Cross-selling (Part 5 of 5)

In the new book Escaping the Price-Driven Sale, Tom Snyder and Kevin Kearns argue that changes in the economy are making cross-selling “more and more compulsory” (p. 122).  Although the book was written for sales professionals by two leaders from Huthwaite (the company that created SPIN Selling), it has many important implications for the legal profession.

One reason that cross-selling is so important these days is that “it costs five to eight times more to acquire a new [client] than to retain a current one” and that “if a [client] relationship is not advancing, then it will soon be retreating” (p. 129). 

Another is that “the consolidation of corporate America is not unlike the Cold War arms race – it grows and accelerates in response to the competition” (p. 123).  Clearly, lawyers have been swept up in this trend toward ever larger firms. And every time two law firms merge, it opens up important new opportunities to cross-sell to each others’ clients. 

However, the number of law firms who talk about cross-selling services is far larger than the number who actually succeed, in part because so many lawyers fail to look at things from the client’s point of view.   

The most fundamental idea in this book is that to succeed in today’s economy “sellers have to create value by providing insight” (p. 17).  The authors argue that powerful forces of commoditization are driving prices down in every industry around the world.  The best way to “escape these price-driven sales” is to develop “business acumen” and focus on how the solutions you offer increase clients’ revenue, margin, and/or profit (p. 75).  Have any law schools started to offer courses analyzing how legal tactics affect clients’ financial performance?  According to Snyder and Kearns, that is exactly what lawyers will need to do to succeed in the future. 

Their very definition of cross-selling stresses the importance of starting from the client’s perspective, “partnering with your colleagues who sell different…services to produce desirable outcomes for the client…. The proper mindset [for cross-selling] is not ‘I’ve got a truck full of [services] and I want to sell them all to you.’  Rather it’s a mindset that thinks in terms of customers with a splendid array of needs, all of which must be communicated within the seller’s [law firm]…so that the [firm] can meet as many of those needs as possible (p. 134).”

The book reviews several barriers to cross-selling, starting with one that is close to every lawyer’s heart:  risk aversion.  No one wants to risk an important relationship, so the first step in cross-selling is always to answer the question: What’s in it for me?  Of course, ideally there should be a financial answer, an origination fee for helping to bring in the business.  But whether your firm compensates lawyers properly or not, cross-selling also has a second advantage which may be just as valuable in the long run:  when you succeed in meeting client needs, you increase your own perceived value, and strengthen your relationship with the client. 

How do you do that?  Before anyone talks to a client about the firm’s capabilities, the lawyers involved must communicate with each other to identify opportunities for the client to increase revenue, margin or profit by consolidating some or all of its legal work at a single firm.  The discussion with clients should not begin until you can realistically explain “why it is a better bet for the client to bring all his business to you (p. 138).”

This will take time, effort, and analysis.  Quite honestly, I prefer action to analysis, and I think that as a group lawyers spend too much time analyzing business development possibilities and too little time following up.  But when it comes to cross-selling services, the analysis step is absolutely critical.

Traditional approaches to selling are based on building relationships.   Relationships will always be important, but these days providing value is more important.  So every lawyer who wants to cross-sell must begin by figuring out what’s in it for their clients.