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4 posts from February 2006

February 22, 2006

Bulletproofing your crown jewel clients – Part 2

When Gerry Riskin talked about reducing the risk of losing “crown jewel clients,” he said that action must begin with some hard choices. “You can’t superplease everyone at the same time! You need to discriminate.”

How do you know who to concentrate on? “It’s really very simple. Imagine your worst nightmare: Your assistant walks in and says that a client has asked to have all their files sent to a new firm. Who do you pray it isn’t?”

The next PowerPoint slides in Gerry’s talk showed several photos of Brad Pitt with Jennifer Anniston, then of Angelina Jolie, and finally of Brad Pitt with Angelina Jolie. Without going into any theories about who seduced whom, Gerry noted that many of the factors involved in a Hollywood seduction also apply in business.

When Fortune 1000 general counsels evaluate outside firms, they look for many of the same things that Brad and Angelina looked for in each other:

Cool offering (sexy)
Listening
Understanding needs
Caring (and showing you care)
Meeting needs
Being responsive
Handling problems

So if you want to start bulletproofing your crown jewel clients, start with that list. And the first action to take may be a client satisfaction interview.

Now if you’ve read this blog lately, you know that there’s been an ongoing discussion with other bloggers about the best tactics for client satisfaction surveys. Gerry stresses that the purpose of these interviews is to listen and learn, “not to sell, not to service, not even to advise.” The goal is to understand four levels of needs: routine needs, explicit needs, unmet needs, and latent needs. As you ascend through these four categories, each type of need requires more time to understand and assess, but is also of greater value to the client, and of more value in bulletproofing the relationship.

Gerry suggests that the interviews be conducted by the relationship partner plus a second partner, at the client’s place of business. He recommends that they prepare by completing “at least three full dress rehearsals interviewing a partner from the firm,” to get feedback on what went well, and what could be improved.

Gerry also offered a list of questions for the interview, which he described as just a starting point:

Please describe the top three ways you measure our performance.
How important to you is it that we know your industry? How do you measure that?
When you’re stuck in traffic and you’re thinking about the business, what issues are running through your mind?
What could we be doing that would make your life easier?
What could we be doing that clients like you may not yet have asked for?
How could we better use technology to be of service to you?
Are there any services that you think we are missing out on by not making them available to companies like yours?
If you were appointed the Managing Partner for a firm like ours, what would you do differently?

Bulletproofing your crown jewel clients never ends. The important thing is to take that first step. As Gerry summed it up: “It’s infinitely better to do a little than to do nothing.”

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Gerry Riskin is the co-founder of Edge International. He lives in Anguilla, British West Indies, with his wife Bethany, and his birds Kaliki (on Gerry’s shoulder) and Pekoe. Contact Gerry at riskin@edge.ai

February 15, 2006

Bulletproofing your crown jewel clients – Part 1

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The title of this posting comes from a recent talk by one of the best known figures in legal consulting, Gerry Riskin, the co-founder of Edge International. Unfortunately, I was not able to be at the Key Biscayne Ritz Carlton when he gave the talk at the Marketing Partner Conference on January 19, but I was able to talk to Gerry about his concepts and conclusions.

The topic fascinates me, because I’ve been wondering for a while why most law firms don’t seem more worried about losing their top clients.

Most experts agree that the legal marketplace is a zero sum game: when one firm wins new business, someone else loses it. So with all the time and money that some firms are investing these days in initiatives to sign new clients, shouldn’t the others be running scared?

Gerry’s talk addressed this very issue. “As the world becomes more competitive, there is an increasing need to nurture and protect clients from competitors,” he said. “No law firm can take their best client for granted… There are just too many things going on.”

“Should we worry? Yes,” he continued. “Do we worry? No.” One explanation: a senior partner who wants to protect a client must tell his peers that he senses some risk. In some firms, that’s like throwing blood into the shark tank. Or, as Gerry more diplomatically put it, “The environment does not foster the confidence to speak candidly.”

Gerry also explained his personal theory that “We all function under a cloud of self-deception.” If people worried all day long about the threats they faced -- from global warming to an avian flu pandemic -- nobody would get any work done. The result is that most lawyers don’t wake up in the morning worrying about losing clients. But maybe they should.

Gerry’s talk included some figures to stress the value of “crown jewel clients.” When a firm has a client that requires $250,000 in legal services per year, its value is actually much greater. To come up with a precise figure, you have to make some assumptions. Gerry assumed that the client will switch to another firm after 10 years regardless of what you do, and that the average interest rate over the 10 years will be 4%. Given those assumptions, the net present value of a $250,000 client is actually $1,895,802. If you want to compute a rough number for one of your clients, multiply this year’s revenues by 7.58. For example, by this formula a $5,000,000 client has a net present value of $37,900,000.

But wait, there’s more. If your big client refers another comparable account, the figure could double. And the benefits in industry credibility and learning can be priceless.

The obvious implication is that, as Gerry put it: “To let a good existing client get poached by a competitor is really really stupid.”

Next week’s posting will explain how to reduce this risk of feeling really really stupid.

February 08, 2006

Selling starts with a plan

In every business, effective selling starts with a plan that identifies potential customers, and how to reach them.

In a January 25th panel at the New York section of the Legal Sales and Service Organization, Carolee Swallie described the steps law firms and practice groups should use to create these strategic and business development plans.

The larger your practice, the more vital a plan is, and the more sophisticated it is likely to be. Swallie manages business development for the Chicago office of Kirkland & Ellis, a firm with over 1,000 lawyers. But the steps she described can be adapted by mid-sized firms, and even by solo practitioners.

A strategic plan provides a big picture framework for deciding what business to go after. It must be based on a realistic view of your firm’s strengths and weaknesses, especially in relation to your competitors. The plan will be built on a number of metrics, including revenues (gross and net), top clients by industry and by fees, revenue and profits per partner, the cost of a billable hour, and total billable hours.

“A little bit of common sense goes a long way here,” Swallie explained. “Know your firm, know what you are good at, know where you have holes in your experience… Have a realistic view of what you can actually accomplish over the next 12 months.”

The plan must incorporate legal and regulatory trends in the industries you target, as well as general business and growth trends. And you should begin by focusing on the clients you already have: “Actively going after new prospects should be left to year two or three of a bizdev plan,” Swallie advised. “Make sure you are getting all you can out of your current clients, before you start spending money and time on clients who don’t know you.” Her slides listed some basic questions to start with:

What work are we doing?
What work aren’t we doing?
Who is doing it?
What industry trends will affect the client?
What issues will their business face in the next 12 –24 months?
What is the client trying to accomplish over the next 12 – 24 months?
How can we help them reach those goals?

Then comes the hard part: planning measurable objectives, assigning people to achieve them and setting deadlines. “All the metrics in the world won’t help you if you don’t assign a person responsible, give them a due date, and make them accountable for completion.”

When I interviewed Carolee, she stressed that this is where plans often fall apart: “You have to measure behaviors. Are the partners going on more client pitches? Are they closing more? Are they keeping track of their sales pipeline? Are they bringing other lawyers from around the firm into their pitches? Are we providing the service our clients expect? Are the clients responding?”

What’s more, “Many firms have a hard time measuring whether their bizdev plans are efficient and effective. And you have to have both.” A lawyer who goes to 10 times as many client pitches is more efficient, but she will only be more effective if she closes new business as a result. “And this type of measurement can meet a lot of resistance in a firm if it is seen as a referendum on a lawyer's performance.”

How much time should you spend on all this planning? That’s a very difficult question, and it’s given me trouble in my own business. Like many readers, I’d rather stay in the office analyzing industry data than go out and start selling. And there is always the risk of putting too much time into analysis because there is more to learn.

Swallie summed up the need for action: “As Biz Dev professionals, at some point we just have to make some educated guesses and get started.”

February 01, 2006

The zen of selling by not selling - Part 2

Zen1
Part 1 of this post appeared a few months ago, based on a preview draft of Bob Krumroy’s new book “Please… Make Me A Little Bit Famous.” The book has since been published, and explains how financial professionals attract new clients by “becoming a little bit famous” within a carefully selected group of potential customers. I called it “the zen of selling by not selling” because the basic idea is to develop relationships first, and worry about selling later.

Since the idea is to insure that a large group of potential clients gradually comes to know, like and trust you, many of Krumroy’s ideas and examples are quite relevant to lawyers. This approach will fit some legal practices better than others, so this posting includes additional details to help you judge whether it could help you.

Krumroy’s book describes a “prospect attraction model” built on four elements: a prospect database, activating events that heighten people’s awareness of you and your capabilities, a characteristic uniqueness that sets you apart from the competition, and consistent contact 12 to 18 times per year.

Deciding who should be in your prospect database is a critical first step, especially for lawyers. You must start from a clear vision of the type of people who may some day need your specialized legal expertise, and then create a list of at least 100 to 200 people you’d like to do business with. Then start a slow and steady campaign to insure that they come to see you as “a little bit famous.”

The work may seem daunting. Even if you “only” contact 100 people 12 times per year, that’s 1,200 contacts, so you’re going to need to track them in Outlook, ACT, or another database. But nobody ever said selling was easy.

The activating events should “deliver highly visible, personal and unique experiential encounters throughout the year” (p. 51). Some should include doing favors for people, that have no direct selling component, such as taking digital pictures of an association charity event, and then sending a link other members.

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Krumroy’s book includes over 50 pages of detailed examples of activating events (and a quote from me on the back cover). The examples are aimed at financial professionals, and some will have little application to law practices (for example, you can probably skip the tomato giveaway on page 96 and the laminated luggage tags on page 128).

But the book also includes many ideas that you might be able to use. For example, for firms that want to establish themselves in a new niche, Krumroy explains how to conduct “interactive client briefings” (p. 129), structured dinner events in which you invite people from your target market and ask questions about their needs “just for the purpose of listening and learning.”

Characteristic uniqueness means finding a way to stand out from the crowd. If you want to get involved in a golf tournament, he says, don’t sign up to play or to be just another sponsor. Sponsor the watering hole to provide free beer and soft drinks. Take pictures and get to know people. If you want to sponsor something at a national convention, avoid the standard cocktail receptions and ads. They’re just a way to waste a lot of money seeming like everyone else. Instead, sponsor the morning coffee booth, hand out coffee cups with your firm’s name, and hold a drawing with a prize of a pound of coffee every month for a year.

Krumroy warns that no matter how well you plan activating events with characteristic uniqueness, you should not expect immediate results. Building relationships takes time, and you’ll need consistent contact, at least once a month. He recommends lots of emails, and says that even if people don’t open some of them, just seeing your name over and over can advance the relationship.

Should lawyers buy this book? I’d say read the first few books on my Amazon recommended list first, since those are aimed at lawyers and cover more ground. But Krumroy’s conclusion (p. 146) is definitely worth thinking about: “Creating a consistent contact strategy that delivers you to your prospect audience should be your top priority in sales.”