Your (Best) Clients Rule!

01.01.02
By Deborah McMurray
Published in Strategies: The Journal of Legal Marketing

Author’s Note: The story about Snow & Snow LLP is inspired by actual events. However, the firm is fictitious and any resemblance to actual people is coincidental.

Countless elements of a client relationship are “critical.” Most are so obvious to lawyers by now, they don’t need repeating. Agreeing that the elements that first come to mind are worth your focus and time, here are others that might be less apparent than “return client phone calls fast.”

Who are your best clients?

“Our top 25 revenue producers,” says John Doe, partner at Snow & Snow LLP. Another Snow partner disagrees – she says, “our 25 most profitable clients.” The marketing director at Snow & Snow disagrees with both – he says, “the 25 to 50 that have the greatest long-term future with our firm.” John Doe wondered if it all wasn’t the same thing.

The Snow & Snow MD conducted client interviews last year – coincidentally with the firm’s 25 highest revenue clients. Among other critical findings (like how happy these 25 were with service, staffing and results), the MD discovered a fact that could change the shape of the law firm forever. He asked a remarkable question to these corporate decision-makers: “How did you happen to hire Snow & Snow in the first place?”

More than half of these top clients “inherited” the law firm relationship from a superior or a predecessor. In all these cases, Snow & Snow hadn’t done a good job of transferring the trust of the original decision-maker to the current one. Consequently, while most of those interviewed expressed some degree of satisfaction, the MD sensed little loyalty to the firm.

These clients might feel “stuck.” Thomas O. Jones and W. Earl Sasser, Jr. in a Harvard Business Review article called, “Why Satisfied Customers Defect,” called these clients “hostages.” Law firms arrogantly assume that hostages won’t go anywhere, but anecdotal evidence suggests that they are already looking for ways to leave. They might not leave in one fell swoop, but little by little, they’ll send more and more to your competitors – law firms that they have chosen. In addition, former hostages are enthusiastic about telling colleagues and friends about the events that precipitated the split from your firm.

Snow & Snow’s MD worked with the firm’s CFO and ran trending reports for these clients. Sure enough – while gross revenue remained constant, plus or minus 10%, the profitability of these clients steadily declined in each of the last five years. Firm lawyers were writing down more time pre-bill and were writing off large percentages each year. These clients complained regularly about fees, staffing, poor responsiveness and just about everything else. The partners “in charge” of these clients, firm associates and staff were frustrated and disillusioned. So – it was a vicious circle of unhappiness all the way around.

What happens to Snow & Snow if half its “top” clients defect over the next handful of years?

More critical questions

Snow & Snow’s marketing director was a wise one. He also knew that complacency was a by-product of an enviable client roster, especially when client names reappeared year after year. The firm’s top 25 revenue-producing clients changed only marginally from year to year – 4-5 would drop off and a few new names would appear.

The MD asked a profound question on the client interviews that shook the very foundation of partners’ thinking: “What percentage of your outside legal budget does Snow & Snow have?” The lawyers were horrified that the MD brazenly asked this embarrassing and probing question, figuring it’s none of the firm’s business. Yet, every client but one answered it.

Snow & Snow had 25 – 90% of the “hostage” clients’ work. Interestingly, for a third of the remaining clients, the firm had less than 10% of the work these companies dole out to other law firms. What did this nugget of information tell the MD? If these organizations decided, as many companies do, to adopt a convergence initiative and reduce the number of outside law firms, Snow & Snow would be vulnerable.

The interview isn’t a test. It’s a conversation.

Many law firms want to do the right thing – but then they mail written client “satisfaction” surveys. There are lots of problems with this method – several are highlighted in the adjacent sidebar. Written surveys often measure satisfaction in the following ways: extremely satisfied, somewhat satisfied, somewhat dissatisfied and extremely satisfied. Law firms add up the scores in each category and pronounce, “75% of our clients are extremely satisfied” and then go back to business as usual – feeling particularly proud of this outcome.

However, don’t trust these results. They aren’t an accurate barometer of your success. It’s far better to interview your top clients in person . . . but make certain you ask the right questions. Don’t you really want to know how happy they are?

Snow & Snow’s marketing director wanted to know this. So, instead of the extremely satisfied, etc. responses, he requested that the clients answer certain questions with “happy, angry, disappointed, frustrated, thrilled.” The query went like this:

The MD says, “Think about the work product we deliver to you. Do we deliver projects when promised? Do you find us to be creative and innovative? Do we accurately estimate the project scope and budget? And so on. Finally, with regard to Snow & Snow’s work we do/provide, how do you feel about the relationship or firm overall?”

The client answers each question individually, then responds, “I’m happy or frustrated” at the end of each section. This is where you can measure the loyalty of the clients you are interviewing – and you can pinpoint where specific problems are occurring.

Disadvantages of written client surveys include:

1. Respondents self select. What does a non-response mean? That they dislike the firm or they are too busy? Perhaps they don’t care, or they’ve been traveling abroad and haven’t seen the survey. You don’t know and you can’t guess.

2. Some clients grade on a curve. This means they almost never choose “extremely satisfied,” even when they are. Others don’t want to feel exposed, believing that if they are “easy” graders, the law firm will get lax in its responsiveness and service. Best to keep the lawyers guessing.

3. Extremely satisfied to one client means somewhat dissatisfied to another. There is no chance of equal measure from one respondent to the next.

4. Written surveys do nothing to get lawyers closer to their clients. Rather, call them and schedule a face to face. This is where your meaningful conversation about your relationship (contrasted with specific matters) begins.

5. If a problem is identified in the written survey, you can’t probe on the spot. Is the client really upset? Has the situation already been fixed? Was the client just having a bad day and felt like complaining? You can’t know. Calling after receiving the returned survey isn’t good enough, and it will be hard to address the problem weeks after a concern was brought to your attention.

6. At their worst, written surveys are passive aggressive.

What’s in the future for Snow & Snow?

Snow & Snow firm management needs to climb inside its client base and honestly analyze the history of the relationships and each client’s numbers for three to five years – gross revenue, profitability, number of practice areas used and for what, staffing and growth strategy for the client inside the firm. Thanks to the marketing director who identified that much of its top revenue producing clients were at risk, firm management has a chance to strategically address the underlying problems.

If the hostage clients are converted – one by one – to loyalists/apostles, the firm’s future will be bright indeed. If the firm creates client teams for the top 25 to ensure that the relationships are managed and grown as effectively as possible, its future can be even more secure.

Snow & Snow’s marketing director is developing the infrastructure to begin a client team program and creating client service strategies for each of the hostage clients, focusing on building trust from scratch.

He is also analyzing the rest of the client base to determine the 25 to 50 clients that have the greatest long-term future with the firm. Those clients will likely be happy or thrilled if firm personnel do their jobs well. Those client relationships will rule.

Deborah McMurray is a strategic marketing consultant to the legal industry. She can be reached at 214.351.9690 or mcmurray@contentpilot.net.

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