Allocating Resources to Keep Your Clients
Everyone knows and has heard the theory about how it costs less to retain clients than get new ones; that you should focus on expanding work with existing clients and consider that to be your core business development strategy. Recent studies indicate that firms that increase client retention by just 5% grow revenues by 25%. Who wouldn’t vote for 25% more revenue? However, focusing on current clients can sometimes be something that doesn’t get a lot of institutional or firm-wide attention or acceptance.
If you don’t know what I mean by this, ask yourself the following questions:
- How much of our firm’s marketing and business development budget is spent on current clients?
- How much of our marketing and business development staff is devoted to client retention and client expansion?
- What is the return on the investment (ROI) for current client programs vs programs to get new clients?
- Does everyone in the firm know the clients who are on the short list for expansion efforts? Are we all working as a team to make sure this happens?
- What is our churn rate?
There are a variety of ways that you can get to the bottom of these questions. Some are easier than others, but all are worth exploring to see how your firm is doing.
Have a look at your marketing and business development budget, or if you don’t have one, look back at what your firm spent over the past 12 to 18 months on efforts with existing clients and with individuals or companies who are currently not clients. There should be quite a bit of money being spent on current clients. This can be in form of client entertainment, attending client events, hosting educational programs for clients, and client surveys or interviews. If you don’t see the focus being on these people, you might want to have a look at how to better utilize these dollars.
How is your marketing and business development team spending its time? Do you have most of the team devoted to your current clients? If not, perhaps reallocating the skill set to focus on expanding work instead of focusing on attracting new clients is something you should consider.
Based upon what you are doing, have a look at how it is going. If you are responding to RFPs, for example, how many are from current clients and non-clients? How many are you winning in each category? How much total time are you taking to respond in each category? Generally, this analysis shows that responding to RFPs from non-clients is a fairly useless activity and does not generate a very high ROI.
What clients is the firm targeting for expansion? This should be known by everyone in the firm, and there should be client teams in place to work on these efforts. The teams should have specific expansion plans in place, and team members should clearly understand their roles in the efforts. There should be regular meetings for the team, and the firm leaderships should be expecting progress reports from the teams on a regular basis. The team should be working with finance to track financial performance and evaluating how matters are staffed.
A metric that can help evaluate how well you are doing with current clients is your churn rate. In other words, how many current clients leave the firm in a given period of time and need to be replaced? High- performing firms have a very low rate, as they do an excellent job of nurturing client relationships. If your churn rate is high this is a good indication that you need to spend more time on client development and client expansion so you don’t have to constantly replace clients who leave to go elsewhere or leave because they don’t know the scope of your firm’s capabilities.
Now that you have completed this analysis and possibly have discovered you need to do a better job with current clients, what can you do? Here are a few things.
- Communicate: Current clients can’t hire you for more work if you don’t take the time to talk to them about their business goals and strategies and how you can help.
- Social proof: Clients want to know you have experience in their industries and with their particular situations. Help them understand how well-regarded you are in the industries you serve and in the areas of legal services you provide.
- Inner Ego: Most people like things that resemble them. Take a look at your client relationships and identify how you can craft conversations and messages that align with their goals, aspirations, pain points and interests.
- Money isn’t everything: Realize that the amount of money spent is not necessarily directly proportional to the reciprocity attained. Even small gestures of genuine interest and respect can go a long way.
- Make it personal: One study found that wait staffs could increase their tips 23% by simply returning to tables with a second set of mints. The conclusion was that mints created a feeling of attentiveness and a personal experience. Know enough about your current clients to make their experiences with you personal.
- Speed is secondary to quality: A Gallup Group study found that customers were nine times more likely to be engaged with a brand when the service was considered “courteous, willing, and helpful,” instead of “speedy.” Take your time to do it right and make sure you have met all your client’s needs and done your job well.
- Make them VIPs: Everyone likes to feel that they are getting preferential treatment. Make your clients feel like they are getting something above and beyond everyone else. Examples might be doing a free workshop internally for the HR staff on hiring practices; taking the time to work out a behind-the-scenes experience for them at a local event; or acknowledging a personal accomplishment of theirs in some way.
You can never go wrong by investing in your current clients. The more happy clients you have, the more new clients you will get. You will reduce your churn and spend your money and your time more wisely.