Client development starts with existing clients

The most probable source

When law firms ask for our help, they frequently request assistance with client development. As client development is a pretty broad topic, we need to drill down into their existing client development activities in order to fully understand their needs and opportunities. All too often the greatest missed opportunity is the lack of any standardized process for developing business from either (i) new clients or (ii) existing clients. The latter omission is particularly surprising as research (Strong, 2013) shows that “the chances of selling to a new customer are between 5 and 20 percent, while the probability of selling to an existing customer is between 60 and 70 percent”. To put it simply, existing clients represent the most probable source of new business for law firms.

In this blog, we will examine briefly (i) why existing clients are the best prospects for client development and (ii) what are the essential building blocks for turning existing clients into repeat customers of your firm’s services.

3 reasons why existing clients are the best prospects

1. Purchasing Influence Advantage

When clients decide to purchase legal services, they typically make this decision in stages, the most important of which are the following (Maister, 2014):

·         qualification stage: Can the law firm do the job?

·         selection stage: Do we want to work with these lawyers?

If a law firm is already working for a client, it possesses several advantages in the above stages (Rejeva, 2015). Such a firm has a better chance to go ahead without needing to participate in a competitive proposal process because

·         it has already proved its technical capabilities (so it can do the job),

·         it has already earned the client’s trust and confidence (which is definitely the most important purchasing influence), and

·         it may understand better the client’s need and concerns because of their past business dealings.

2. Lower Marketing Costs

Marketing experts say 80% of the business development potential of a law firm comes from existing clients; conversely, only 20% of the potential rests in the remainder of the marketplace (Bower, 2002). Marketers know very well that the marketing costs required to win new business from existing clients are lower than those necessary for obtaining business from new clients. In this case, the firm does not need to (i) research the client and its industry, (ii) carry out investigatory interviews or (iii) in many cases, make competitive proposals and commercial pitches. These activities are a major part of the new prospect sales process, but with existing clients a firm can mostly eliminate them.

3. Follow-on Work is a Treasure

Follow-on work refers to work deriving from a previous main engagement. For example, after a successful M&A transaction, a firm can offer to its client continued services relating to the man deal in order to harmonise labor contracts, commercial agreements or corporate bylaws. Being in a non-competitive situation, assuming the law firm has already proved its ability to deliver value for money, it is in a much better position to sell more services to its client. Significantly, this work is often more profitable than first time engagements from new clients.

 

Building blocks for developing existing clients

So, how do you get clients coming back for more? In our experience, firms can best tap their existing clients for more work if they make “client satisfaction” the cornerstone of their relationship with clients. You can find below three simple programs that will boost the satisfaction levels of your clients.

1. Post-Transaction Surveys

Although many firms are shy about asking clients for feedback, a firm-wide and systematic post-transaction survey system is one of the most effective and powerful marketing programs a law firm can implement. Such a system can measure client satisfaction and the firm’s improvement efforts relating thereto. Through the implementation of this system, the firm will

·         clearly signal to the clients that it is committed to delivering quality service; and

·         obtain (i) a picture on client satisfaction level, (ii) starting point to identify new opportunities and novel services / service areas and (iii) an additional tool to refine its ongoing business strategy.

We are always surprised by how many insights law firms obtain from such a program. As an added bonus, it is great to see the enthusiasm from clients when they finally get the opportunity to tell the firm about how it is doing and what it could do to improve its services.

2. Client Seminars

Seminars are always at the top of the list of effective business development tools for professional services. Although there are many types of client seminars, reverse seminars seem to be the most useful. In a reverse seminar, a client is invited to the firm to talk to the firm’s members about his company, business and industry. With a reverse seminar, law firms can reap the following benefits:

·         effectively deepen a client relationship

·         add to the business knowledge of the firm

·         offer a chance to identify future business development opportunities and

·         expose the juniors of the firm to business thinking and language.

If you want to try a reverse seminar, we have one warning. Do not use it as a sales opportunity. Clients really, really hate that.

3. Client-Specific Marketing Materials

Law firms typically focus on producing standardized marketing materials, such as office brochures, capability statements, lawyer bios and websites. More often than not, these materials are ineffective on existing clients because they do not reflect what is truly important to them. As an alternative, law firms should consider developing client-specific materials that address the client’s unique needs in a  highly personalized format. 

References

Bower, W. (2002) “Ten Keys to Success in a Small Law Practice” 2002, Altman Weil, Inc., Newtown Square, PA, USA

Maister, David H. Managing The Professional Service Firm. New York: Free Press, 2014. Print.

Rejeva, I. (2015) "The Business Instructor: The Goldmine In Every Law Firm Is The Existing Client Base." LegalTrek.

Strong, F. (2013) "7 Amazing Statistics For Law Firm Business Development." Business of Law Blog.