Tenacity Podcast

A 30-minute webinar record with KSU, "Starting the Climb Back."

A discussion on ways we might emerge from the disruption of this pandemic (or any crisis) as a responsive and empathetic partner. We hope that the extraordinary commitment you can demonstrate now will serve to make the relationship stronger after emerging from the crisis period than it was when we entered it.

A Conversation with Tenacity Founder John Gamble

Let's get started.

First, you should know Tenacity is the world's leading client retention firm. Our Clients for LIfe client retention process is protecting over $24 billion in management contracts...

Hello World! It seems like a lot of water has passed under the bridge since a 21-year-old Tiger Woods used these words to announce the start of his professional golf career 14 years ago. Indeed, Tenacity® was already 13 years old when Tiger announced – we’re just saying “Hello World” anew today, because things have changed so much in our world (let alone his — OK enough said on that!).

Once upon a time (1984 to be exact) I was a relatively new VP of Marketing for a large Division of one of the country’s best-known service management organizations, headquartered in a major northeastern city (known for cheesesteaks).  My fellow Atlantan and good friend Steve Wurzbacher had joined the company about three months prior.  Together, we were off to conquer the world of contract service management.

We think it’s usually a good thing when people say, “Interesting, I like the name of your company.”  We get that a lot, actually. Answering the follow up question is instructive too, “So, why’d you name it that?”

In early 1995, John and I gave a keynote address to a Partner’s Conference at PriceWaterhouse Coopers.  The PWC Vice Chairmen, who had sort of accidentally happened upon our first book (“What Your Clients Won’t Tell You and Your Managers Don’t Know”) had arranged for the speech and clearly knew very little of what he had gotten himself in to.

Let's start small by talking about a billion. That's billion with a "B." My wife Bonnie (that's also with a "B"), who recently took early retirement from the Coca-Cola Company, has been a prolific speaker on the subject of meaningful work.

Lead, leader, leadership.  Do these words really mean anything anymore – particularly in the way that they are used when companies and organizations go about promoting themselves?  Look on the website of virtually any company or enterprise you can think of and one or all of these terms will almost always be used as an adjective to describe themselves.  Kind of all gets lost in the translation and ignored in what becomes little more than white noise.

Are you over-investing (in acquiring new clients)? Probably.  At least if you fit the pattern of most service management companies we encounter.  The notion that growth comes from the next new client you sell is fallacious, that is, if your client retention house is not yet in order.

Most firms go to market focused on two primary pillars: client satisfaction and selling new business. Legions of literature and faddish management paradigms have emerged to guide companies in pursuit of these two goals. And, they’re important. It’s just that they’re not sufficient to differentiate a service-based company from its competitors in a manner that generates eye-opening profit improvement and category leadership.

I miss Detective Sargent Joe Friday and the show, "Dragnet." It harken back to a simpler time of moral clarity when truth wasn't quite so relative.

The legend is that Dr. Albert Einstein, while at Princeton in the early 1950's, was asked by a student, "Professor, what is the most powerful force in the universe?" He is reputed to have answered, "compound interest."

We have to give David Letterman the credit for inventing, or at least popularizing, the “Top 10” idea. In many endeavors, it really is a sound discipline to thoughtfully list out and prioritize the reasons that you may want to do something – particularly if what you are considering portends great impact or requires a high investment.

Do you remember back to the 80’s and the corporate raiders? The Michael Douglas portrayal of Gordon Gekko, made famous in the 1988 Oliver Stone movie “Wall Street”, was symbolic of the real life “Barbarians at the Gate”, describing people like Henry Kravitz, Carl Icahn, Michael Milken, T. Boone Pickens, etc. They used a lot of other people’s money (hence the “leveraged” in the term LBO) to acquire companies – many of which were mismanaged, bloated, vulnerable, undervalued or all of the above. Milken, in particular, created mountains of capital available for investment that allowed for new frontiers of success and innovation.

So back to last week’s podcast – yours truly is on the hook for roughly triple my net worth as a participant (twice-removed) in a management buyout – having outbid the modern day iterations of Gordon Gekko to make the deal. Financial (not to mention personal) Armageddon is feeling like a real possibility here.

YES, IT IS! You don’t think so? Picture yourself at an operating forecast meeting. You’re seated around a conference table. There are six of you, including the boss. She has just put that very question on the table for discussion – “Do you think that it is possible to retain 100% of our clients this year?” Awkward silence. “Do you think we should plan for attrition?” More silence.

As we prepare to engage in the battle for client retention, client satisfaction is a really big bullet. I’d sure want to have it in my arsenal as we take on the challenge of retaining clients. The problem is, that client satisfaction in and of itself, is not enough to guarantee success. At worst, overreliance on a client satisfaction metric or annual survey can be down right dangerous. Here’s a quick story:

Tenacity believes in the principle that 100% client retention is possible and should be the goal of every client we work with. Over our more than 30 years in business, we have achieved that goal, having never lost a client for cause, or been replaced by a competitor, if indeed there was one to be found.

To My Brothers & Sisters in Sales: I know you feel betrayed. I know you think I’ve gone to the dark side. But you know me, you know my credentials: (P&G, Aramark, bonafide sales and sales management pedigrees). Trust me, I haven’t abandoned you. In fact, “Clients for Life®” can make you even more effective. Wait – wait – let me explain:

Go ahead and Google “Hunters and Farmers”.  There is an astonishing amount of information and opinion about this concept of building and managing a sales organization.  It almost feels obligatory that we weigh in on the debate and take a position on the controversy.  Of course, we would never shrink from the task.

Way back when, long ago, John and I were new executives at a large, well-known and highly respected contract services management firm. We happened to be in the offices one day, when a team of operators, who had just had a contract terminated, were arriving to meet with executives and other staff to debrief and to plan for the closing. We were stunned to witness their attitude – happy, light, and celebratory! The polar opposite of what we would have expected.

What We’ve Learned and What We Believe. Recently, John and I got together, along with two additional Tenacity Partners (Marty and Randy), to spend a day with a diverse group of senior executives. Some knew us and had experience with our firm, others were hearing from us for the first time. They represented a range of industries and companies, but all shared a high-level interest in best practices around account management and client retention.

We believe that effective account management stands firmly on a balance of three essential pillars: 1) Understanding and Managing Client Expectations – Expectations are the key drivers of client satisfaction. Ultimately, people make value judgments about products or services based on how they actually perform versus their expectations of how they believe (or are led to believe) they should perform. Operating plans must be built and executed to consistently meet and exceed client expectations. Consistently exceeding prioritized corporate expectations drives provable and sustainable value for the client.

We’ve all heard the rationale, “No news is good news.” Sometimes that’s true. If you don’t hear from the IRS, that might be a good thing. However, no news is seldom good news when it comes to client relationships. Our experience, over many years of working with leading service providers, is that generally the sheer volume of communication that transpires between the parties who have entered in to a contractual relationship is directly correlated to the health of the relationship. Even if the client is complaining or sharing negative feedback, it usually indicates that they care about what is happening and, that as difficult as the situation may be, they haven’t given up on it.

I wonder sometimes if the 80/20 rule must be one of the natural laws. I know that it was Vilfredo Pareto, an Italian economist, and not Newton or Galileo that came up with it, but it’s amazing how many things in life (and in business) conform to it. As background, Pareto first noticed that 80% of the land in Italy was owned by 20% of the population. Shortly thereafter, he realized that 80% of the peas in his garden were produced from just 20% of the pods.

Usually when we start a Clients for Life client retention process training class, we display some quotations around the room that we find, and hope that participants will find, instructive and inspiring.

The account management training embedded in the clients for Life client retention process is grounded in the reality of the importance of expectations in governing business-to-business relationships. Simply stated our clients don't judge us on what we do. They do judge us on what we do relative to what they expected us to do.

While preparing for a recent class at The Tenacity Center at the Cole's College for Business at Kennesaw State University, John and I had extensive preparatory conversations with the company’s EVP to ensure our teaching was tailored to their needs. Interestingly, one of their biggest concerns was managing the Expectations Paradox with their clients. We don’t hear that a lot.

Expectations are immensely powerful. The provider’s ability to consistently meet and exceed the expectations that the client brings to the new relationship is the key driver of value. Committing to a process driven methodology of eliciting these expectations, refining them to specific and measurable terms, then prioritizing them into a single set of time sensitive corporate expectations is critical to both a successful start-up and to a successful long-term relationship.

Occasionally we’re asked: “Tell me about Clients for Life®”? One answer would be to say that, Clients for Life is a formal process of client retention. At its heart, however, Clients for Life is an expectations-based, value creation model. We teach firms to create sustainable value, by understanding and meeting their client’s corporate expectations in a way that is specific, measurable and prioritized. Expectations are highly important to the successful management of client relationships. They are the key drivers of value. Did you know that there is a psychology of expectations and how they are formed? Expectations come from two sources, communications and experience.

Your firm is positioned right where you want it to be. You’re leaving a wonderfully successful Expectations Meeting with an important client. All members of the Web of Influence®, on both sides, were in attendance. You had very good news to present about the prior year and your performance against the key expectations you had elicited 12 months ago. Importantly, the new set of expectations is very compatible with your capabilities. They are specific and measurable and the clients easily prioritized them, while agreeing that their successful achievement would create meaningful value for them. Life is good!

We know that clients judge us not on what we do, but on what we do relative to what they expect us to do. Understanding client expectations is really important. Yet, once we know what their expectations are, we still haven’t obtained all the information we need to succeed…unless we insist that the clients prioritize them.

PostMortem Audits (PMA’s) are one of our least favorite things to do at Tenacity, yet they are arguably the most valuable service we provide to our clients. The PMA involves a Tenacity interviewer meeting individually and face-to face with the key client personnel who were involved in the decision to terminate our client’s contract. It can be gut wrenching — dissecting a failed relationship. In a divorce you might say the love is gone, the commitment broken, the magic lost. In a business relationship, usually the value has gone, the trust compromised, the enthusiasm waned. Ultimately, value is the key word and the primary driver of retention. Value doesn’t have to be complicated – in fact it’s a pretty straightforward equation: V = Q ¸ C (Value is equal to Quality divided by Cost).

Most of us can think of a question – or perhaps several questions – we’d prefer never be asked of us. That can be true in our client relationships too. Picture, if you will, an account we’ve served for years. Like most clients, financial pressures intensify from time to time. They are thinking critically about their costs, staffing, overhead and general productivity. They take seriously their obligation to be productive managers and prudent buyers of goods and services. Everything is on the table.

Do you ever wonder if your son or daughter thinks you are a sage and wise as you thought your own father or mother was? I hope so but I do wonder. By the way, does it make you proud to come to the realization that your own son or daughter is wiser in many ways than you have ever been? Here's wishing you that experience, which I am blessed to have regularly.

We often hear from our clients that they feel a need to penetrate higher up in their client’s Web of Influence® i.e., to have better access and stronger relationships with the more senior decision makers in their client’s organizations. We agree, having observed this shortcoming / opportunity many hundreds of times in FreshEyes® Reviews and PostMortem Audits. We often find that the problem is not so much with the clients, but instead with the service providers. Possibly, because a service or function is outsourced to begin with, our clients may feel it is “non-core” and less important to executives in the overall scheme of things. Often they are a reluctant to ask senior executives for the time and attention necessary to optimize the relationship and facilitate vital communication. They’re too often and too easily intimidated.

“People don’t care how much you know about them – if – they know how much you care about them.” I don’t remember who actually said that, in order to attribute the quote – maybe Harvey MacKay, but at Tenacity, we believe this is largely true. Haven’t you ever been flattered by someone you know, but maybe not terribly well, when they remember something about you that you find surprising? That’s happened to me more often than I’d like to admit, particularly if I have very little recollection of comparable details about them. Surely we had a conversation some time ago and shared this kind of personal information with one another – our kids, our work, our interests. But they remembered and I didn’t – or maybe I was just too self absorbed to have asked in the first place. That’s definitely possible too. Nonetheless, I’m really flattered because they’ve made me feel as though I’m important to them. It’s nice to feel valued. It’s really nice to make other people feel valued.

Tenacity’s Founding Partner, John Gamble, is probably the most creative – out of the box – thinker I know. Who else would tune in to the Discovery Channel to watch a documentary on a gigantic and morbidly frightening spider, dwelling deep in the jungles of some hopelessly remote country (I hope never to visit), weaving a web as large as my house and think “Wow! – What a great metaphor for the way we should be thinking about our business relationships!” Only John.

It’s interesting (to me at least) that when I have a set schedule -- when I’m expected to write this podcast -- I find myself becoming much more observant about things, people and events. Oftentimes, these observations are ‘podcast-worthy’. (Should be a word.) It’s a bit like pastors. More than once I’ve heard a pastor, upon hearing an interesting or inspiring story, say “That’ll preach!” Here are a couple of random observations on relationships and interpersonal dynamics:

I think some of the great television commercials are true works of art. Those that spring to mind are Volkswagen’s (How Does The Guy Who Drives The Snowplow Drive To The Snowplow?), Coca-Cola’s (I’d Like To Teach The World To Sing) and Bob Uecker for Miller Lite (“I Must Be In The Front Row!”). My personal favorite though is every Budweiser commercial that features the Clydesdales at Christmas. A little searching on YouTube can readily stoke some very worthwhile nostalgia from these classics.

You know, it sounds so simple. Clients really want only two things from you. 1) solve the problems you were hired to solve and 2) bring some innovation to the management of the service. Okay. So how do we know what problems are important to solve that simple we've asked them in the context of the meetings. We've held around their expectations. In fact, not only have they told us what problems are important to solve. They've told us what order to solve them in remember because we've insisted they prioritize the list.

Sometimes the very best ideas are birthed on the backs of napkins or envelopes. An observation or idea becomes a picture in the mind’s eye and begs to be captured at the exact moment it crystallizes, no matter where you may be at the time. That’s the very nature of a revelation and that is what occurred when our founding partner (John) first sketched out the graphical depiction of the typical lifecycle of a service management relationship, a concept we’ve come to know as “Revelation X”.

One of the most dangerous occurrences in any relationship, including a B2B outsourcing services contract, is when the parties have fundamental differences in the way they see the same situation. Given adequate understanding, discernment and communication, that doesn’t have to happen. But in the world of business, it too often does. Let’s sketch this out as we go deeper into the service lifecycle. In the diagram that follows, first sketched on the back of a napkin in 1998, the X-axis represents “Time” while the Y-axis is High and Low.

Picking up from out last podcast, not only does this really happen, it will happen to every single account you have if you do one thing.  And, that one thing?  That’s if you do your job well! As with many things, there is more than one way to look at this graph.  When viewed from the service provider side, this is a great outcome.  We’ve successfully solved / reduced the clients problems and we are returning increasing revenues and profits to our firm.  This is great performance and exactly what we are trying to achieve.It looks different, however, from the client’s vantage point.  Once the lines have crossed, clients see a smoothly functioning / low problem operation that they are paying a great deal to maintain.  As time passes, we’re farther and farther from the hard work and massive value we created at the opening.  It’s natural for clients, who are always looking to trim costs, to begin to wonder, “What have they done for me lately?”

For those of us not quite old enough to remember the late great Karl Malden commercials for American Express, again, I refer you to YouTube. Search for "Karl" (with a "K") Malden American Express commercials. “What WILL you do?” Great stuff! I think back to those commercials when I consider the dilemma of Revelation X™. Here, we’ve been doing a great job for our client – working hard and solving the problems they hired us to solve. At the same time, we’re doing an equally great job for our company – bringing operating efficiencies and fee increases that enhance our income and margins. We’re blissfully anticipating “Manager of the Year” awards while our client is struggling to remember just what they’re paying for and exactly what we’ve done for them lately. The “Value Gap” is staring us squarely in the face and we don’t even see it. But our contract is now at risk. “What will you do?”

Sometimes when you think the news can’t get worse, it does. As we’ve seen over the last three podcasts, we’ve done our job exceedingly well – solved the client’s problems and increased our margins. Still, due to the inevitable passage of time, fewer problems become the “new normal” and the client perceives a widening “Value Gap”. We’re looking at the world through a very different lens from our client and, if we fail to see things from their perspective, we’re vulnerable.

You may remember he Polar Vortex has the attention of all of us during the winter of 2013. We were seeing record low temperatures, broken pipes, robust natural gas futures and arctic icebreakers frozen in place. The climate is definitely changing, but we’re beginning to wonder in which direction! If you recall from the immediately preceding podcast, the business big chill occurs when we experience a client contact change near the point where the Revelation X lines have crossed and the “Value Gap” is emerging.

Talk about a loaded question!  How much is too much?  How would we know?  How will our client know? Let’s revisit Revelation X again.  Last week we talked about the red line (the “Problem” line) and its role in closing the “Value Gap”.  Well, there’s only one other line that creates the “Value Gap” and, of course, that’s the green line (the Fee / Profit) line.  Whenever the green line goes up, value will decline, unless there is a commensurate quality improvement that is real and recognized.