the larger engagement ran to completion, and no follow-on work came to the team as a result.  Worth noting, the larger program was worth something over 10x the revenue as the smaller tool project, but the relationship impact from the trust that had been lost was significant enough that the larger engagement was damaged.
  • This is a difficult situation to assess in retrospect, because the team was eager to solve a client need and be responsive. The problem is that the solution itself didn’t make sense, added no value, and was essentially a ticking time bomb from the moment it was conceived.  At a minimum, had the engagement team raised the concern and documented it somewhere in the course of initiating the project, there may have been some resource to mitigate the damage done once the overall direction changed.
  • The other takeaway from this situation is that a solution should objectively make sense and create value so that, in the event that circumstances and sponsorship changes, the work itself should be worth continuing. If the need for a project is largely subjective in nature, there can be downstream risk that the investment itself may not be in the best interest of the company (or client).
  • It could be argued that, as an outside team, it was far easier for us to call out the potential issue than the team engaging with the client directly (and that’s 100% true). However, the entire reason we had review teams was to provide an objective lens on the ongoing delivery work, in the interest of providing input and guidance to teams, but also to help them assess revenue at risk.  We provided exactly that input, but it was largely discarded in deference to securing the revenue.

• Where there was a historical lack of trust
  • As the start up on a first engagement with a new, large client, a teammate and I had the opportunity to meet with the client CIO for an introduction.
  • His opening statement to us was “I could buy a company of your size tomorrow if I wanted to, what makes you guys any different and why do we need to talk?”
  • After the tumbleweed blew across the room… and we drew a collective breath… my very young, overconfident, and inexperienced mind told him that we could also get a set of contractors, give them a copy of Microsoft Visual Studio, and ask them to do the project even cheaper… BUT… that’s not what buying consulting services is about. You’re buying experience, culture, methodology, passion, and a commitment to success.  If successful delivery was about tools and technology, then everyone would be great at it, but unfortunately that’s not how things work, which is where we come in.
  • In retrospect, thank goodness I was young and inexperienced, or I might have been more intimidated. To his credit, the client probably knew that, he paused, apologized for being abrupt, and then told us that nearly every consultant he works with started by saying they were going to deliver a project but “then the minute I turn around and open the safe to pay them, they are looking over my shoulder to see how much more money I have in there.”
  • For whatever reason, I suspect the fact that I focused more on successful delivery and not “partnership” (which translated into future revenue opportunity in his mind) made a difference in getting off on the right foot.
  • We left the meeting with an invitation to come back whenever we wanted which, given the size of the client and how generally inaccessible their CIO was at the time, was a notable achievement.
  • In retrospect, what I believe worked was the unfiltered nature of a genuine and honest response, and I think the client picked up on it by comparison with more “polished” consulting pitches he likely heard on a regular basis from people much more experienced than I was then.

• Where the engagement approach itself was poor
  • The final example I’ll share relates to having an ‘all or nothing’ mentality when it comes to discussing higher risk efforts.
  • With a change in senior executives, a directional statement was made with regard to a desired amount of technology delivery (i.e., X major releases per year) the new leader wanted to be part of the future environment.
  • The CIO and leadership team assembled a set of “educational” materials to help the new executive understand why the desired pace was unachievable. The message was not met well, either by the new executive or the head of the company, both of whom considered it a lack of leadership on behalf of the CIO and technology leadership team.
  • In retrospect, the entire issue was in the approach to the response, because the reason the IT leadership believed the request couldn’t be accomplished was, aside from technology-related issues, the business dependencies in delivering at that pace were generally unmet and would require an unprecedented level of speed by the business teams working with IT overall. The team assumed those items would never change and therefore wrote off the new executive’s request without ever considering whether he’d be willing to explore ways to address those challenges.
  • This situation has actually bothered me for a long time, in part because of the risk averse nature of the CIO and leadership team at the time, but also because the discussion could have been approached in a positive and partner-oriented mentality. “We’d like to help accomplish these goals and we will do X, Y, and Z to support it.  We also, however, need your help in making sure that we can do A, B, and C from a business standpoint as well, because those are critical dependencies in our ability to meet those objectives as well.”  That discussion never happened and rather than further the idea of IT as an enabler or partner, the reputation of IT as an impediment or barrier to success was furthered.

Putting Things in Perspective

In all of the situations described, it’s safe to say that none were “easy”, all involved some level of risk, and the stakes were generally high in some way or other.

What I’d say is fundamental in all cases for having healthy client relationships is:

• Being open and transparent in communications, noting objections where appropriate
• Operating with integrity, no matter what the pressures of the situation are
• Remembering to put value in the center of the conversation and the desire to make things better. A partnership isn’t about control, it’s about mutual respect and understanding, listening, and collaboration in the interest of finding the right solution to challenges

It’s worth noting that our reputation is what transcends individual decisions, projects, and jobs over the course of a career (whether within one employer or across many)… and it doesn’t take long to do substantial damage to one if you’re not careful.

Recognizing there are opportunities to improve partnership in customer or client relationships isn’t a condemnation or criticism of any current or past situation I’ve encountered.  It’s a recognition that, by acknowledging dysfunction and identifying opportunity where it exists, we create space to make things better and lay the foundation for excellence.  It takes humility, but also courageous leadership to drive change where it’s needed, and that will always be worth the effort for the betterment of an organization.

Hopefully the ideas were worth the time it took to read them.  As always, feedback and reactions are welcome and appreciated.

-CJG 04/09/2022