What price loyalty?

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Viv Williams, CEO of Legal Futures Associate the 360 Legal Group, says law firms need to do more to build loyalty among their existing clients to bring in new business, and details some key tactics for achieving this

Williams: most clients would provide a reference for their firm for new clients but are never asked

Many law firms have failed to recognise the importance of client care and how, by taking care of their clients, they will encourage their clients to take care of their firm. Building a loyalty ladder with your clients is more important at this stage than ever before. Why?

We should all know the cost of obtaining a new client – it actually costs six times MORE to find a new client than it does to retain an existing one. The well-used term “Tesco Law” or more appropriately “Co-op Law”, raises even greater concern when we look at their system to maintain customer loyalty.

The Tesco loyalty card is a powerful tool to encourage shoppers to return again and again – this will also help Tesco to market a new type of service whether it be insurance or even legal services. The brands are also here, SAGA, the AA and many more to come.

So how can a law firm compete with this challenge?

Downward price spiral

Traditionally, a law firm could open up a new practice on a busy high street and be relatively assured of a decent footfall to encourage new clients – this is no longer the case. In fact, the Legal Services Act will actively encourage competition in the core areas of law that firms traditionally occupied, such as conveyancing, wills, personal injury etc. If it can be processed, then we will see prices moving in a downward spiral.

Tesco is an extremely impressive marketing machine and will provide discounted legal services to their customers, which must make many partners of law firms shudder with the potential consequences.

It is no longer sufficient to have a brass plaque on the wall and claim you have been established for many years. Your clients have changed and you must change, both the services you offer and the way you deliver them.

How many law firms actually take the time to ask their clients what they want and how could they improve their service? Surely at every file closure it is appropriate to write to your client and ask a number of pertinent questions:

• How would you rate the service you received?
• Is there anything we could do to improve our service?
• Are there any additional services you would like us to offer?
• Would you recommend us to another potential client?

In fact, why not go a stage further and ask them who they are? Perhaps using a little more subtlety – e.g. if you would like to receive our newsletter etc, we will enter you in our monthly draw.

Satisfied customers

Actually, the clients of most law firms actually trust their solicitor and in all of the client satisfaction surveys I have been involved, the statistics speak for themselves:

Of 12,000 commercial and private clients of law firms who have responded to a satisfaction survey, over 96.4% would recommend their lawyer to another potential client. Unfortunately almost every single one says they never to have been asked to do so. Is this a missed opportunity?

Client satisfaction surveys also indicate the differences between how your client rated you in comparison to the client’s expectations. The three key areas for concern are:

• Higher fees than expected.
• Poor timeliness in both delivery of service and, even worse, the failure to return telephone calls.
• Lack of proactivity.

Clients are demanding that their lawyers become more pro-active with advice and guidance and not wait until something goes wrong. We are seeing more “want” rather than “need” driven services being offered by progressive law firms and it is these firms who will attract the clients of the firm who is not being proactive.

For example, the £350m reduction in the legal aid budget will mean many family clients will not be eligible for legal aid – do you tell them it’s now straight to an hourly charge or should you be offering a fixed-price service that bridges that gap?

If a law firm offers a no-interest/low interest finance package to those clients, it will also enhanced their relationship. This service has been working with other professions for a number of years and by using a little imagination, the same service can be offered by law firms to their clients. The decision, delivered via the Internet, is instantaneous and the relationship is between the client and a bank, with no recourse to the firm. The firm has all their money within three working days and the client can spread the payments between one to three years.

Another example is the switch to offering insurance-backed employment packages, providing HR advice, an annual review of employment contracts and an insurance-backed package in the event of tribunal proceedings against the client. Clients pay a monthly fee ensuring they receive a proactive service from their lawyer and regular cash flow for the law firm.

Giving them what they want

Giving clients what they want, and offering a delivery mechanism to ensure the services you deliver are on time, is the way of the future. I would recommend a simple message to all partners and fee-earners: “Always under promise and over deliver.”

If you adopt this simple philosophy, your clients will not only remain clients but will tell others about the excellent service they receive.

Clients should be at the core of your practice – a people-focused, client-centric practice is essential to maintain and grow your client base.

I firmly recommend that a varied programme of 10 contacts with clients per annum be introduced, avoiding August and December. Those firms that had the foresight to gather the e-mail addresses of clients when opening a file should find this an economical and rewarding exercise. Ten years ago very few of us had an e-mail address; now most of us have at least two, if not more. This logic can be applied to your own clients, whatever their age, and they actually prefer to be contacted by e-mail.

Of course, this assumes you have a decent client relationship management (CRM) system to enable you to take advantage of this idea. Those law firms who do have a CRM system can contact both existing and potential clients by the following: a quarterly newsletter, a series of news alerts, an invitation to a seminar or any other item or event that is relevant to you client.

It is essential that a law firm becomes an information-centric organisation; profiling your existing client base will give you the base information you need. Once you have established the mix of clients – that is, a breakdown of the percentages between private client and commercial – profiling what type of client you are most successful with will give the core information required to create a marketing process.

Fanning the desire

The term cross-selling is often used and by profiling your client base you can create practice wide opportunities. The simple acronym AIDA, which means Attention, Interest, Desire and Action, can be applied to all of your marketing process. Not surprisingly, offering the right service to the right client at the right time, with the right offer, produces outstanding results.

Relationship marketing is the basis for creating a “loyalty ladder” for your clients. Imagine you are climbing a ladder and each rung represents each stage of the process. On the first rung we have potential clients who are merely “suspects” at this stage; the second rung identifies these as potential “prospects”, potential clients who match our profile; the third rung is when they actually become “clients”; and the fourth rung is when they are so pleased with the service they receive that they “advocate” our firm to others.

A useful exercise to undertake is to evaluate the potential lifetime value of your clients. Once your best clients have been identified, the data base model will track each client and update all their activity with the firm. This will give you a forecast of your client value to the firm over time and is invaluable when identifying new clients. Once you have established what type of client gives you your greatest lifetime value, you can focus the bulk of your marketing activity to the same type of client profile. This has the effect of focused marketing and is both cost effective and targeted.

In conclusion, it has been found that the highest return on investment comes not from new clients but from existing “best and valued clients”.

Here are my Top Ten tips to build and maintain loyalty:

• Identify your most valued clients.
• Improve your CRM system to enable you to measure their value.
• Try a pilot program to deal with your best clients on a one-to-one basis.
• Try a client advisory group and gather ideas from them.
• Profile your best clients and target similar groups.
• Ask clients to nominate a non-client for a special offer.
• Ensure all your staff realise the importance of client loyalty.
• Calculate the lifetime value of a loyal client.
• Launch your own Loyalty card for your clients
• Create a plan (with a deadline) on how you can create greater client loyalty.