Well, if Hislop thinks perks are trivial, he’s been too rich, for too long. When, aged 24 and accustomed more to travelling in old bangers or hitch hiking, I landed a job which involved frequent first class rail travel and flights sitting at the front of the plane, it made me feel like a king. More importantly, from my employer’s point of view, it made me feel valued. This was something they didn’t have to do for me, but did nonetheless. And boy, did I return the favour, working much longer and harder than I had to. A little generosity on my employer’s part reaped much greater dividends.

Perks make particularly strong economic sense when an organisation can offer a benefit that costs it very little, but which the recipients value a great deal. BA is the obvious, as well as the most topical, example here. Allowing staff to use otherwise empty seats costs BA nothing.  But, especially for staff who have taken a significant pay cut to do an increasingly low status job, free flights to anywhere must make all the difference in the world.

In many countries, gifts between company representatives are also a regular ‘perk of the job’. In the UK, we are quick to dismiss such gifts as corruption, but the true position is much subtler and more constructive. Indeed, in my experience, the risk of corruption is part of the game of checking out who you are dealing with and whether or not he or she can be trusted. No gift at all breaks no ice. A small token shows politeness, goodwill and a degree of sophistication.  Too substantial a gift raises alarm bells and shouts ‘this person wants to buy me in the hope I’ll sell out my company’.

Such subtleties are the very stuff of the provision of professional services, because everything hinges upon relationships and the quality of your staff. Thus an awareness that short-term perks can motivate staff more than money, and that the most humourless of clients will, all else being equal, choose the firm with which it has the better relationship, can make the difference between keeping and losing an account.

So provide employees with more perks, not less, because it’s cheaper. And if it’s not on to take clients out for a boozy lunch, consider taking them out for boozy dinner (or something more original) instead. Most will be genuinely appreciative – and you’ll discover much more about what makes them and their organisation tick, than at any formal meeting.

Professional firms are not above following suit

Ryanair’s approach works because, even after the unavoidable extras and last minute premiums, they’re still cheap, convenient and, in my experience so far, bang on time. On my chosen route at least, there was no realistic alternative. So you play their game, but have absolutely no customer loyalty whatsoever. Given that the clients of most professional firms have lots of alternative providers, and that unlike an airline, giving the impression that you are not First Class eats up your brand capital faster than the speed of sound, you would have thought that no firm offering, say, legal or accountancy services would dream of adopting such a model. But some surprisingly big names (on which more in a moment) do, and their success throws up challenges for the rest.

The basic cunning idea is as old as the hills: offer seductively low rates to secure a major contract, then:

- charge as many extras as you can;
- have all work done by the lowliest, lowest paid people you can hire;
- schmooze the senior managers and…
- ramp up service levels in the run-up to the three year review.

With luck, you might then even persuade the client to stick with the devil they know. If not, you’ve had three fantastically profitable years and can probably secure a replacement contract, with a different client, on the same basis. There are always managers around tasked with driving costs down, and the credit for securing ‘great deals’ all comes up-front. Come review time, they’ll have had their promotion.

Competing with this approach is all the harder because it tends to be the larger name firms that do it. This happens either because a few divisions of otherwise strong firms will always trade on a reputation maintained by their colleagues, or because the whole organisation, like a famous but fading hotel, is resting on its laurels. Smaller name firms don’t have this brand capital, so cheap offers don’t smack of high efficiency, just desperation.

What can be done in the face of such cynical rivals? From personal experience and that of some clients, there are some defences which, whether pitching to gain or keep an account, I have seen succeed:

1) Influence the tender criteria
Often an opportunity when it’s an account you have and, if you’re in early enough, one that might be open to you even if it’s not. Your objective should be, in the most positive way possible, to educate the client in how to ask for information, such as actual average costs on a comparable account, which will make it difficult for the bidders to pull a fast one.

2) Be as open as you dare
I’ve seen firms lose major accounts because they are affronted at how much detail a client wants about their financial position and ways of working. But those I’ve seen who have also taken exception, then given up the information anyway, have invariably later wondered what they were making such a fuss about.

3) Accept the unacceptable – with an early review
A client coming out of a poor contract will, like a newly-spurned lover, be very nervous about getting taken advantage of again. This can prompt unreasonable demands. Don’t worry – accept them. But do so on the basis that, six months in, you can review pretty much everything. By that time, you’ll have proved your worth, the unreasonable demands will be quietly pushed to one side, you’ll have the business for another two or three years and, assuming you’re terrific, a lot longer than that.

Of course, if you’re not terrific, perhaps you should consider the “Only £X per hour!” line with the cost of the proverbial coffee and sandwiches hidden in the small print. Just don’t count on any repeat business.

In his new book, Spent, evolutionary psychologist Geoffrey Miller shows how and why the object of much consumer spending is not owning things for their direct benefit, so much as their ability to send ‘fitness’ signals about their owner to other people (i.e. to impress your mates / boss / opposite sex etc).

This subtle distinction matters hugely to consumer marketing because it means that, in many cases, it’s not the potential buyer who should be the focus of attention, but those whom the buyer wants to impress.

Consumers couldn’t give a fig about having a relationship with a brand – they’re just using it (shamelessly!) for personal positioning. This is how high-end fashion ads featuring models who are gorgeous but haughty, work. They’re not supposed to make you want to buy the product. They’re supposed to make you feel inferior, so the purchaser will believe that, when she wears the product, you’ll feel inferior to her, too. Closer to home, a booklet on the history of Notting Hill which I produced for estate agents Bective Leslie Marsh positioned my client as better educated, more professional and a little idiosyncratic. Which, in Notting Hill, turned out to be exactly the sort of firm with which owners of big houses would be prepared to advertise their association, not least by sticking a big ‘for sale’ sign outside.

But does this have any real relevance in professional B2B markets? I think so, mainly because it draws attention to how your firm can affect your client’s positioning. How will hiring you make the hirer look to his or her bosses, colleagues etc? Will the client’s rivals and customers react to your appointment with excitement, derision or indifference?

Most of all, Miller’s revelations  highlight how, even if all of your new business comes through word of mouth, if your positioning to the rest of the world is poor, potential clients are going to think twice before hiring you. Your superficial shortcomings could make them look bad in the eyes of others. As Darwinian-driven individuals have known for millennia, if the positioning of your otherwise brilliant offering isn’t up to scratch, its chances of a long and productive life will be much diminished.

Spent: Sex, Evolution and Consumer Behaviour by Geoffrey Miller is by William Heinemann Ltd (Amazon page).

Which is why it is worrying, over this summer, to have seen so many examples of businesses abandoning such enlightened self-interest for the sake of short-term gain. Smart people only do this when survival is at stake – hence the curbing of my more normally optimistic outlook. Here are just a few of several examples…

Your bank wants your cash. One client was told by its bank last month that, despite all MBO loan payments having been made on time, in full, it wanted to “renegotiate” the terms, and was entitled to do so because turnover and margins were below target. My client pointed out that adding to his loan costs would exacerbate his biggest problem – cashflow – and undermine the business the bank was supposed to be supporting. The bank said it couldn’t help that. My client then pointed out that he typically held several million pounds of client money on account at the bank, money he would move if his bank persisted in undermining his business. His “Personal Banker” said that such accounts involved a different department and so made no difference to him. Both parties now know that, assuming my client survives, he’ll change his bank as soon as he can.

Your insurance company wants your cash.  At least one major Employer’s Liability insurer of which I am aware is going after past and even existing clients for ‘Additional Premiums’, i.e. payments which are due if actual staff numbers and turnover for any given year were higher than projected when the premium was set. The additional premium can amount to tens of thousands. Traditionally, it has not been collected, but taken into account, together with the the long term value of the business when setting the following year’s premium. Now, on being told by its collectors that both clients and brokers were swearing they would ‘never return’, the insurance company’s reply has been, in effect, “So be it. We need the cash now.”

Your tenants want to keep their cash. Talking with a major player in the shopping centre investment market recently, the impact of Pre-pack Administration and the general legal abuses which limited liability permits was again driven home to me. Holding companies are able to put large retail chains into pre-pack, then go to the landlords of any locations they want to keep, still refusing to pay the outstanding rent whilst offering greatly reduced terms for future occupancy. Both parties know that, whatever the lease terms, future covenant value will be negligible, hence the landlord will get a better tenant as soon as conditions allow. Often, the retailer plays the same trick on its suppliers, wiping off old debts yet still wanting new stock, at lower prices.

 My point here is not just that things are so tough that companies feel forced to care only about the short-term, it is that no one is making any extra money. Profits are coming from cost-cutting and, as in the examples above, by businesses taking money from others where they can, without providing any value in return. There is no net contribution to GDP, hence no green shoots. Closer to home, the question faced by businesses in danger of being caught in the crossfire (if you’ll forgive the mixing of metaphors) has been, what should we do about it? The options are limited, but mine include the following:

Offer help before you are asked. The cost of your goods or services to a client you know is suffering might be small in relation to its overall budget, but many managers have been charged with securing concessions from dozens, even hundreds of suppliers. By taking the initiative, you stand a better chance of making only concessions which suit you, whilst strengthening the relationship with your client.

Point out (realistic) opportunities. You need to be careful here, because clients don’t want your sympathy, especially when they are really hurting. But if you can, say, introduce a client to a source of new business, or mention a way in which someone else in a similar position has saved a great deal of money, you’ve got a friend for life (or until the next recession, at least).

Watch for changes in behaviour. More defensively, you do need to keep an eye on exposure to individual clients and, indeed, sectors. I have had one client of many years standing go bust on me and, in retrospect, the warning signs were there for months beforehand. Happily, when its successor emerged from the ashes of the old business, its directors re-hired me and made good the amount I’d had to write-off. Having thought I’d learned it the hard way, it’s a lesson I’ll not forget.

Invoice more often. This ties in with the previous point, helping to limit exposure and put out more markers to tell you if a business is about to go down and take a bit of you with it.

Are your own T&Cs too relaxed? A designer colleague of mine has, like so many, always had instructions from one client either via a brief email or simply a telephone call. Now that company is in trouble and refusing to pay all outstanding bills on the basis that there was no official order for them. Legally, it doesn’t have a leg to stand on, previous behaviour on countless occasions clearly establishing an implied contract but, again, in an attempt to save cash now, it is now willing to alienate, forever, a supplier who has served them well for many years.

There are, of course, many reasons to be cheerful and, having diversified a little, I’m personally enjoying working in some new sectors and business is brisk. But, having cut back on all the easy bits, it does look as though companies which are still struggling are now having to get nasty, and that this practice may be growing, not diminshing.

When you see some green shoots, eat them. Before some else does.

MT

* the course, ‘Bargaining for Advantage’, was run by G. Richard Shell and my friend was hugely enthusiastic about it. You can go on it if you pay Wharton  $9,750 and can spare a week in Philadelphia. Alternatively, you can (like me), just buy the book of the same name for less than a tenner. It’s great for reminding you of all those things you sort-of know but, unless you negotiate for a living, never really practise.

Different messages for different audiences are out
One client of mine used to have a series of emailable PowerPoint presentations, each adapted to show almost every prospect in its entire market how its particular sector just happened to be my client’s speciality. But then the prospect would go to the company’s website and find this wasn’t true, especially when they used the cunning trick of looking (how dare they!) at the pages aimed at visitors from other sectors.

One natural reaction to this is to try to have it all, to tell prospects that you really do specialise in everything. There are two problems with this. First, unless your company is huge, no one will believe you. Secondly, in trying to talk to everyone, your message will be so broad and bulky as to talk to no one. The simpler your message, the clearer it will be. So sacrifice a part of the market you can do without and let people come to you knowing what you’re really like.

Speed and relevance matter even more than (graphical) quality
You send an important email to a supplier. How long before you consider a reply overdue? Two hours? Twelve? Only a few years ago, you would have sent a letter and expected a reply two days after posting at the earliest. Now we know that immediacy is possible, we expect it.

This means that a lower quality, tailored information is more effective than glossily-presented generalised blurb and that a combination of personalisation, speed and high quality can be hugely impressive.

There is a message in the medium – and it can give SMEs the edge
SMEs have an advantage here in that most of the necessary technology is cheap and readily available. So whilst the big players are debating who should front their video presentation or webinar, for example, and what regulations they have to comply with etc etc, smaller firms can just get on and do it, delivering a powerful message about their capabilities in the process.

Know that this information can be used against you
Most firms now check out potential employees on social networking sites before making a first response. They are also conscious of the ability of a disgruntled employee to walk out with a roomful of printed information on a single memory stick. Now, businesses fighting tooth-and-nail for new contracts are using such information to undermine rivals as well, including photos of site operations, Google Street View images of PO Box addresses posing as ‘satellite offices’ and links to the Facebook pages of leading individuals. So, if you don’t know what your key people are posting on their social networking pages, it might pay to find out before your rivals do.

© Michael Taite July 2009

The hierarchy of ‘Big Advertising’ continues its struggle to reflect its heyday, when visually-led creatives ruled the roost, churning out massively profitable campaigns for Big TV and Big National Press. These campaigns were so high profile and their creators so amply rewarded by massive media commissions that everything else the client wanted was willingly passed over, dismissed as suitable for (hold your nose) ‘sales promotion agencies’. The very name given to this sector, whose campaigns – using special offers, coupons and gifts – more directly link expenditure with sales, reeks of our disdain for selling. In doing so, it also betrays Big Advertising’s historic real view of its work, regardless of what might have been said about wanting to shift more product: its art, darling. Did Ken Russell really care about the client’s ROI when he made TV commercials? Of course not. What he wanted was the praise of his peers, heaps of it, and the movie contracts he subsequently got.

Today, though, the visually-led days of beautiful, oh-so-clever campaigns are closing in, fast, overshadowed and overtaken by a storm of anti-creative Google Adwords, search engine optimisation-driven text, rough quality viral YouTube video clips and hyperlinked, socially networked, profile “mashed” analyses. Forget design and gloss, this is about content, speed, niche identification, multiple landing pages and, above all, conversion. Conversion of profile into visitor traffic, visitors into named contacts (“community”), contacts into leads, leads into sales. Drop what isn’t working, pump more into what is. No art, just cash in, sales out.

Which, of course, is all the client wanted in the first place.

In a business services environment, is this such a bad thing anyway? It means that marketing professionals have to focus intensely upon the meat of the offering and its relevance to the potential clients.  It means more direct feedback (through search words, click through rates etc) on what people in the target markets want, are interested in and thinking about. It means marketing becoming a ‘grown up’ part of the invent/make/sell cycle that is so vital to every thriving, evolving business. In short, creative marketing becomes not some bolt-on that exists to flog pre-determined product, but an inherent part of delivering and developing ever-better services and communicating them in more efficient, interesting and relevant ways.

©Michael Taite June 2009

The invent/make/sell cycle is an intrinsic part of the methodology of Work Structuring Limited.

But does the same apply to professional services? I think so. You might say this is obvious - a service is just that, and no service if it is not simple to use. In practice though, opportunities for greater simplicity abound - and clients will favour those who embrace them. Here are some that spring to mind: 

‘Non-fixed’ fixed fee arrangements

Clients awarding annually-reviewed contracts for significant volumes of work (I have litigation primarily in mind here, but similar contracts arise in many fields) really, really want fixed fees. In fact, what they want even more is a fixed total annual cost. You, on the other hand, know full well that conscientious professionals are motivated by being properly paid to do a proper job. Consequently, fixed fees discourage initiative and drive away star performers. In other words, in asking for certainty where none exists, clients are pushing their suppliers to follow a course that is not in their own best interests. 

Surely though, creating certainty and reconciling differing financial incentives is what risk markets have been doing for decades? Could not a third party take on the risk, paying the professionals for their time, charging the client a fixed fee and, on average, taking a modest cut for doing so? The third parties would also, over time, develop a broader and more accurate picture of which firms delivered true value for money than any one client could obtain - potentially a great service to the industry concerned. 

Website homepages each client can personally customise

Large firms rightly have a single website to emphasise their size and strength and, up to a point to keep things simple. The problem is that this can make it hard for clients focused on one field and using just one or two departments, to find them. Given that the most common reason clients return to your website is to get contact details, this is a real obstacle. One solution would be to take a leaf out of the BBC’s book - allow clients to customise their homepage of your site to show, for example, your team’s contact details, your sector’s news and the client area login, encouraging familiarity and contact. 

Use of technology such as conference calls and webinars

I recently dropped in on a training session of the Environmental Law Foundation to hear Steve Shaw of Local Works (www.localworks.org) talking to a room full of our volunteers from all over the country about the Sustainable Communities Act. His talk was fascinating and, as a ‘kick-off’, I think delivering it in person and getting the volunteers together was the right thing to do. But it was also expensive, the travel fares alone running into hundreds of pounds. In contrast, the cost of conference calls has now been cut to pretty much zero (see www.powwownow.com, for example) whilst delivering a lecture via the internet requires only basic equipment (and, possibly the greatest challenge, a truly quiet room). No wonder webinars (which combine the two, so a lecture can be given and questions asked by the audience) are taking off. Suddenly, attending a training session becomes easy, quick and inexpensive, i.e., simple. 

Getting to you

Useful as technology might be, people still like to get together. This was brought home to a construction client of mine when it moved from a town centre to a business park location. Though quite properly focused on how its staff might react (such moves tend to be unpopular), what the directors underestimated was quite how enthusiastically its clients would respond to its offices being right beside a mid-UK motorway junction (construction people are constantly on the road). Suddenly meetings were agreed to more readily and clients started dropping in unexpectedly, asking if they could borrow a desk and a proper internet connection for an hour or two. Now they occasionally even ask if they can borrow a room for internal meetings. All this valuable contact and goodwill, just because getting to them is so simple. 

Simplify your written English

The Campaign for Plain English might have been going for many years now, but its work is far from done. Just this week, I have been helping a client with a response to an invitation to tender which is so complex that it took literally 20 minutes just to work out how best to identify an earlier question (as in ’see our answer to question 1, section…er…’). Confusing language deters good clients, good job applicants and good business. It’s worth the extra effort. 

Are your work processes draining value through excessive complexity?

A core step in Christian Schumacher’s Work Structuring methodology (www.work-structuring.com) is the Transformational Analysis. This looks at each step in your work process and questions how much value it is adding. Storage (e.g. matters waiting in your in-tray) scores lowest whilst actions that go to the heart of your firm’s raison d’être (such as the creative steps in solving a client’s problem) score most highly. Typically, many of the lower level steps can be removed, simultaneously simplifying your life and improving productivity. 

That note of caution, however: when delivering simplicity to clients (and colleagues), make sure you get the credit for it. Simplicity is as blindingly obvious in hindsight, as it is devilishly hard to achieve in practice. So put your markers down, clearly, along the way. 

© Michael Taite May 2009