I’m on vacation this week, so I’m sharing a slightly updated version of one of my most popular newsletter articles, unearthing an article that’s almost 20 years old and still fundamental to understanding client relationships. Enjoy!
Nearly 20 years ago now, David Maister (a now-retired advisor to professional services firms and author of several excellent books) wrote an article that distinguishes the relational and transactional views of client relations. Here’s the crux of Maister’s argument:
In The Trusted Advisor (Free Press, 2000), my coauthors and I pointed out that building trusting relationships with clients leads to many benefits: less fee resistance, more future work, more referrals to new clients, and more effective and harmonious work relationships with the clients.
However, many people have built their past success on having a transactional view of their clients, not a relationship one, and it is not clear that they really want to change. Stated bluntly, professionals say that they want the benefits of romance, yet they still act in ways that suggest that what they are really interested in is a one-night stand.
. . .
Most professional-to-client interactions involve little if any commitment to each other beyond the current deal. The prevailing principle is “buyer beware.” Mutual guardedness and suspicion exist, and the interaction is full of negotiation, bargaining, and adversarial activity. Both sides focus on the terms, conditions, and costs of temporary contact. Each side treats THEM as “different,” as “other.”
. . .
Moving from a one-night-stand (transactional) mentality to a romance (relationship) mindset is not about incremental actions, but requires a complete reversal of attitudes and behaviors. One approach is not necessarily “better” than another, but there is a real choice to be made.
In today’s legal economy, clients have more options than ever before. They can choose from a wide range of law firms (the size of firm and perceived expertise becomes only one factor to consider rather than the deciding factor in every instance), from numerous individuals, and even from outsourcing options that may rely on non-lawyers or technology. While transactions can be valuable, good client relationships can form a strong foundation for a practice. Relationships yield repeat business and referrals because they’re built on trust; transactions are won one-by-one, which usually yields only one-off work or entry to compete for each new piece of work. Building relationships certainly takes effort, but it’s effort that builds toward long-term value. Transactions also take effort, but it’s effort that usually doesn’t lead to a next step beyond the transaction at hand.
Consider this quote from the article:
The real challenge, however, is for all of us as individuals, not as firms. Transactions are common because they involve less hard work and demand fewer skills. Ultimately, however, they are not in the best long-term interests of either professional or client. (emphasis added)
Mutual trust will allow both sides to get more of what they seek than continued mutual suspicion. Relationships are not more “noble” than transactions, but where they can be created they are much more profitable.
If you’ve never asked yourself whether you want relationships or “one-night stands” with clients, go read Maister’s article and ask yourself now. The topic was ripe in 2005, but it’s absolutely critical today.