Client Speak: Client Feedback: Best Practices

The By Whom Best Practices

• In-House v. Third Party
• Other Important Considerations
• Comparative Cost

In-House v. Third Party

Having resolved to initiate an in-person Client Feedback Program among a firm's Tier 1 clients, one of the biggest challenges is to determine who the interviewer should be. Various qualifications will be discussed below. However, the aspect that often appears to generate the most consternation is whether to use someone in-house or a third party. Among those who know best, support can be found for both.

Those who favor using in-house personnel cite the following:

• In-house personnel are more familiar with the personality, culture, procedures, strategic initiatives, goals and objectives of the firm, as well as the firm's client serving personnel.
• Some firms will never use a third party. In this way, they retain all the feedback within the firm and have greater assurance that it will remain confidential.
• Firm personnel have the ability to possibly address and resolve more quickly any issues that are raised.
• At a recent meeting, a partner of a major professional services firm indicated, “We wouldn't select third-party representatives to conduct these interviews with senior executives of important clients as they could jeopardize our brand.”

In contrast, here are some of the arguments in favor of using a third party:

• As specialized consultants in this area, they are generally more experienced in conducting Client Feedback interviews and possess greater expertise.
• Use of a third party can assure a greater likelihood of timely completion of the interviews and submission of comprehensive reports, as well as continuation and maintenance of the CFP itself. Many firms have told us that they started such a program on their own and found the results very useful. However, because of the partners' time required, they had to curtail it.
• Third-party interviewers generally have a better ability to listen ' especially when difficult issues are raised ' without getting defensive and attempting to dominate the discussion. The goal should be to allow the interviewee to speak for 80% to 90% of the interview.
• Use of a third party will minimize the possibility that the interviewees will assume that the process is in reality a disguised fishing expedition for new business or primarily an evaluation of the client serving personnel.

Other Considerations

Candor quotient ' All concur that an essential objective of client feedback is obtaining complete candor from the interviewees. The term “candor quotient” refers to the fact that the quality of the feedback increases in proportion to the degree of the interviewer's independence from both the client and the firm. Accordingly, it is pretty well agreed that in no case should in-person interviews be conducted by the lead partner or a member of the client service team. Over the years, many of our interviewees have stated that what they have revealed to us they would not have felt comfortable saying to a member of the firm. On the other hand, an equal number have also stated that what they were telling us they wouldn't hesitate to also mention to the lead partners, although in most cases they had not done so.

Stature, maturity and experience ' Clients consider the interviewer to be a representative of the firm. So whoever is selected should project partner or senior management
stature and maturity, an adequate understanding of the client's business and concerns, as well as appropriate experience in conducting this type of interview. Interviewers with these qualifications will impress the interviewees not only with the firm's willingness to make such an investment in the relationship, but also with the client's perceived importance to the firm.

Position within the firm ' Interviewees may be reluctant to be completely candid about firm personnel (such as partners) who are at a level senior to that of the in-house interviewer. Even where there is no such reluctance, the interviewer may have difficulty in truthfully conveying criticism to those senior to him or her. Interestingly enough, the reverse is often also true: interviewees may be similarly reluctant to be completely candid about client serving personnel who are junior to the in-house interviewer out of concern for possibly jeopardizing their careers.

Competitive intelligence ' Interviewees are often hesitant about divulging information regarding competing law firms, particularly those they are also using. Therefore, care must be taken in how this topic is raised by the interviewer. Clients will more likely be willing to share their views in this area with a third party than with an in-house representative.

Impartial and objective ' Because of internal politics, one firm's partners told us quite frankly that they didn't trust their own partners to conduct the interviews and report back accurately and reliably. Accordingly, where such a situation exists and sensitive findings need to be fed back to the firm, use of a third-party interviewer will act as a shield against any shots that may have otherwise been leveled at an in-house messenger.

Number of interviewers ' For each interview, it is normally best to have only one interviewer present. This is less distracting for the interviewee and permits him or her to focus more intently on the one-on-one discussion and relevant issues. Furthermore, all interviews at a client should be conducted by the same interviewer. As for the total number of interviewers used by the firm in conducting all its interviews, these should be limited to the fewest number possible and practicable. In this way, the firm is less likely to miss important trends and themes. In any event, the work of the interviewers should be coordinated and their reports should follow a prescribed format.

Breadth of firm involvement ' The foundational role of such client feedback intelligence gathering is to inform a process that engages the firm broadly, including top management. And marketing can play a key role in developing intelligence as part of an overall contact strategy designed to yield continuous improvement in the dialogue, transparency, interaction, and investment in the client relationship, ultimately inuring to the benefit of both the firm and its clients. Aside from client interviews at Tier 1 clients, such a comprehensive overall contact strategy will also include both continuous client dialogues between lead partners and their key client contacts, as well as periodic client visitations by appropriate members of the firm's top management with the Tier 1 clients' most senior personnel.

Comparative Cost

Admittedly, retaining a third party requires an outlay of money ' i.e., a hard cost ' whereas use of in-house personnel does not result in any actual expenditure. So, solely from a cost perspective, how do you compare the two? In other words, what is the opportunity cost of using in-house personnel?

While there are a variety of methods and considerations, one way to get an approximation of the opportunity cost involved is to divide your firm's profit per equity partner by your partners' average number of charged hours. For example, using the median annual profit per equity partner of roughly $1,300,000 for the 2011 list of AmLaw 100 firms results in a “cost” of $722 per hour, assuming 1,800 chargeable hours per equity partner. A comparable calculation for the 2011 list of AmLaw 200 firms (with median annual profit per equity partner of approximately $650,000) yields an hourly “cost” of $361.

But, however you determine the cost, you'll undoubtedly find that the benefits (both tangible and intangible) of a CFP far outweigh the cost. For example, as one of my three collaborators for this article mentioned with regard to the in-person interviewing process: “Clients love it!” Now how would you quantify that?

And, since clients love it, agonizing over who will conduct the interviews should not preclude a firm from doing it. In fact, several of the firms we work with use a combination of in-house personnel and third-party consultants to ensure that they optimize the process and the results.

Summary

In conclusion, whoever the interviewer may be, s/he will want to continuously focus on three essentials:

1. The goals of the CFP itself (as distinguished from the goals of the firm and the respective client service teams, practice groups and/or practice offices), namely:

• To provide insights and observations to help convert good clients into great clients;
• To prevent current engagement problems from escalating into larger relationship issues;
• To assess the perceived quality of the firm's work and its service;
• To generate feedback useful in determining and enhancing competitive positioning.

2. A primary emphasis on uncovering vital client issues, with lesser emphasis on obtaining answers to a firm's set list of predetermined questions.

3. Most important, achieving complete candor from the interviewees.

Donald E. Aronson is CEO of D. E. Aronson Associates LLC and a member of this newsletter's Board of Editors. Don's firm conducts market research by interviewing executives of professional services firms' Key clients with a primary focus on Client Feedback. Located in New York City, he can be reached at 212-874-4181 or [email protected]. Copyright ' 2011 by D. E. Aronson Associates LLC

Part One and Part Two of this article, which appeared in the July 2011 and September 2011 issues, respectively, discussed the nine components of How Client Feedback Best Practices. This last Part is devoted to the By Whom Best Practices.

While a Client Feedback Program (“CFP”) may incorporate interviews (in-person and/or phone) as well as surveys (written or online questionnaires), this three-part article is oriented primarily toward interviews, which are what you'll want to use with your Tier 1 ' i.e., most valuable ' clients.

In order to lend more objectivity to this By Whom discussion, I have solicited input from the following individuals, all of whom have had considerable first-hand experience and/or exposure regarding Client Feedback:

Despina Kartson ' Chief Marketing Officer of Latham & Watkins LLP

Mark Messing ' Chief Marketing Officer of Duane Morris LLP

Mozhgan Mizban ' Partner at Zeughauser Group

What follows, therefore, incorporates their views as well as mine.

The By Whom Best Practices

• In-House v. Third Party
• Other Important Considerations
• Comparative Cost

In-House v. Third Party

Having resolved to initiate an in-person Client Feedback Program among a firm's Tier 1 clients, one of the biggest challenges is to determine who the interviewer should be. Various qualifications will be discussed below. However, the aspect that often appears to generate the most consternation is whether to use someone in-house or a third party. Among those who know best, support can be found for both.

Those who favor using in-house personnel cite the following:

• In-house personnel are more familiar with the personality, culture, procedures, strategic initiatives, goals and objectives of the firm, as well as the firm's client serving personnel.
• Some firms will never use a third party. In this way, they retain all the feedback within the firm and have greater assurance that it will remain confidential.
• Firm personnel have the ability to possibly address and resolve more quickly any issues that are raised.
• At a recent meeting, a partner of a major professional services firm indicated, “We wouldn't select third-party representatives to conduct these interviews with senior executives of important clients as they could jeopardize our brand.”

In contrast, here are some of the arguments in favor of using a third party:

• As specialized consultants in this area, they are generally more experienced in conducting Client Feedback interviews and possess greater expertise.
• Use of a third party can assure a greater likelihood of timely completion of the interviews and submission of comprehensive reports, as well as continuation and maintenance of the CFP itself. Many firms have told us that they started such a program on their own and found the results very useful. However, because of the partners' time required, they had to curtail it.
• Third-party interviewers generally have a better ability to listen ' especially when difficult issues are raised ' without getting defensive and attempting to dominate the discussion. The goal should be to allow the interviewee to speak for 80% to 90% of the interview.
• Use of a third party will minimize the possibility that the interviewees will assume that the process is in reality a disguised fishing expedition for new business or primarily an evaluation of the client serving personnel.

Other Considerations

Candor quotient ' All concur that an essential objective of client feedback is obtaining complete candor from the interviewees. The term “candor quotient” refers to the fact that the quality of the feedback increases in proportion to the degree of the interviewer's independence from both the client and the firm. Accordingly, it is pretty well agreed that in no case should in-person interviews be conducted by the lead partner or a member of the client service team. Over the years, many of our interviewees have stated that what they have revealed to us they would not have felt comfortable saying to a member of the firm. On the other hand, an equal number have also stated that what they were telling us they wouldn't hesitate to also mention to the lead partners, although in most cases they had not done so.

Stature, maturity and experience ' Clients consider the interviewer to be a representative of the firm. So whoever is selected should project partner or senior management
stature and maturity, an adequate understanding of the client's business and concerns, as well as appropriate experience in conducting this type of interview. Interviewers with these qualifications will impress the interviewees not only with the firm's willingness to make such an investment in the relationship, but also with the client's perceived importance to the firm.

Position within the firm ' Interviewees may be reluctant to be completely candid about firm personnel (such as partners) who are at a level senior to that of the in-house interviewer. Even where there is no such reluctance, the interviewer may have difficulty in truthfully conveying criticism to those senior to him or her. Interestingly enough, the reverse is often also true: interviewees may be similarly reluctant to be completely candid about client serving personnel who are junior to the in-house interviewer out of concern for possibly jeopardizing their careers.

Competitive intelligence ' Interviewees are often hesitant about divulging information regarding competing law firms, particularly those they are also using. Therefore, care must be taken in how this topic is raised by the interviewer. Clients will more likely be willing to share their views in this area with a third party than with an in-house representative.

Impartial and objective ' Because of internal politics, one firm's partners told us quite frankly that they didn't trust their own partners to conduct the interviews and report back accurately and reliably. Accordingly, where such a situation exists and sensitive findings need to be fed back to the firm, use of a third-party interviewer will act as a shield against any shots that may have otherwise been leveled at an in-house messenger.

Number of interviewers ' For each interview, it is normally best to have only one interviewer present. This is less distracting for the interviewee and permits him or her to focus more intently on the one-on-one discussion and relevant issues. Furthermore, all interviews at a client should be conducted by the same interviewer. As for the total number of interviewers used by the firm in conducting all its interviews, these should be limited to the fewest number possible and practicable. In this way, the firm is less likely to miss important trends and themes. In any event, the work of the interviewers should be coordinated and their reports should follow a prescribed format.

Breadth of firm involvement ' The foundational role of such client feedback intelligence gathering is to inform a process that engages the firm broadly, including top management. And marketing can play a key role in developing intelligence as part of an overall contact strategy designed to yield continuous improvement in the dialogue, transparency, interaction, and investment in the client relationship, ultimately inuring to the benefit of both the firm and its clients. Aside from client interviews at Tier 1 clients, such a comprehensive overall contact strategy will also include both continuous client dialogues between lead partners and their key client contacts, as well as periodic client visitations by appropriate members of the firm's top management with the Tier 1 clients' most senior personnel.

Comparative Cost

Admittedly, retaining a third party requires an outlay of money ' i.e., a hard cost ' whereas use of in-house personnel does not result in any actual expenditure. So, solely from a cost perspective, how do you compare the two? In other words, what is the opportunity cost of using in-house personnel?

While there are a variety of methods and considerations, one way to get an approximation of the opportunity cost involved is to divide your firm's profit per equity partner by your partners' average number of charged hours. For example, using the median annual profit per equity partner of roughly $1,300,000 for the 2011 list of AmLaw 100 firms results in a “cost” of $722 per hour, assuming 1,800 chargeable hours per equity partner. A comparable calculation for the 2011 list of AmLaw 200 firms (with median annual profit per equity partner of approximately $650,000) yields an hourly “cost” of $361.

But, however you determine the cost, you'll undoubtedly find that the benefits (both tangible and intangible) of a CFP far outweigh the cost. For example, as one of my three collaborators for this article mentioned with regard to the in-person interviewing process: “Clients love it!” Now how would you quantify that?

And, since clients love it, agonizing over who will conduct the interviews should not preclude a firm from doing it. In fact, several of the firms we work with use a combination of in-house personnel and third-party consultants to ensure that they optimize the process and the results.

Summary

In conclusion, whoever the interviewer may be, s/he will want to continuously focus on three essentials:

1. The goals of the CFP itself (as distinguished from the goals of the firm and the respective client service teams, practice groups and/or practice offices), namely:

• To provide insights and observations to help convert good clients into great clients;
• To prevent current engagement problems from escalating into larger relationship issues;
• To assess the perceived quality of the firm's work and its service;
• To generate feedback useful in determining and enhancing competitive positioning.

2. A primary emphasis on uncovering vital client issues, with lesser emphasis on obtaining answers to a firm's set list of predetermined questions.

3. Most important, achieving complete candor from the interviewees.

Donald E. Aronson is CEO of D. E. Aronson Associates LLC and a member of this newsletter's Board of Editors. Don's firm conducts market research by interviewing executives of professional services firms' Key clients with a primary focus on Client Feedback. Located in New York City, he can be reached at 212-874-4181 or [email protected]. Copyright ' 2011 by D. E. Aronson Associates LLC