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5 posts from August 2005

August 31, 2005

How much should you spend on marketing and sales?

Do you want to compare your spending on marketing and sales to other firms? In June, Law Firm Inc reported that the average firm spends 1.1% of gross receipts on marketing and sales. When the Legal Marketing Association surveyed 864 legal marketing professionals, they reported a figure more than twice as high: 2.4%. The difference is easy to explain, since LMA surveyed legal marketing professionals, and therefore automatically excluded firms that did not have a marketing person on staff.

If you want to be conservative, you can just try to keep up with those averages. But as competition increases, spending is going up. So if you want to survive and prosper in the next few years, you’ll need to spend more. How much more? When will this upward pressure stop?

I have bad news: The end is not near.

I base this conclusion on 20 years of experience owning a small business. Companies that develop and deliver sales training, as we do, spend so much on sales and marketing that 2% sounds like a joke.

According to Don Schrello’s book How to Market Training and Information, in the training business “marketing and sales costs consume one third of every revenue dollar.” (Full disclosure: I first read Don’s book 10 years ago, and was so impressed that I hired him as a consultant. He has since become a member of my Board of Advisors, and a friend.)

When Don surveyed training firms during a 15 year period of growing competition (1997-1992), he found that company marketing and sales expenses increased from a low of 23% to a high of 35%.

Good news for cheapskates: some companies spent much less. Bad news: I think they all went out of business.

In the training industry, there are a large number of companies that do good work. Customers have many choices, and quality is not a differentiator. Excellent service is a requirement for success, but growth is based on relationships and building trust. And in order to grow relationships and build trust, companies need to invest in marketing and sales. As Don summed it up in big bold letters: “Good training products are abundant and cheap. It’s good sales and marketing that’s scarce and expensive.”

Does that sound familiar? According to surveys conducted by Altman Weil (see "Is your firm really marketing?"), “almost all clients believe their lawyers do good work.” So reread the paragraph above and see if you think it could apply to the legal profession over the next few years.

Nobody likes spending money in an arms race, especially when that same money could be used for a trip to Naples or a new boat. Then again, when your competitors start using bullets, how much should you save by shooting arrows?

August 24, 2005

A new survey of legal marketing pros

Have you seen the Legal Marketing Association’s recent survey of 864 professionals regarding their roles and their compensation?

The results paint a picture of a specialty that is still evolving, where professionals are treated differently at different firms. They may or may not be invited to company retreats (one third always attend, one third sometimes attend, one third never attend.) A few always go to partnership meetings (13%), but most never go (45%). 31% of the respondents report to the managing partner or chairman, but 27% report to someone in adminstration.

The vast majority of the respondents wear many hats, and classify themselves as “marketing generalists” (72%). But the number that concentrate their efforts in a single area is growing, and the largest area of specialization is business development (12%). I predict that this specialization in business development will accelerate in the next few years, as clients continue to become more demanding, and the firms that master traditional selling skills are the winners.

About half of the firms (49%) did not have a formal marketing plan. But don’t worry, they probably had a formal marketing budget (82%). So they may not know where they’re going, but at least they know how much it will cost.

In this survey, the average marketing budget represented about 2.4% of gross receipts. That’s much higher than the 1.1% found in the Law Firm Inc survey I’ve mentioned before. But you’d expect it to be higher because this survey was limited to firms that had a marketing specialist, and the Law Firm Inc. survey included all firms. In a future posting, I will discuss the percentage spent on marketing and sales in other industries, and exactly how low that legal figure is.

August 17, 2005

Are lawyers starting to accept the word sales?

After my first sales call at a law firm, I asked one of the participants for advice on the best way to explore what other firms were doing. She suggested I join the Legal Marketing Association. Through the magic of Google, within an hour I learned that it was founded in 1985 to serve as “the voice of marketing professionals and attorneys at law firms looking to develop their practices,” and had over 2,200 members. A few minutes after that, I was in.

Some time later, I emailed her again to ask her impression of the Raindance conference, which I had found on the web. She replied: “I'm sorry to say I don't know anything about it.. If you do go…I'd be interested to hear your take on it.” Which was my first sign of how rapidly things are changing.

If you’ve read previous posts, you probably know that I did go to the conference, and that it was sponsored by the Legal Sales and Service Organization (LSSO) an organization “for professionals who recognize that business and client development skills must be cultivated to successfully sell legal services and retain clients.” LSSO was launched in August 2003 by Silvia Coulter of Coulter Consulting Group, Beth Cuzzone of Goulston & Storrs and Catherine MacDonagh of Day, Berry & Howard. All three were quite active in LMA before founding LSSO, and after: Silvia is a former national president of LMA, and Beth and Catherine are past presidents of the New England chapter. They did not want LSSO to compete with LMA, they wanted to supplement it with a new forum to focus on sales, client development, and client loyalty.

I recently talked to Beth Cuzzone about the founding of LSSO, the state of the profession, and the line between marketing and sales. She had a number of insights I’ll discuss in future postings about how competitive the legal profession is becoming, and how the emphasis on sales will inevitably increase. But the comment that most got my attention came near the end of our conversation: “Things are changing,” Beth said, “and the legal profession is ripe for sales experts from other fields to contribute.” Sounds good to me.

August 10, 2005

Stop marketing, start selling - Part 2

In Part 1 of this posting, I wrote about how appalled I was by the recent ALM survey data showing that large law firms spend more on marketing than they do on sales.

In talking to people about that item, I realized that some were misled by my use of the word marketing. I did not mean to attack chief marketing officers and marketing committees, simply because they used the word marketing in their titles. In fact, when I summarize a new survey from the Legal Marketing Association in a future item, I will include data showing that legal marketing professionals are frequently responsible for exactly the kind of direct selling that I recommend.

So it’s not the word marketing that I object to. It’s the act of putting too much effort into communicating with groups, and not enough into applying proven sales principles with individuals.

For example, consider a fictional law firm that invites clients to an in-house presentation about administering trusts. I believe that speeches like this are a great marketing tactic. In fact, I believe so strongly in their power that I’m offering my own rainmaking workshops this fall in the Boston area.

But giving the speech is just the first step. So the key question to my fictional law firm is: exactly what will you do after the speech? Sales pros look for reasons and excuses to meet with each and every person who attends a promotional speech. And they do it within a day or two of the event, because that’s when people are most likely to be receptive to a meeting.

But many law firms fail to do this, for a number of reasons. One is that it’s a lot easier to plan your next speech than it is to call people and follow up on the last one. Another is that when you are trying to make sure people remember you, it’s inevitable that sometimes you will become too aggressive, and be perceived as a pest. Even the most successful sales pros sometimes accidentally step across that line, which is no fun for anybody.

So if you want to avoid the unpleasantness of selling, spend your time and money on marketing to groups. Just keep polishing the wording for new brochures, and you’ll never have to pick up the phone to call someone who will fail to return the call. The only down side is that the best brochure in the world has never brought in new business.

In the 20 years I’ve worked in training, I’ve seen that consultants either learn how to sell, or they go out of business. In the past, the legal profession did not seem quite this harsh. The next few years will be a whole different story.

August 03, 2005

Is selling tacky?

Last week, I wrote about the legal profession’s overemphasis on marketing to groups and underemphasis on selling to individuals.  Here’s one underlying reason: many lawyers think that selling legal services is at best a little tacky, and at worst downright sleazy.

Everyone likes to buy, but no one likes to feel sold to.  In surveys of occupational prestige, the sales profession often ranks dead last.  And the history of sales includes plenty of reasons for this bad image.  Walter Friedman’s book Birth of a Salesman includes several hundred pages of examples ranging from the unethical (the tricks used by 19th century lightning rod salesmen, p. 30), to the downright silly (the Fuller Brush company motivational song, p. 227):

   Selling yesterday

   Selling the day before

   Going to sell today as I never sold before

   For when I’m selling

   I’m happy as can be

   For I’m a member of the Fuller family

But in recent years, leaders in the sales profession have developed new and different models of selling based on honesty, and on building long-term relationships by genuinely helping people.  Books like Stop Selling, Start Partnering, High Trust Selling, and Selling with Integrity explain how this high road approach works over the long term and is the only way to succeed with complex products and services, including legal counsel.

There are no magic tricks in these books; the approach takes hard work and consistent effort.  You’ll need time to find what works best with your clients, and what doesn’t work at all.  But by studying how successful sales people operate, these authors and many others provide a powerful source of ideas, examples, and advice that will help every lawyer who wants to bring in new business.  You don’t have to use the word selling, but to survive the next few decades, lawyers will be required to put more effort into sales.

So, to answer my question from above:  Yes, selling is sometimes tacky.  But it doesn’t have to be.

Are you too busy to learn about these positive new selling techniques?  Don’t worry.  In a few years, you’ll have plentry of free time, after more nimble competitors take away your clients.