Improving Your Processes Will Result In Satisfied Customers And Better Margins
Does this headline sound like an unattainable statement? I can assure you it is not.
Process optimisation in a Professional Services Organisation (PSO) and customer satisfaction are two sides of the same coin, and both can provide the same result, margin improvement.
Below I will highlight two crucial sub-processes within a PSO to justify my argument and show you how you can improve customer satisfaction and margin.
These sub processes are:
- Time from when work is done to when cash is received
- Identifying early warning signals from when the first budget is created to the last estimate to complete (ETC) and the final result of a Fixed Price project
The outcome of minimising time from when work is done to when cash is received
It is obvious that the faster you invoice the client after you have completed work, the sooner you will get your money and therefore improve your cash flow. But how does this improve your client satisfaction?
Let me relay a story from a colleague in a large Management Consulting company:
Think of a fantastic dinner at a very expensive restaurant. The food was delicious, the wine exceptional, the service second to none – you have just had a brilliant evening – but you also know that the bill will be “significant”. This however does not matter as the feeling of the magnificent dinner is still with you when you pay the bill.
Now think of a different scenario – you had the same fantastic dinner, but you receive the bill two months later. Now you don’t have the full memory and satisfaction of the dinner when you are paying. The only thing you think about is, did we actually get sufficient value for the money you are about to pay? Therefore a fast billing cycle is simply a win-win for you and your customer.
The other aspect of a fast billing process is that you can only achieve this if you have automated handling of project entries and provide a minimal number of errors throughout the process.
Again it is obvious that you will benefit if you can execute on this internally. But here comes the good news: Your customer also wants an accurate invoice with no errors. There is nothing more annoying from a customer’s perspective than to receive an invoice they either don’t understand or where they can spot errors.
When this happens your customer will have to set aside time to review your invoices, a task that is often put aside and therefore delaying the payment process. The customer will often request a credit note, but not before he receives a reminder. So instead of getting your money straight away from a smiling customer, you have just added one or two months handling time while adding absolutely no value to either your business or the customer.
Identifying early warning signals from when the first budget is created to the last ETC will ensure the best possible result on a Fixed Price project
One of the biggest issues for PSO’s is large fixed price projects, where they end up losing money. There can be a variety of reasons for this, but one of the crucial steps to improving the project is ensuring that you know as early as possible if there is a delay or budget overrun.
If you know it early on, you have the opportunity to make the necessary changes to bring the project back on track, but it requires constant and accountable handling of ETC. Nothing is more damaging to your reputation and your margin than not knowing whether you are coming in late; which will cost you money and cause disfavour.
Recently, I have been working with a number of clients to analyse these very processes. Our findings have resoundingly confirmed that there is a clear correlation between a consistent handling of budgets and ETC. If done correctly the resulting margin in larger fixed priced projects is greater, and as a consequence customer satisfaction is won.
So, if you are sitting in a Professional Services Organisation it might be the right time to review your processes before the possibility of a full up-swing in the economy. Perhaps a focus on preserving margins and raising your customer satisfaction levels, will have a long term impact on your growth no matter what the climate brings?
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