Keeping and growing existing business

In difficult economic times it is vital that law firms do everything they can to keep existing clients’ business.

Research by BTI Consulting Group in 2001 showed that 70% of clients switch lawyers because they feel unloved. Not because their lawyers are too expensive, but because they are purely reactive and too remote. In short, solicitors are failing to manage their client relationships.

Also, it is a well-established fact that it costs up to ten times as much to generate a new client as it does to develop additional business within an existing relationship.

Such analyses have been thrown into sharper focus in a difficult economic climate, which looks set to become even more challenging. But with the right approach, it is possible to retain and develop existing clients and generate new client business.

Dissatisfaction factor
No one likes to lose business. In tough times – when new business may be harder to win – maintaining business with existing clients is vital. A client’s need to change often arises from dissatisfaction with their existing lawyer, so stay in regular contact with them and monitor their satisfaction. Also, be proactive in maintaining contact with other prospects and monitor their levels of satisfaction.

It usually takes some time for the level of dissatisfaction to reach the point where a client wants to change lawyers, so it is important to spot and remove potential sources of discontent early. Check client satisfaction regularly to ensure your contacts are promoting good news to others in the organisation, particularly to senior people. Then use these conversations to proactively explore other opportunities – do not wait for the client to come to you.

Perceptions of value
Make sure your clients are aware of the value you bring – document good news and evidence of how you have added to their bottom line. This is necessary in all high-value sales, but is even more important in difficult times. If a client has no real perception of your value it will be much easier to change to a competitor, particularly if they appear to offer more.

Offer to sit down with clients and review current transactions and the relationship, then use this to reinforce value, as well as to pick up on any early warning signs that all is not well.

Keep in contact
With long-standing clients there is a risk that the number and quality of contacts will shrink and, in the worst case, this may fall to just one person. In difficult economic times, priorities change and decisions are often made at senior level. Make sure that you maintain contacts at all levels to be aware of forthcoming changes in policy.

Develop – do not maintain
Just trying to protect what you have is not the best way to keep business. Instead, actively try to develop business at your competitors’ expense. Attack is the best form of defence – change happens fast in a recession and cosy relationships are easily shattered. Find out what changes are planned and how you can build perception of the value of your services by helping your client tackle difficulties and be more competitive.

Invest as much time in keeping existing clients happy as you would in winning new business. Use client reviews to reinforce their selection criteria and why they chose you in the first place.

Expect price pressure
It is natural for clients to seek fee reductions and discounts in tough times, but it does not follow that you have to concede or respond immediately. Take time to consider how to respond and check the full cost of any concession.

Is price the real issue? Or can you help in other ways, such as phasing payments in line with budget constraints? In meeting direct pressure on fees, look creatively at one-off discounts rather than more damaging blanket fee reductions. Always trade for other things of value, such as better payment terms, and do not be fooled by the promise of ‘jam tomorrow’ in return for concessions today.

Remember, clients often rationalise suppliers in times of economic pressure to cut costs, so you may be in a position to win extra business for any concessions.

Watch your own cost of sale
Despite the temptation, do not chase every scrap of business that comes along. Qualify each enquiry to assess your chance of winning and the likely value of the work. Sell to your strengths and focus on areas where you have a strong track record. Also, check for bad news about your clients – in a recession, efficiency demands that you do not chase those who have no money or may not even survive.

Marketing
Now is not a good time to cut back on marketing spend, but you might want to review your strategy. Efforts on building the brand are important, but you need to focus on generating leads. Also, make sure leads are followed up effectively, because now is not the time to waste hard-won opportunities.

Clients want to buy from firms they see as successful, not struggling, so publicise good news.

Be hospitable
Budgets are often cut during a recession, so it is important to make the most of the money you do have for corporate hospitality. Develop plans before each event to decide how best to use the opportunity to influence clients and prospects, and make sure you invite the people of influence.

Choose events where you can have well-focused business discussions and take care about the type of events you organise. Clients and prospects who are struggling and suffering budget cuts are likely to have a negative perception of lavish entertainment.

Offer low-risk solutions
In tight economic times, clients are less likely to take risks – survival is top priority. Look for ways of reducing risk in the solutions you put forward. Try to offer small bites rather than facing them with a huge, costly decision. Can implementation be phased so that risk and cost can be spread?

In the round
The key to client retention – and the profitable development of your own practice – is to get close to clients, understand their concerns and oppor­tunities and take a proactive approach to driving their business growth.

Complacency and taking a ‘business as usual’ approach are the main contributors to failure. By actively embedding your business and nurturing relationships with as broad a group of decision-makers and influencers as possible, you become much more difficult to replace.

Kate Fleming is a director of HuthwaiteFleming, a legal-focused sales and business development consultancy. www.huthwaitefleming.com