Solicitors must diversify and cross-sell to boost profits
In the next few weeks some friends of ours, who are farmers, will be opening a new marina and farm shop on the Trent and Mersey Canal. Having survived the foot and mouth crisis and BSE, it was clear that dairy farming, as they knew it, had changed, and they needed to rethink how they took their business forward.
In the same way that the farming sector has had to embrace the concept of diversification, are solicitors considering how else they can service their client base or better utilise their assets profitably?
In November last year, I attended the Law Society/SIFA conference, where a number of speakers highlighted practical opportunities for offering financial advisory services directly to their clients. Across all practice areas, do you know how much work you are passing to IFAs regularly and its approximate value?
In a previous life, when marketing a firm of chartered accountants, a merger with a practice that already incorporated an IFA opened the door to huge growth through the provision of financial advice. Given that the lawyer/accountant often generates a need for financial advice, it makes good sense to exploit that business opportunity, rather than send it elsewhere.
In the last two weeks, I have also met and spoken to two firms which have opened their own estate agencies, each creating another income stream and their own profitable referral source for conveyancing work and other related services.
From the client perspective, integrating your service portfolio means that you can develop the one-stop-shop concept and provide a really seamless service.
The obvious appeal of vertical integration to the law firm is the scope for cross-selling of additional services. However, how many law firms would consider themselves real experts at cross-selling?
In what other ways are law firms diversifying? Should there be more events exploring opportunities for diversification as a way of meeting competitive challenges in the market?
Comments
Go Online To Cross Sell
Really liked your post.
Increasing number of consumers decide their firm based on online listings.
One good option might be for a firm to buy out an online lawyer listing site, tastefully feature write ups/templates/blogs from their staff on the directory site, and have the site host a set of links that allow interested consumers to directly register and request legal assistance.
The directory would need to continue to function as a directory, offcourse, and live up to its promises to other firms listing on it. To avoid conflict, the brand that is highlighted on the directory site could continue to be the brand of the original listing website. The firm would benefit well enough even if it only functioned at the back end.
Online listings?
It's worth pointing out that the majority of people pick their solicitor by some form of personal or professional recommendation. According to most consumer research and specifically the recent LSB research, only 5% used an internet search to chose a solicitor. While the web is an essential element of promotions, it's mostly used to look up a solicitor the person already has in mind.
Online Listings And Cross Selling
Solicitors in Reading gets 15000
search queries a year. So I wouldn't
call this ONLY 5%.
(Even allowing
for Google's Keyword tool overestimating
this is a lot of people searching for
specific services).
And a lot of research is done online before
going with a recommendation.
Cross-selling is done badly in article marketing,
email footers and internally.
I have established that internal teams do not
like to refer clients in many cases and have
no formal system for cross selling. (Or reward).
With a cross-selling system in place, measurable
ROI from initial loss-leading clients, can turn into
a healthy profit. Particularly if a long-term automated
marketing sequence is in place.
Perhaps the biggest opportunity is a law firm
that's great at marketing that can charge other
firms for its marketing systems?
Would you like 5% more clients?
It's not really a question at all is it? Which Solicitor actually wanting to survive in the current economic climate would not want to accept 5% more clients at nil cost ? Given the remarkably narrow margin that many solicitors actually makes, that 5% could represent a massive increase in profit. What's more what is certain is that if it is indeed only 5% of clients who currently choose their solicitor by the Internet, it's going to be much higher in future years.
Faulty logic
Just because 5% off all clients pick a solicitor from the internet, it does not mean that your client numbers would increase 5% if you had a website. I could also mention the difference between a 5% share and a 5% increase: it is quite important.
Online Marketing and Cross Selling is the key
From the past few years, online marketing has been a profitable decision for many Law Firms. Any consumer though recommended to a particular Law Firm will still go over the internet and fetch for a best and cheapest available quote and compare. Therefore cross selling is really important and it is not a question of just adding 5% share or increase.
Therefore, keeping a good and updated website with registrations at different available channels is always a wise step.
It's high time law firms have
It's high time law firms have a serious look at their internal marketing structures and learn from accountancy firms which are able to cross-sell its audit, tax and accountancy services services without much fuss about partnerships gains for individual teams.Cross-selling need not involve flyers but rather a real "team spirit" within firms to promote their unique competitive edge. The "ABS" model would provide much room for flexibility for lawyers (given the conflict issues).
The Big 4 have always built their business upon those three core areas of accountancy. Law firms have rather focused upon the quantity of areas of practices , leading to lawyers with limited skills to offer to a client a wider array of services. I can't see why a tax solicitor may complement his services with those of a tax accountant ( already being in place within the Big 4 accountancy firms!). It provides the commercial solutions sought by clients in terms of compliance and tax-efficiency.
Most firms boast their ability to provide tailored and commercial solutions but those are intangible and quite vague. Apart naming their deals, participation in high-profile cases and providing online newsletters, what are other value-added services can a law firm provide to attract their clients?
Online marketing will be rather a battle of the name and viable because most clients would be seeking the cost advantage at the very outset ( such as insurance quotes, supermarkets deals, bargain prices, etc..). Statisctics are only guidelines but not determinative to determine one's success in the legal landscape
A change of attitude as well a well-thought business strategy remains the underlying fundamentals which need to be looked within for a better future.