This is the third in a series of four posts regarding contract retention. In the first post I outline the 3 Common Causes of Contract Losses. In the second post I deal with the 6 Steps to Improving Contract Retention. If you have not read either of these posts you may find it helpful to read these first before continuing. In this post I want to cover the 4 enablers of contract retention that are critical to your contract retention process.
No two contracts are the same and no post could ever provide a detailed and definitive plan of how to retain a particular contract. There cannot be a one size fits all approach, there are however, evergreen principles which underpin contract retention.
Running a Facilities Management contract is hard work. There are performance levels to meet, staff to manage, customers to keep onside, costs to manage and optimise and margins to maintain and grow (hopefully). As a contract manager you have to manage pressures from your own company, from the customer, from your end users, from your own staff as well as health and safety inspectors and environmental targets. There are reports to, write, distribute and present. There are management and review meetings and a hundred other things to keep you busy.
In any Facilities Management contract there will be problems large and small that you face everyday that vie for your attention. It is easy with all of these daily pressures and monthly targets to become fully absorbed with the day-to-day and not spend time and effort thinking about, and putting in place, actions that address the longer term. Franklin Covey highlighted the difference between the urgent and the important. Unfortunately we always seem to first attend to the small fire that is burning at our feet, rather than lifting our heads to deal with the wild fire inferno that is coming over the horizon. In the whirlwind of daily life, the urgent always seems to win over the important and before you know it 3 or 5 years have gone by and the end of the contract is imminent.
At the same time the world and your customer is not standing still. Market conditions are changing, new technologies being introduced. New competitors with new offerings are entering the market, new contracting techniques are being adopted. Your customer may also be changing, changing their strategy or ambitions, growing, having changes of management and direction. They are being faced with new challenges in their business and there are few things in the marketplace that do not change over period of your contract.
If your contract hasn’t changed significantly over this period and kept in line with your customers needs and the market’s best practice, then you are likely to be very out of date when contract termination looms. Your customer could be looking for drastic changes and a new supplier. They will be looking for a supplier that can deliver the much-needed change through new innovative and flexible approaches.
Even if you are delivering well and are performing over and above all of the KPI’s and SLA’s this is no guarantee of renewal. These are probably measures put in place three or five years ago and cast in stone ever since and have not kept pace with changes elsewhere. You need to be asking yourself ‘why should our customer choose us again’?
Contract retention needs to be underpinned by great leadership, skills, systems and measurement. Whilst all this may sound like commonsense it is worth reiterating that this needs to be delivered in the midst of the whirlwind of everyday operations.
1. Great Leadership
The contract retention effort will ultimately fail if your teams do not work together efficiently. The six-step contract retention process discussed in last week’s post, relies on your team’s ability to work together in a highly collaborative way to evaluate and measure the health of your contracts.
This is a process that is rife with the potential for confirmation bias providing an overly optimistic assessment of the contract health. Alternatively you may have a team that is unwilling to face the truth and a client that sees this contract as a lost cause. This process is complex and fraught with potential landmines.
Honesty and cooperation simply will not work without strong leadership from the top. Your efforts cannot be sporadic or a once off contract retention event. It must be an on going commitment from you and your company to your clients. If you want to be taken seriously by your client in your efforts to provide the best for them, you must invest in the process. The top performing organisations have dedicated teams that focus on contract retention and these teams have regular and in-depth buy-in from their senior decision makers. Whilst you may be leading the team, great leadership entails having the confidence in your team to be able to stand back from the process at key points to ensure that levels of engagement and buy-in from the team are at their highest. A team will not engage or accept accountability for results if edicts are engraved in tablets of stone and these are forced down on the front-line from the leadership.
Great leadership also entails understanding that the team is still responsible for day-to-day operations and that this is a huge obstacle for the team to overcome in order to deliver on the contract retention promise. The operations team will naturally gravitate to the day to day and this can overshadow any change efforts required by the contract retention initiative. In Chris McChesney and Sean Covey’s book the Four Disciplines of Execution (4DX) they elaborate on a methodology for achieving your Wildly Important Goals (WIGS) whilst in the midst of every day operations, something they refer to as the ‘Whirlwind’. 4DX is a simple but effective and perceptive approach to achieving the behavioural changes that are required to achieve the goal of contract retention. I will elaborate on 4DX further on in a future post.
2. Excellent Skills
The process described in the 6 Steps to Improving Contract Retention will require tailoring to suit your organisation, your contract and your client. Training your teams in these best practices is important, but so is your choice of the people that form the contract retention team. In the delivery of services our only truly unique asset is our people. We need to understand that the skills required to retain a contract maybe very different from those that have delivered that contract over the preceding three or five years. High levels of EQ together with a portfolio of soft skills are essential if you are to develop a rapport with your clients. The team involved must also be able to adapt their behaviour to the changing needs of the client and to be able to focus on results as well as work cohesively to deliver the identified improvements.
3. Efficient Systems
If you have a number of contracts in your portfolio, it is going to be exceptionally difficult to manage these without efficient systems in place. A customer relationship management system (CRM) will allow you to keep up with the communication between your teams and your client. CRM will also assist in ensuring that the contract retention process is being handled in a timely and organised manner. Most CRM systems will have a structured approach to your company’s sales funnel and the process of rebidding should be similarly structured. Suppliers often misread the existing relationship with their client and can be prone to complacency in the re-bidding process. A structured contract retention/rebidding process will ensure that not only are the right actions being taken but that the right people are responsible for these.
CRM systems should also be used to capture customer satisfaction and customer loyalty information. Other useful information will be a customer complaint history together with their rectification efforts. In addition to a CRM system some form of project management system would be advantageous to ensure that you keep track of progress against agreed actions as outlined in steps 4 – 6 of the contract retention process.
In my experience investment in automated reporting and business information management is a prerequisite. Significant amounts of time and resources are tied up in overly clunky and manual reporting regimes. Client’s are used to the ubiquitous nature of the internet and they want to have at their fingertips, real-time, credible information, upon which they can act.
Other areas where systems should be reviewed are financial, health and safety, compliance, and quality management.
4. Robust Measures
The whole process will get very confusing very rapidly without agreed metrics for managing and measuring retention. Customer retention metrics can be overwhelming in an environment where customers are free to shop around for services. Once both parties are committed to a contract this needn’t be the case. Whilst the metrics may be simpler they must still be robust and forward-looking and predictive. You’ll need to decide on what is important to measure and then apply a process like 4DX.
It will be absolutely necessary to undertake a comprehensive risk analysis in order to determine the contract vulnerability as part of step 1 of the retention process as well as for predicting the impact the losses may have on your commercial forecasts.
These four enablers are not the only catalysts that need to be in place to be successful, but they are essential, if they are not present in your team or your enterprise then retention of your contracts will be at risk.
Please remember that this post is Part 3 of a 4 part series
- Part 1 – The 3 Common Causes of Contract Losses
- Part 2 – 6 Steps to Improving Contract Retention
- Part 3 – The 4 Enablers of Contract Retention
- Part 4 – 10 Surprising Benefits of Contract Retention
In next weeks post we will examine 10 Surprising Benefits of Contract Retention.
I really value your comments in moving the debate forward. and so I would encourage you to leave your comments below or provide your insight on the Question:
What are the key issues you face when having to try retain a contract?
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