In previous posts, I’ve talked about how important it is for lawyers to become more responsive to client needs. One way that firms in other businesses create this kind of culture is by assuring that every employee understands the value of each customer.
In a 1990 Harvard Business Review article called “Zero defections: Quality comes to services,” Frederick Reichheld and W. Earl Strasser (p. 7) cited the example of a Domino’s pizza owner who calculated that the average customer in his franchise would, over the course of a decade, buy $5000 worth of his product, including ultimate deep dish pies, classic hand tossed pies, crunchy thin crust pies, buffalo chicken kickers and amazin’ greens.
In law firms, of course, the numbers are much much higher. When I wrote about Gerry Riskin’s advice for “bulletproofing crown jewel clients,” I explained the assumptions he usedf to calculate their financial value, including 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%. This lead to the conclusion that the net present value of a $250,000 client is actually $1,895,802.
For a simple way to communicate this, pick a client, look up last year’s revenues, multiply by 8, and tell everyone, over and over. Then watch service improve.
One of the best ways to create raving fans is to improve how complaints are handled. In the Jones & Sasser article I described in Part 1 of this series, they noted that: “Companies that excel in satisfying customers rank the ability to react when something goes wrong as one of the most important factors in satisfying customers.”
Client complaints offer enormous opportunities to law firms. At a minimum, they offer insights into what clients really care about. Even if a client walks out the door threatening to sue you, it teaches you something. And if you can keep him from walking out the door you may have one of your most loyal clients ever.
However you do it, you need to focus on turning your clients into raving fans. The Jones and Sasser article (p. 99) ended with this quote from Horst Schulze, president of the Ritz Carlton Hotel Company:
Unless you have 100% customer satisfaction – and I don’t mean that they are just satisfied, I mean that they are excited about what you are doing – you have to improve. And if you have 100% customer satisfaction, you have to make sure that you listen just in case they change… so you can change with them.
This material was adapted from my new book Legal Business Development: A Step by Step Guide, which will be published September 25 and can be ordered now on my web page.