customer

Which would you prefer: the customer you attract, or the customer you pursue?

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This blog post is based on a #2020futureoflawthought I posted last week on social media – ‘Who pays you better, the client you attract or the client you pursue?’.

It occurs to me that law firms are much more willing – and even better resourced – to pursue customers than they are to attract them. We have dedicated pursue customer resources to hand – such as bids, tenders and pursuits teams. And we are willing to offer discounts and other ‘value adds’ to new customers that we would never think of offering to existing and loyal customers.

And what do we get for throwing all these resources and efforts in to pursuing customers?

If we are honest, and have a really good bid/tender/pursuit team to call on, somewhere between 50%-70% win conversion rate! Which is not to say that conversion rate is profitable, because in many cases to get us across the line it isn’t!

Create distinction

Recently I started listening to Scott McKain’s daily ‘Project Distinction podcast. It’s a great podcast that lasts around 10 minutes; around the same time as I made my social media post, Scott ran a week long series on how the ‘hard sell’ had had its day (the $55 million dollar ‘lost’ sale is a funny listen and a serious lesson in to why the 7 touches sales method is dead IMO).

Scott is also the author of ‘Create Distinction’, a book I have just started reading on the back of his daily podcasts that I have really enjoyed.

Anyhow, both Scott’s podcast and what I have read of his book so far have made me come to the realisation that the traditional law firm approach of pursuing a customer is actually the wrong way of doing things. Instead of pursuing customers with great value adds and discounts, we need to get much better at attracting customers – to our areas of expertise and to our superior service delivery.

Become a person of interest
Timely Andrew Sobel – one of the greats in my opinion – also touched on the issue of attracting versus pursuing customers in his blog post last week: ‘C-Suite Strategies Part IV: Become an Irresistible Person of Interest’.

In the post Andrew asks:

What if, however, the situation were reversed, and senior executives were *drawn to you*? What if, instead of you waiting in the long line outside their office, they were waiting in a line to meet *you*?

Fair question: what indeed?

Andrew then sets out six ‘strategies’ (more like ‘tips’ in my opinion) on how to become a person of interest, that include:

  1. Sharpen your expertise while expanding your knowledge breadth
  2. Develop your thought leadership
  3. Be seen as someone who is at the crossroads of the marketplace
  4. Become a person with interests
  5. Build an eclectic network
  6. Develop, manifest, and communicate your core beliefs and values

Something to think about this week then: would you prefer to be attracting or pursuing customers?

As always though, interested in your thoughts/views/feedback.

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It doesn’t pay to be a loyal customer

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The Chanticleer column in this weekend’s Australian Financial Review is titled ‘It doesn’t pay to be a loyal customer’. The article is a post-Hayne, post several reductions in interest rates, look at bank mortgage rates and analysis undertaken by Matthew Wilson at Evans & Partners that suggests:

“In Australia, the banks enjoy a profit benefit of about $3 billion a year from exploiting the difference in mortgage rates between existing and new customers”.

I’m not going to comment on whether or not that statement is correct/true (although a hunch would suggest it is), but it did make me think that in the professional services (read ‘legal’) sector it absolutely holds true that it doesn’t pay to be a loyal customer/client.

What do I mean by this?

Well when pricing services to new customers/clients – especially in tender situations, law firms are far more willing to:

  • Buy the work to cement the relationship
  • Offer volume discounts
  • Deeply discount on rack-rates
  • Agree to discounted fixed fee arrangements
  • Agree to risk-sharing arrangements

Indeed, more often than not the average billing rate (ABR) and the average realisation rate of a long-term customer/client will be higher than a new client, while lock-up days will be lower.

As Chanticleer says, it really doesn’t pay to be a loyal customer these days!

As always though, interested in your thoughts/views/feedback.

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