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February 10, 2010

The keys to new business in a changing economy (Part 2 of 2)

Whether you choose to focus on current clients and referral sources or to spend your time looking for new ones, the marketing tactic that is most critical in this changing economy is increasing the value you provide.  This need is hardly limited to the legal world.  In his book, What the Customer Wants You to Know, consultant Ram Charan described how the internet and the global economy are changing the way customers think and what it means to people who sell: “[Businesses] are under enormous pressure to deliver value to their clients and their shareholders.  They are compelled to use the newfound power of transparency and overcapacity to drive down prices.”  One result is that the traditional tools of business development – “long-term relationships, golf games, skybox seats and theater outings” – are losing their power (p. 4).

The same trends have now come to the legal world, with a vengeance.  In a June 2009 survey, Altman Weil reported:
[There has been] a dramatic vote of no confidence from Chief Legal Officers.  Either many law firms just don’t understand that clients today expect greater value and predictability in staffing and pricing legal work, or firms are failing to adequately communicate their understanding and willingness to make real change.  In either case, it’s a big problem.
In interpreting this result and others from the survey, they noted that:
CLOs rated the importance of “relationships” with outside law firms at exactly the same low level, whether for critical work, important work or commodity work.  The personal element apparently doesn’t carry as much weight in the hiring decision in 2009. 
How do you deliver more value?  Value lies in the eye of the beholder, so it all starts with asking clients questions like this:
•    How well do we listen to your concerns?
•    How well do we understand your goals?
•    How well do we understand your industry?
•    Do we do a good job keeping you informed?
•    Do we explain legal issues in terms that are easy to understand?
•    Do you perceive us as genuinely committed to your business success?
•    Do you perceive our lawyers as prompt, responsive, and accessible on short notice?
•    Are our billing statements accurate and complete?
•    Do our invoices include an appropriate level of detail?
•    Do you think our fees are fair and reasonable?
When you ask these questions, plan to listen, not talk.  Experts say that when you are building business relationships, you should spend 50% to 80% of your time listening. But when lawyers meet potential clients, many think that they need to talk quickly so they can list all the wonderful things their firm can do.  This is a mistake.  The customer is a lot more interested in her own problems than in your capabilities. If she did not think you were good, you wouldn’t be meeting. So you need to devote most of your time learning what she wants and needs, and then act on what you hear.

To win new business in today’s tougher environment, law firms must ultimately change the very way they do business.  At a panel discussion sponsored by the Legal Marketing Association (LMA), consultant Leigh Dance suggested that firms should:
•    Prepare to be one step ahead by measuring and proving your value proactively.
•    Improve transparency in budgets and estimates and allocation of resources.
•    Demonstrate and promote efficiencies.
•    Offer value added services free.
Norm Rubenstein, another panelist at that same event, expanded on the value of offering free services, and recommended offering “a host of unbilled products and services dedicated to relationship development, including CLEs, intellectual property, and loaned staff.”

Marketing research in every profession has consistently shown that the vast majority of business comes from existing clients and referral sources, so if you focus on providing more value and defensive marketing, it will not only help protect the business you already have, it will also lead to new business.  The way the profession is headed, the best way to protect your future is to increase your personal book of business.

Marketing is the hardest work you can do in a suit, so you will be disappointed if you look for instant results.  But if you stay with it, prioritize relentlessly, and follow professional advice, you will get new business.

Who knows?  Maybe the changing economy will prove to be a blessing in disguise.  Maybe you’ll find that you’re not only good at marketing, you actually enjoy it. 

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