I said firms need to look at themselves. Be prepared to do something different as a firm: offer new services and change your capabilities so they can be applied to new and/or different client needs. But above all, firms need to defend from the front. How? Look close to home. At your existing client base, and the opportunities it presents.
Client retention is the first line of defence. In the current economic and political environment, innovative law firms should be driven by the need to retain and prevent client defection. In times of stress, get closer to your clients.
It wasn't what he wanted to hear. As much as he recognised the importance of defending his firm’s client territory, he felt a more ‘strategic’ approach was needed. His firm was going to focus on winning new clients. In this instance, higher value, catastrophic injury victims. Only problem was, his firm was struggling to find a business development manager (and did I know any?) to go out and find this new business.
Without wishing to be critical, you have to admit it’s real needle in a hay stack stuff. Not only finding catastrophic injury victims, but also finding a business development manager who is capable of supplying a constant and sufficient source of them. PI is a tough market at all ends. To develop a strategy based on sourcing and servicing only the ‘juicier end’ of a saturated market is questionable. That’s without going into the benefits and pitfalls of hiring a non-lawyer business development manager.
The issue I see is that new clients are being seen as a panacea; get new clients through the door and everything will be alright. To me, there’s a lot to question here. To most, it’s the path of least resistance.
The attraction of new clients
Winning new clients is considered 'easier' than developing existing clients. It’s considered easier because the activities that surround new client acquisition are more detached. They are less intimate. Networking. Seminars. Writing proposals. Presenting at pitches. They are ‘arm’s-length’ activities. Trying to get 'more' from an existing client requires a closer and more ‘personal’ touch. Higher levels of trust and a show of interest in each client’s further and changeable needs. Lawyers and partners alike can struggle with this proximity.
The issue is compounded because law firms run 'minimal marketing' systems. Squeaky wheel, reactive systems that respond to external impetus. "I need a proposal document, quick!". Marketing time is quickly filled with reactive activities. Furthering existing relationships requires pro-activity. There is little time left for that.
From a law firm marketing perspective, there is an element of logic and structure to pursuing new clients. "I want 10 new clients per month". It’s easy to define. It’s clear. It has a deadline. Above all, there is a really good reward at the end. Apply some pressure on others to perform. Job done. And there’s a certain thrill of the chase with new clients. There’s an attraction with firms with getting something they don't have. There’s not the same thrill in nurturing relationships with existing clients. There’s no adrenalin rush.
Defending, protecting and getting more out of existing clients is seen as being a little more difficult; progress (which is difficult to define) is usually slower in bearing reward. It’s difficult to plan and involves lots of ambiguous tasks.
Client retention and development isn’t plain sailing. I’ve had too much first-hand experience to be so flippant. Nurturing existing clients is similar to the cross-selling conundrum. It has cultural barriers. Barriers that are inherent in even the most innovative law firms. It’s the 'rainmaker syndrome'. Reward structures based on getting new clients through the door. The classic 'over-reward'. Bonuses and recognition are usually tied to a new client rather than an existing one. That’s not the only issue. Scratch the surface. Most firms have available resource and marketing budgets for new clients and little or no budget for developing existing business. The idiosyncrasy being that once a client becomes the 'existing' kind, time or money spent on them shows up as a cost, which in turn then means lower profitability.
I’ve experienced how lawyers can become bored with the monotony of work for existing clients. No matter how diverse service lines can be, it’s always the same brand to work on day in and day out. I’ve experienced partners reaching saturation point with existing clients. The point in the relationship which causes creativity to become exhausted. And I know firms who have had the same couple of big clients for decades. Where the firm has become known as a service provider only to a few, removing the potential for growth of the client list because of stagnant reputation.
It’s all of these things that result in the under-exploitation of existing client opportunities.
Protect your existing clients: your opportunity providers
A firm’s existing client base can lead to many an opportunity, for a number of reasons.
First, the firm has already won the trust and confidence of its current client base. A bird in the hand is better than two in the bush. The firm already knows the client. The firm is more likely to be able to identify his or her concerns and needs than it could with a new client.
Second, as a source of opportunity, once clients have confidence in a firm’s ability they are more likely to employ the firm for other types of services. Existing clients are also more likely to become brand advocates and provide referrals - which benefits the firm in a number of ways. Referrals reduce the costs of obtaining new business. Referred clients come with a higher opinion and pre-existing trust of the firm because of the trust they had in the person who made the recommendation. This pre-existing trust gives the firm a head start on establishing a strong relationship with the new client.
In the money stakes, the cost of satisfying an existing client is less than the cost of attracting a new one. An often-quoted statistic is that it costs five times more to win a new client than it does to keep an existing client. I haven’t done the maths on the general level myself, but I do know that the cost of acquiring new clients is high, and it’s front-loaded. It’s the promotional cost of awareness and qualifying activities. Building comfort, investigatory interviews, competitive pitches and proposals and so on. Once a firm has obtained a client, not as much effort and resource are required to retain.
Another financial consideration that all firms recognise is that as a firm works longer with an existing client, the firm has the opportunity to integrate more juniors into the delivery of legal services. By building up client trust and comfort with the firm’s junior members, the hourly cost to serve goes down and profit margins increase.
Innovative law firms turn existing client opportunities into success
How should firms approach capitalising on their existing client relationships?
Firms need to continue building trust.
It’s hard to do. But worth it. Trust has to be earned and built over time. Trust is established through a firm’s actions. It is awarded to firms who have demonstrated credibility and expertise in a given area, honesty in how they portrayed themselves, and reliability having done what was promised. As much use and helpful as sending clients articles that relate to their business, providing seminars for clients’ staff, volunteering to attend clients’ internal meetings. These kind of activities are almost seen as a given these days in the lawyer/client relationship. To really deepen the relationship, firms need to add 'trust value' where it matters most by helping clients with contacts and referring business to them.
Build client knowledge.
Law firm marketing is about building client knowledge. Innovative law firms recognise that knowledge truly is power when it comes to retaining clients and building stronger relationships. In the new economic and commercial environments, there is no excuse for firms not to use market research to find out all they can about its clients and the environments in which they operate. Firms should be recording data, rich client data, through the appropriate information systems so that clients are never asked the same question twice. As a minimum, firms should be understanding the type of market the client is in, the products and services they offer, external and environmental issues that affect the client’s company, internal issues affecting the client’s business, the client’s business goals, client’s suppliers and satisfaction levels with suppliers, relevant decision makers and organisational chart and how satisfied the client is with the firm’s past efforts.
Once you have information, make sure you use it in an operational sense. Firms should be moving away from departmentalised areas of law into multi-disciplinary client teams that are built around the clients’ needs (part of the matching capabilities process).
Firms need to make their service more accessible.
For the past few years larger commercial clients have insisted on preferred supplier relationships with firms. They seek firms that are willing to provide better service and closer partnering as part of the organisation’s value supply chain. That’s where technology comes in. Technology is constantly improving. Client relationships should improve at the same rate as technological advances. Technology should be increasing the firm’s capabilities in servicing clients by integrating client and firm systems, providing more relevant information. Technology should help with service customisation, driven by client needs and expectations. But most of all, technology provides the platform for real time conversing one-to-one. It allows a firm to render its services digitally.
Firms should be making it easy for existing clients to do more business. Give clients every opportunity to communicate with wider members of the firm. We live in an open, communicative environment. Be local to clients. Provide hours of operation that match clients’ schedules. Have regular contact, informal and formal: face to face time, Skype time, coffee time, anytime. Twitter. Facebook. LinkedIn. Email. Web cams. Use it all. The firm should be doing everything it can to increase client contact. Create a solid social bond.
Certainly in relation to personal injury, my feeling is that unless the government makes a u-turn on its crackdown, run of the mill personal injury services may be seeing their end. But in terms of law firm marketing as a whole, as one door closes another opens. Sometimes there can be a reluctance among firms to accept that service lines become geriatric and eventually die. Firms should accept this and the search for new products and services should be a constant activity, ranking equally in importance with all other marketing functions. But importantly and more immediately, in the present competitive market environment, defensive marketing strategies are a necessary core business activity for the firm which it should be seeking to affect though improved client satisfaction, service and product quality.
Far from advocating moving away and ignoring new client acquisition, as a client acquisition specialist, I preach the need to adopt the right mix of acquisition and retention strategies. Innovative law firms recognise that they are separate and distinct marketing processes. A correct balance must be attained as should be the optimum balance of resource allocation too. Balancing the two is essential not only to record growth but is essential for the modern law firm to even survive. A defensive strategy to pursue a client retention programme is important and can not be questioned under such circumstances. However, acquisition of new clients also needs to be engaged with continuously in order to expand on the client base of the firm. Although a better balance in selecting resources for retention and acquisition may well mean a sustainable long term client management strategy at the core of a business strategy.
It truly is a time to protect and defend.