Focus on Clients: Good Client Relationships Require Conversations that Matter

Evening sunlight & conversation, inside the Embassy 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]

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That New Customer Smell

wunderbaum - new car Spotted on the side of a bus recently: “New customers are better than old customers because they have that nice new customer smell.”

Really???

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]

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What Clients Want

What are the key factors that lead to a successful long-term relationship between corporate clients and their outside counsel? LexisNexis Martindale-Hubbell (in association with The Global Legal Post) have just released a report of a 2012 survey of in-house counsel in Western Europe that seeks to answer that question. The report examines the following issues:
  • Selection factors,  reasons for reviews of panel firms, and the frequency of those reviews.
  • Factors influencing the retention of firms for future work.
  • Top reasons for the removal of firms from preferred panels/lists.
  • Approach taken by in-house counsel to evaluate law firm performance and common themes in feedback.
  • Value-adding elements of relationships.

Of the 219 in-house lawyers who participated across 16 countries in Western Europe, the results were very clear:

  • To be successful, a law firm must demonstrate that it understands its client’s business needs.
  • A guaranteed way to end a client relationship prematurely is to provide poor service.
  • Cost is a factor, but it can be outweighed by the high quality of the firm’s service and the extent to which the firm demonstrates its understanding of client needs.
  • Clients appreciate value-added services such as free training seminars and lawyer secondments.

Be a Trusted Advisor

Clearly, knowing the law is necessary but not sufficient. Clients aren’t looking for an erudite legal lecture, they want the assurance that you understand their situation and have the legal sophistication to apply the law appropriately to their facts.  Beyond that, clients want to know that your understanding of their business is so deep that you can anticipate their needs and be active in helping manage their legal exposure. In other words, your client wants you to be a trusted advisor, not just a technician for hire.

How can KM help deliver what the clients want?

If your knowledge management program has focused primarily on legal documents thus far, now would be a good time to think about adding some current awareness programs.  In addition, consider partnering with library and training professionals to provide opportunities for lawyers to learn more deeply about client industries: What are the economic drivers? What are the pressures? Where are the opportunities? Look for ways to passively capture KM resources from these training programs and from the related conversations within client service teams.

Focus on Feedback

Lawyers are notoriously thin-skinned, so they sometimes shy away from asking directly about client expectations and satisfaction. As a result, they can find it difficult at times to understand how best to serve their clients. The report addresses this issue squarely:

Most respondents were also very happy to participate in feedback programmes conducted by their law firms, although less than half had received an invitation to provide this. However, law firms appear to be even less committed to using customer insights to help strengthen their relationship. Only 28% of survey respondents said that their law firms came back to them to share the results and communicate improvements or changes that would be made as a result of feedback received.

Thanks to this report, we now have some insight into exactly what clients are looking for.  Although the report relates to a study of in-house counsel in Western Europe, I have a hard time believing that their North American counterparts have materially different expectations of their lawyers. Put another way, I think a North American law firm would be foolish to disregard these results.

The client has spoken.  The rest is up to us.

 

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