Peak Performance Strategies

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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.