The most important trends in legal business development (Part 2 of 5)
Last week, I introduced the idea that trends in five areas—loyalty, relationships, process, price, and value—are transforming the legal profession.
The same trends are affecting many other businesses due to the pressures of an increasingly competitive global economy. Indeed, in the last twenty years most other businesses have already felt these trends far more than lawyers.
Last summer, a reader of a Business Week column (Aug 13, 2007, p 92) by Jack and Suzy Welch (of GE fame) asked, “Is customer loyalty dead?” Their answer: “Not dead, but different. Time was you could ‘earn’ a customer’s loyalty with tickets to a big game... [and] a few nice dinners.” Those days are over, according to the Welches. In “today’s fierce economy” there is a greater emphasis on price and on a “two-way approach” in which sellers are “fervently committed...to making your customers win big in the long haul, rather than just meeting their immediate demands.”
Sales gurus have been preaching the benefits of these types of client partnerships for more than 20 years, starting with two classic books: Robert Miller and Stephen Heiman’s Strategic Selling (1985), and Neil Rackham’s SPIN Selling (1988) which summarizes his twelve years of systematic research on over 35,000 sales calls. (For details, see my post “What lawyers need to know about SPIN Selling.”)
In 1994, when Larry Wilson published another book along these lines (Stop Selling, Start Partnering), he compared the changes in the business climate to “churning white water,” which is harder and harder to navigate due to globalization and the growing client perception that everything is a commodity. He began that book by arguing that all companies need to think differently about service and create “powerful relationships with your best clients (p. 1).” Selling is not about pushing services onto clients, Wilson said, but about “trying to understand and help clients solve their problems.” Value is in the eye of the beholder, so the only way to provide it is to genuinely understand what clients want and need, by asking good questions, and acting on their answers.
And that challenge just keeps getting harder. Last year, Tom Snyder and Kevin Kearns wrote in Escaping the Price Driven Sale that “Brand allegiance is virtually nonexistent in today’s hypercompetitive market.” They argue that to succeed in this environment, sellers must learn how to have a positive impact on one or more of five crucial financial measures: revenue, cost of sales, margin, expense, and/or profit. In essence, the seller must learn so much about the buyer’s industry that he can demonstrate problems, solutions, and opportunities before the buyer becomes aware of them. There’s nothing easy about it, but this approach will allow sellers to resist commoditization and charge a premium price. Indeed, this is the only way, as the title of the book puts it, to “escape the price driven sale.”
Are the harsh trends which have been transforming other businesses for the last 20 years really coming to law firms? Next week, I’ll begin to review the evidence for the first two areas: loyalty and relationships.
This series of posts is an expanded version of an article I published in the March 2008 issue of Marketing the Law Firm, titled "Legal Sales & Service: The Most Important Trend in Legal Business Development." To download a .pdf file that includes all five parts of this series, go to the Free Resources section of our web page.