Balancing the scales of client retention - client acquisition in legal
Vincent is Chief Executive of Verisona Law, an incorporated practice in Hampshire. He began working with the legal profession in 1991 as a consultant and since then has worked at local, national and international legal services businesses of all sizes, including two roles at the Bar, holding roles of Chief Executive, Business Development Director and Practice Director at legal practices located in London, Liverpool, Bristol and Sydney, Australia.
In a market driven environment, the focus is on growing the business by increasing market share in the existing market for services.
In a client focused world the concentration is on client retention. Here the rationale suggests that the highest priority should be the existing client because there are considerable cost benefits in keeping existing clients rather than recruiting new ones.
Both of these strategies are valid; indeed many firms employ one or the other (or a combination of the two) to significant benefit. But there is a missed opportunity.
Consider these questions:
- What proportion of your existing clients legal needs are you meeting?
- Do you know why they use you for some matters and not others?
The opportunity that you risk missing is that of increasing your share of your clients’ spending on legal services. Firms that have adopted this approach have achieved significant benefits:
- They are constantly improving their service levels to reflect client expectations and thus increasing loyalty
- They are able to become much closer to their clients; becoming more indispensable and increasing spend
- They are able to redesign internal processes, which will lead to even greater client service levels and improve overhead cost reduction activities
You must get to know all you can about your clients’ own businesses. By doing so, not only will you provide more valuable services but you will become more of a business partner. There are two distinctly different but critically important elements to this strategy. If you can assimilate them both successfully, you will be in a position to go beyond the traditional thinking of market share and customer retention. You will also be ahead of your competitors for the business.
Get the basics right
Examine carefully the core offering of the firm and consider how it could be improved. It does not matter whether it is corporate or private work; client satisfaction is the key. The problem is, clients will only rate your performance in what you presently do for them. They are not too good at rating what you could be doing for them. This suggests that your current method of establishing client satisfaction is actually causing you harm because by focusing on what you do now, you are prevented from innovating and improving and therefore from achieving increased revenue.
Traditional methods of assessing client satisfaction are at best misleading – you have to get to know client needs better than they know them themselves. The result is an increasingly loyal relationship and, more importantly, increased fee income without additional marketing cost
The objective then is to develop an even closer relationship with clients, which will lead to increased satisfaction and fee income.
Having got the basics tight, you can move on to developing the business by building on what you are already good at. Learn from an example in the financial services industry. A bank wished to target high net worth customers for very large mortgages. Rather than just use price competition, it created a personalised service with a dramatically different approach to selected customers. This strategy had two benefits; first, the strengthening of the relationship in a fiercely competitive market, and second the ability to ‘Premium Price’ and increase profitability in a market where competitors were relying on discounts to do business.
As we said at the beginning, there are two essentials to achieving increased share of your clients’ business.Knowing your clients better than they know themselves and then understanding yourself better than you do now.
This is of vital importance. You have to learn all that you can about your clients and their businesses. Then, you have to bring that knowledge back into your own business and use it to improve your own operational effectiveness. In this way, you will be more likely to improve present (satisfactory) performance levels to heights previously considered impossible or too costly. It makes sense to try and learn more about your clients’ needs, but shouldn’t you also be trying to deliver more of their business at the same time?
Client satisfaction measurements indicate how clients feel about you.
If you focus on meeting more of their needs, you get them to act; and actions are much more profitable than feelings.