How to Manage Key-Client Marketing
How to Manage Key-Client Marketing
Sep 2 2010, 03:21 PM
Joined: 17-July 09
Member No.: 125
Reprinted from Law Practice TODAY
The bad news is that most law firms are marketing to the wrong people. The good news is that the solution is so simple that it was best stated by my dentist: "Floss only those teeth you want to keep." If the link between dentistry and marketing is not immediately apparent, think of it this way: If you take care of what you have, you can avoid painful, expensive replacement procedures.
In many law firms, 20 percent of the clients produce 80 percent of the revenue. Yet those important clients typically receive a minuscule portion of the firm's marketing attention. Client retention is often regarded as something outside the boundaries of marketing and as only a minor factor in compensation. But increased competition, eroding client loyalty, "partnering" with clients, and a slew of other factors have made that an increasingly suicidal equation.
Law firms seem compelled to focus their limited marketing time and resources on where the money is not—dispatching hit teams all over the place to give new business pitches to prospective clients, most of whom will not pan out. To be sure, natural attrition and other factors mandate that a firm keep looking for opportunities with new clients. But it is far more important to retain current clients. This is difficult for most firms to comprehend—that is, until a major client defects or fades away.
Why do firms lose clients? Formal surveys point to how the client was treated by various members of the firm—specifically, poor service or neglect. Most well-established client relationships can sustain a litigation loss or a matter that exceeded the client's perception of cost, but not poor service in the form of missed client deadlines, phone calls not returned promptly, and other acts of negligence. Often, the loss of a client is due not to a single catastrophic event but to a cumulative series of "little murders" committed by partners.
If clients do look for new outside counsel because of mismanaged relationships or neglect, then survival demands a strong relationship-management program for key clients. The immediate and long-term mission of the program is client retention. This philosophy is true whether the law practice consists of a solo practitioner or more than a thousand lawyers.
The best way to begin a client-relationship analysis is to use existing accounting and billing data to create a computer spreadsheet of the top clients on one axis and to list the practice areas of the firm on the other coordinate. Each cell should show the revenue for clients in terms of the fees collected yearly. This simple and powerful report shows which practice areas the client has been using, the overall fees collected annually, practice areas not utilized at all, and the variations year-to-year in revenue by practice area.
By analyzing the various practice areas' revenues or lack of revenues, a firm may be able to pinpoint a potential client relationship problem. Once this information is collected and analyzed, it should be circulated to the designated client relationship manager ("CRM").
Role of the Client Relationship Manager
The goals of the CRM are to increase the client's satisfaction with the law firm, expand or retain the business that the firm does with the client, and eventually increase profitability. In short, an effort should be made to develop the relationship between the firm and the client's organization. Although these relationships are typically built from a singular contact, the most profitable and enduring client relationships result from a team approach and a complete network of contacts that yield business and opportunities for both the firm and the client's organization.
The CRM selection process will need to be clear, open, and carefully defined by the firm's management to avoid the appearance of favoritism or politics. It is important that the client manager's role is ombudsman, not owner of the client. The person selected is the one who will get the best results for the client and the firm. Simply, that means taking the high road: Who will play best with the clients? Whom do they trust? Who at the firm makes them feel secure that their best interests are being looked after? In most firms, this process has a strong political content. Even today, lawyers continue to guard their clients jealously and may avoid exposing their clients to this approach. However, the alternative is to leave key client relationships unmanaged and, thus, fail to focus the firm's marketing resources on the retention of key clients of the firm.
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