There are at least two obvious strategies for growth: go wide or go deep. Go wide implies covering as much territory as you can, while go deep suggests mining your current location to extract as much goodness as possible. For many businesses, including law firms, go wide is their first impulse. Doing the hard work of attracting new clients can feel more manageable than doing what feels like the infinitely harder work of truly engaging with an existing client to deepen that relationship in meaningful (and profitable) ways.
I wrote about this phenomenon recently in a post entitled That New Customer Smell. That post led to several delightful and rich conversations with Susan Hackett. For those of you who haven’t yet had the pleasure of meeting Susan, let me introduce you. Susan was for 22 years Senior Vice President and General Counsel of the Association of Corporate Counsel (ACC). Among her many accomplishments at ACC was the creation and adoption of the ACC Value Challenge (highlighting the need to link value to the cost of legal services). Susan is now CEO and Chief Legal Officer of Legal Executive Leadership, a management consulting firm that helps clients “find smarter ways to work,” build stronger legal teams and “promote thought leadership and collaboration in their work and workplaces.”
In her many years of close work with corporate counsel around the country Susan has learned a great deal about what law department executives expect from their external counsel. It was that perspective she brought to our initial conversations and agreed to share via this blog in a series we’re calling Focus on Clients. Over the next few days we’ll be posting on this blog highlights from our conversations, which examined how critical it is for external lawyers and their clients to engage in meaningful conversations with each other. Because, as with our personal lives, relationships deepen and grow through shared experience and conversations that matter.
Next in this Focus on Clients series: Making Rain by Making Conversation
[Photo Credit: Velvet Android]
Spotted on the side of a bus recently: “New customers are better than old customers because they have that nice new customer smell.”
We’re told that it can cost six to seven times more to recruit a new customer than to retain a satisfied customer. With an existing customer you can leverage your established relationship and track record. By contrast, these assets need to be created from scratch with the new customer. Satisfied customers are willing to buy more of your goods or services and they tend to be less price sensitive over time. Best of all, the happier they are, the more likely they are to refer potential customers to you.
Esteban Kolsky rightly points out that to compare accurately the cost of retention versus recruitment, we need reliable data regarding customer acquisition costs and customer maintenance costs in the relevant industry. I wonder how many law firms track these costs in any systematic way? What about tracking the costs incurred by a law firm knowledge management department to attract or retain its internal (or external) customers? Have you given any thought to the costs of maintaining and expanding your services to existing KM customers as opposed to ignoring what you’ve got and chasing new customers?
When you think in terms of developing a long-term relationship, you realize that what you need is an ongoing conversation with your customer. It’s this conversation that helps you understand your customer’s needs and how you might best serve. It’s this conversation that allows you to grow with your customer in a perfectly symbiotic way.
Zappos has taken this even further. The company claims that
Customer service isn’t just a department. … We’ve aligned the entire organization around one mission: to provide the best customer service possible.
Contrast this approach to the ones described by James Surowiecki when writing about the current crisis in customer service. Where does your law firm or KM department fall on the spectrum that runs from Zappos to far less attentive organizations?
I’ve heard it said that the difference between a customer and a client is repeat business. What are you doing to ensure that customers become long-term clients?
[Photo Credit: Me Maya]