MARKETING YOUR PRACTICE TODAY: A BUSINESS-MINDED APPROACH TO BUSINESS DEVELOPMENT
TARGETING THE SUPERSTAR CLIENTS
Every law firm is trying to operate more economically, which includes maximizing limited business development resources. In this area, law firms could definitely benefit from a more objective, corporate-style approach. That, however, means they need to reevaluate how they view their client base as a whole, in terms of positioning, prioritization, expansion and retention.
Most law firm business development efforts tend to be ad hoc and opportunistic, with the efforts often conducted in an individual attorney or practice group silo. Most businesses, on the other hand, take a holistic and systematic approach in selecting the clients they want to get, engage further and retain for the long term because those clients (1) are profitable and (2) have needs that fit with the current and future strategic direction of the business. Using a systematic approach to targeting clients for additional work increases the likelihood of not only obtaining the initial work, but also expanding client relationships and improving retention.
For most industries—from consumer products to professional services—this approach involves client segmentation and analysis. Such segmentation carefully considers the various niches where products and services are highly likely to add value and is often a key strategy for establishing brand recognition. Companies adept at this often start by focusing on historical patterns of existing clients and applying lessons learned to identify high-opportunity or high-risk clients. Understanding the characteristics of today’s premier clients can, in turn, help identify latent premier clients, or ones who are more likely to purchase additional products or services.
From there, businesses can better focus on improving the profitability of client relationships by ensuring a direct link between their investment (of both time and money) and the value of the relationships. The business gains a clearer focus by identifying with whom to work, and with whom not to work. Segmentation can also help businesses match expertise to the issues affecting high-value clients, grow new areas of expertise and provide extraordinary levels of service.
Law firms can mirror this model, too. By focusing on the right clients, building more expertise in their unique industry issues and reducing the number of clients that do not fit into priority segments, they can build a much deeper understanding of client issues and communication preferences—elements at the core of strong client service. Plus, knowing which clients to pursue will enable firms to stop or curtail less-productive marketing and business development, thereby saving considerable time, money and mental effort. Here is how it begins.
Segmenting the Client Base: Getting Started
The first step is to focus th e firm’s segmentation efforts on current clients who are either high-value ones or likely to become high-value ones, a process that must encompass both objective facts and issues of strategic importance to the firm.
Identifying the first group, the firm’s existing high-value clients, is fairly straightforward. Your current high-value clients, or “superstar” clients, are those who have trusted the firm with a great deal of legal work consistently over many years. Since firms also place higher value on work of particular types and work that is not significantly discounted, those characteristics are factored into identifying high-value clients as well.
The second part, identifying clients likely to become high-value ones, is more complex. An important initial step here is to conduct a brainstorming exercise to share all ideas without consideration of their viability. It is essential to think about many aspects of what a future superstar client might look like. Usually, clients who display one or more of the following characteristics should be considered potential high-value ones:
- They have a growing amount of legal work in an area of firm expertise.
- They are loyal to the firm but provide substantial high-value work to other firms.
- They provide profitable work—i.e., invoices are promptly paid and not substantially discounted.
- They are within key strategic industries for the firm.
- They are showing signs of rapid growth early in their business life cycle.
- They hold especially strong relationships with multiple individuals in the firm.
There is also another group of clients worth identifying: those who were at some point high-value clients but have either reduced the volume of work they provide to the firm or have started providing work less consistently. While they might not seem as exciting as the newer, growing clients, they could have the potential to become high-value clients again and should not be overlooked.
Such a “white board” exercise is useful for high-level thinking about ways to prioritize clients for business development efforts. But identifying clients who actually meet these characteristics requires knowledge from several combined sources: a firm’s time and billing system, client relationship management (CRM) software and competitive intelligence sources. The data are out there—pulling the information together for decision making is where the rubber meets the road.
Further Exploring the Patterns Behind Superstar Status
While it’s essential to know which clients are currently providing the larger amounts of legal work, analyzing those clients’ past patterns with the firm can also prove extremely enlightening. For example, analysis can reveal which clients have consistently provided large volumes of work for, let’s say, 10 years on average. This kind of finding can be important from many perspectives.
Clearly, these types of clients should be receiving some special attention. Perhaps they need full teams organized around them or a periodic visit from a senior partner. Also, in terms of forecasting and anticipating work for the firm’s lawyers, these clients are highly likely to provide a steady volume of work in the future.
In addition, analysis could reveal that each year this long-standing segment trusted the firm with its legal work in multiple types of law. Such clients are highly profitable, so fittingly, the firm’s most senior partners are much more likely to spend time working on the matters of these clients than other clients of the firm. And these clients have stronger relationships and more interactions with firm lawyers.
These clients set the bar. The more you look under the hood, the more you realize you want more clients to be like them. So the next step in this scenario would be clear. Once it identifies its existing high-value clients, the firm can understand what those clients looked like along the way to obtaining superstar status—and find other clients who can be nurtured along the same path.
Nurturing the Next Wave of Superstar Clients
Here is an example of how to proceed. In looking back at the first 12 months in which your current superstar clients provided work to your firm, let’s say you find these clients provided a similar volume of work in their first year as they did in the most-recent year. This knowledge can have an important effect on business development prioritization. Essentially, the name of the game might not be to “grow” volume from clients, but to retain it at steady volume levels.
In addition, the clients who have provided consistently high volumes of work could do so through different mixes of types of law, with their needs shifting each year. This finding underscores that it is essential for partners responsible for potential superstar clients to foster strong relationships to ensure that those clients will keep the partners aware of their changing needs—and will trust your firm to meet those needs.
Once armed with the knowledge that today’s superstars almost always begin as high-volume clients, here is your obvious next step: Sort through all the firm’s clients and identify those in their first 12 to 24 months with the firm who are providing significant volumes of work across several practice areas. The objective will be to keep these “fast-track” clients “on track.”
You can then direct your attention to another segment of clients—those who give your firm important quantities of work but not as reliably of your superstar clients do.
Digging Deeper into Potential High-Growth Work
A large percentage of clients provide significant volumes of work to firms for many years, but not at the consistency level of the superstars. Is it because those clients have not had consistent legal needs or because some of their legal needs were met by other law firms? If the latter, are their legal needs in areas where your firm has expertise? Have you been missing an opportunity?
To investigate this further, you can narrow down your client list to those with the following characteristics:
- They have been with your firm for a number of years.
- They have provided significant work, though inconsistently, over their lifetime.
- They have provided legal work of one or two types.
- They have maintained solid relationships with your lawyers.
Based on your firm’s size, this might yield a larger list than you were seeking. So here is one more criterion you may want to apply. If your firm has recently grown significant expertise in a handful of particular industries, you could also narrow the list of clients to those within these key industries. These clients can be dubbed “high-growth” potential.
You can then proceed to build out several more client “profiles” to narrow your focus to the best business development candidates. Within the profiles, you can consider not only the amount of legal work from each client, but also the value of the work provided. The segmentation approach can enable you to prioritize clients that provide relatively high-margin work to the firm and encourage you to not devote business development resources to clients providing low-margin work.
Gaining Greater Market Share Identifying clients within particular profiles can certainly inform your firm about client life-cycle patterns and opportunities. This information, however, may not be actionable until you gain more insight into the clients’ legal needs. To round out your knowledge of the clients to focus on first and to build your strategy, you then bring competitive information into the database.
Firms use multiple sources of competitive information in business development every day. While the exact type and quantity will vary based on firm size, budget and staffing, by creating a process for combining your internal data sources with external business intelligence and relationship intelligence for key client “profiles,” you can more easily identify the clients that represent the greatest opportunities.
For example, you could give a higher priority to clients demonstrating trends of increasing legal work of a particular type than to those whose work is stable or dropping off. In addition to looking at overall volume, you could consider trends to help identify clients with whom you are losing share of work in order to move quickly to reverse that trend.
But overall, by choosing high-potential clients and building competitive intelligence into their profiles, you may find evidence of work opportunities you never knew existed for clients who were not part of your initial “top clients” analysis. The payoff could be big.
Moving from Analysis to Action
One thing is strikingly similar between managing the business of a law firm and the business of a corporation. Getting and keeping business requires a team effort among players from various areas of the organization. The act of prioritizing business development opportunities does not in itself bring in more business, but it definitely makes time focused on business development more likely to be effective.
Sharing client analysis across the organization to help the lawyers gain more business has another positive aspect not yet mentioned. Lawyers are trained to think in logical, sequential steps and have an appreciation for objective, fact-based analysis. Seeing an objective analysis of the client base enables them to see the logic in focusing their business development efforts on these particular clients. That, in turn, can eliminate some of the political jockeying that can take place among partners and instead prioritize marketing efforts based on a set of objective factors.
The priority clients coming out of the analysis are the ones to proactively target for retention and expansion, which in larger firms is generally accomplished by forming a multidisciplinary client team. This requires a sophisticated and institutional approach to client management, not merely a reactive approach as was commonly the case in law firms in the past. It requires focusing more on the unique and specific needs of a given client, across practice areas, typically resulting in better service quality and experience for the client, which then results in the expansion of the work from the client—both in terms of total revenues from the client and the profitability of the work.
The bottom line: As law firms grow into a more sophisticated business model, it is likely they will begin to mirror their clients’ operating standards. And when it comes to client analysis, segmentation and targeting, which have long been essential to marketing and business development in the corporate world, law firms will very likely find that they can produce results in a far more cost efficient and effective manner.
Susan worked with Kris Satkunas, director of the Redwood Think Tank at LexisNexis, on a client analysis project for Duane Morris.
About the Author
Susan L. Shallcross is Marketing Director for Duane Morris LLP, based in Philadelphia, PA. She holds an MBA in Strategy and previously served as Marketing & Communications Director at Arnold & Porter in Washington, DC.