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The RRETT-Index as a Tool for Engaging Clients
This index is the result of research of more than 14 years on the prediction of client behaviour.
Initially it was designed for and used in the advertising industry
for a project in which an international company wanted to explore
ways of
retaining their clients for longer than the industry average of 3-5
years. At the time it would appear that after 3-5 years the clients
and/or the advertising agency were so dissatisfied in their
relationship that the relationship was terminated. Termination was a
very costly exercise for both parties. Added to the client’s situation,
there was the challenge of re-selecting an advertising agency, the risk
of the as yet unknown relationship, and the suspense whether the new
agency would meet the criteria of the client.
This
research was then applied in other service providing industries where
the top management of companies were serious about the quality of their
performance, as a party to an agreement:
They wanted to perform in such a way that the client would stay in a
lasting relationship with them. 5 factors seemed to repeatedly appear
from the interviews as indicative of what the input of the service
provider into the relationship with a client should be in order for the
relationship to be long lasting. These factors were reliability,
responsiveness, empathy, tangibles and timeousness.
Note:“The RRETT-Index is very specific to this client and
industry in which it functions. Also, this client is putting a high
emphasis on the philosophy and practises of "outsourcing". Their
business model and practises are about their core competences, which
are outsourced by their client companies.
For other industries and companies the index would be different and
would go under its own acronym. This is just one example of this
approach, and it would be unwise to copy it as is, since one would
create a false impression with the tail wagging the dog.”
Rationale
In deciding how to go about collecting the data, three important considerations acted as value-drivers:
1) The criteria that clients apply in deciding to do business change
the minute the contract is signed. Clients then switch to a second set
of criteria, which are identified by the RRETT-index (for more
information see the article “Cost Effective Client Management”)
2) It is this second set of criteria, in combination with the formal execution of the contract, which determines the possibility of repeated or sustained business with the client. My experience (see “Fourth Agenda Selling”) confirms the research reported in the Harvard Business Review (“Why Satisfied Customers Defect” by Thomas O Jones and W Earl Sasser Jr, in HBR-On Point product 6838) that satisfied clients are not necessarily loyal clients. Whoever else meets their dominant criteria will also satisfy them. The challenge for the service provider is to do what it takes to maintain a sustainable relationship.
3) The kind of relationship measured is what is described by the
philosophy of “outsourcing”. The client makes use of a service rendered
by a provider external to the client. The service provider is entrusted
with an important part of the client’s business. Therefore it is vital
to the client that the service provider has the core competencies that
is needed to render the service. The client is functionally and/or
strategically dependent on the “contractor” (service provider) In
addition to the Service Level Agreement, the mutual benefit of the two
parties is vital to the sustainability of their relationship.
The Variables of the RRETT-Index
Reliability: This is the trust that the client puts in the service
provider to deliver the specified or agreed output. It is also the
trust of the client that the service provider is capable and qualified
to execute the actions they agree on. The service provider needs to be
predictable therein that it will consistently execute the actions they
agreed on without any further urging on or co-management by the client,
in order for the client to trust the service provider as described. If
the client must “ensure” delivery through repeated requests or
management assistance, it considers the service provider to be
unreliable. But, if the client can request and feel assured that the
service provider will take care to execute the request in a
satisfactory manner, the client considers the service provider to be
reliable.
This is one of two critical causes cited as reason for deterioration
in, or termination of, a business relationship. The other is
responsiveness as described below.
Responsiveness: This is the willingness of the
service provider to react on the needs and requirements that are
important to the client. It is an attitude of concern displayed by the
service provider to make the values and priorities of the client its
own. Defensive or aggressive responses to complaints, or excuses, or
“can’t do”-statements by the service provider, are examples of low
responsiveness. Examples of good responsiveness are: to adhere to the
client’s requests; anticipating the client’s circumstances; taking a
serious solution-orientated look at the client’s requests; and
involving the client in the progress towards the final solution.
Empathy: This is the understanding that the service
provider has of the business of the client and of the seamless
integration of the service provider with the business of the client. To
implement an understanding of his kind, the service provider needs
information about the value drivers of the client’s business in order
to do contingency planning in co-operation with the client’s
management. Further, also, it is the fact that the service provider
uses this understanding to anticipate, plan and deliver outputs that
are significant to the client. The service provider should actively
gather the necessary information for this purpose. Does the service
provider attend to that which really matters to the client? If yes, the
clients perception is that their business is understood.
Tangibles: This is the information that the service
provider supplies the client with by its physical presence on the
premises of the client. From physically observing the service provider
on its site, the client draws conclusions about whether it conforms to
the client’s criteria for professionalism, effectiveness, sound
financial management, etc. Does that presence contribute to the
appearance of the client’s site? Does that presence comply with the
safety and other standards that the client tries to uphold, like ISO,
NOSA, or other designated internal criteria? Does the visible presence
of the service provider demonstrate the professionalism and identity of
the service provider to the client? From what is tangibly visible to
the client on its site, is the service provider a candidate suitable
for a partnership with the client, a party that the client would prefer
to render a service (bulk moving, for instance)?
Time to Reacting or Timeousness: This is the
client’s perception of how long it takes for the service provider to
react in order to execute actions that it agreed on with the client or
jointly decided on with the client. It is measured from the time a
request is made by the client, to actual delivery of the output by the
service provider. My research has indicated that this is a very
relative expectation: For one client “urgent” might mean a reaction
within the next few minutes, for another it might mean a reaction
before the end of shift. It is the responsibility of the service
provider to verify the time of delivery involved in a request, or to
negotiate a time of delivery that is acceptable to both parties.
The Score of the RRETT-Index
The scoring system is kept simple: 0=not complying with the particular
measurement; 1.sometimes complying with the particular measurement, or
only partially complying with the particular measurement; 2. complying
consistently and as agreed with the particular measurement. The score
for the 5 variables is expressed as a percentage expressing the
measurable quality of the relationship with the client. High and/or low
scores express the quality rather than the quantity of the relationship
between the service provider and the client.
Scores of 80% or higher indicates that, from a relationship point of
view, here is a working outsourced relationship. The service provider
is in touch with the clients needs, value drivers, business processes,
and the relationship is perceived as mutually beneficial. Language
reflects “us” rather than the “them” or “they” of
lesser scores.
Scores below 70% are indicative of tension in the relationship. Tension
affects the executable performance, especially with regards to mutual
involvement in problem solving. It is the platform to start playing “blame games” where
discussions about who is guilty takes more time than resolving the problem. Out-of-kilt
ratio of problem-analysis to
problem-solving leads to inadequate solutions.
Low scores (50% or below) are indicative of “us versus them” attitudes
accompanied by blaming reactions rather than constructive “we”-type
practices of problem solving. This is the contrast between an
“adversarial” and a “co-operative/partnership” relationship.
This is an
anathema to the success of outsourcing. Outsourcing, whether functional
or strategic, demands a co-operative/partnership relationship where
there is a seamless integration of two or more businesses.
Set out graphically, the score on the RRETT –index looks as follows:
Measuring of Impact on Client
The RRETT-index is indicative of whether the execution of the Service
Level Agreement by the service provider, is coherent with the image
that the service provider would like to project to the client, namely
to be a low risk partner that innovatively contributes to that part of
the client’s business that the client has entrusted to it. Every
service provider surely intends to be a preferred partner when it comes
to the service it renders.
The RRETT-index enables a service provider to prioritise the practices
and operations on the site of a client in a way that will lead to a
sustainable relationship. The relationship can only be positively
sustainable when the service provider consistently scores in excess of
80% when measured by the RRETT-index.
The RRETT-index is an indicator of whether a service provider sets and
reviews priorities in line with the needs and requirements of its
clients, thereby making its clients its business partners. Outsourcing
requires a special relationship between the service provider and the
client, and the RRETT-index is a measuring tool to determine whether
the service provider is complying in the terms that the client requires
and needs.
The RRETT-Index has been shown to correspond with fluctuating profit
margins between a contractor and it’s client. There appears to be a
positive correlation between the RRETT-index and extra-contractual
work, as well as the smoothness of renegotiating new work or a new
contract. When the RRETT-index is in the 80%+ the experience of
“partners” is expressed through a win-win of extra work and no-hassle
negotiation for new contracts.