Alternative Business Structures – Playing them at their own game (Managing for Success, January 2009)
31st January 2009
I would split delegates into three groups, the first representing a fairly typical high street practice, the second a niche start-up firm and the third a fictitious pilot chain of a high-street brand’s legal business arm. At first, this third group would be rather glum. The members were qualified and experienced professionals and certainly never intended to go and work for a high street retail chain. The other two groups would be somewhat smug, glad they had not drawn the short straw and were able to retain their professional integrity.
However, as the afternoon wore on there was a noticeable shift in the energy and enthusiasm amongst the groups. The traditional high street firm had some good ideas and enthusiastic members, but it was hampered by legacy problems including a lack of enthusiasm amongst mature partners and a consequently limited marketing budget, as well as a lack of modern IT systems, particularly an effective client database to enable them to cross-sell services in future.
The niche start-up practice was able to invest in a modern brand and the latest technology and implement best practice systems from the outset, but the partners, quickly became busy servicing clients and marketing activity slowed..
Meanwhile, the high street chain had started to realise what they could achieve with the resources at their disposal and the freedom from the restrictions of a typical partnership structure. A vision emerged of bright, airy, modern offices in prime high street locations, with the latest branding, spacious, welcoming reception areas and opening hours reflecting customers’ needs. Although it was initially assumed that it might be difficult to attract the right calibre of staff (especially with extended hours), it became clear that it would be possible to offer more attractive packages of flexible working and benefits (including sales incentives) than many high street firms could afford. Partnerships prospects would be lacking, but innovative share incentive schemes might prove a very attractive alternative.
The group was concerned about quality control, but prestigious high street brands are renowned for their systems of quality control and customer care – would it really be so hard to adapt those systems to handling a legal matter? With effective systems for monitoring quality of service, investment in a detailed induction programme and a structured ongoing training programme for all staff they would probably be able to ensure a high quality of service delivered consistently through their branches.
The service would have the advantage of immediate brand recognition and instant visbility, and could be launched through existing TV and poster advertising campaigns, point of sale leaflets in retail stores and editorial coverage on the company’s website, via the homewares catalogue and in the chain’s customer magazine. The company would also obviously have a sophisticated customer database, allowing co-ordinated cross-selling opportunities; conveyancing clients might receive a set of towels or a voucher to spend in the company’s homewares department.
So how can law firms face up to the sheer might of these corporate Goliaths? How can they possibly compete with established brands, long-standing consumer confidence and vast marketing budgets, state-of-the-art IT resources, and dedicated specialist resources focusing on quality control, customer care, recruitment and training?
Build your brand
The corporates will be able to enter this market because they benefit from immediate brand recognition and customer confidence. They will launch with big budgets and dedicated marketing and PR resources and will be attractive to the first-time buyer of legal services with no particular loyalty to their family solicitor.
How would your brand image measure up alongside these corporate brands? Size isn’t everything if you can differentiate yourself clearly. Innocent Drinks, Loseley Ice Cream or Tyrrells Crisps are examples of small niche quality producers who have created a strong brand identity because they are sufficiently individual and different from their competitors. Invest in a professional brand design that is implemented consistently across all your office interiors, advertising, web site literature and stationery.
A recent article in Legal Week (10 July) by Mark Rimington highlighted that a strong brand has equity that is reflected in the balance sheet – potentially creating a valuation multiplier of up to 15 times its worth: “A strong brand attracts client loyalty, it makes new offerings attractive and desirable, it attracts the best talent to work for it and it makes other organisations want to be associated with it. In short, a firm that has developed a distinct and strong positioning has increased the desirability of its business to investors.”
Drive loyalty among existing customers
Corporate marketing teams are already dreaming up marketing programmes and incentives to seduce your clients away from you. You have a window of opportunity to cement the loyalty of your existing clients. During this period you need to identify and capture the details of all your clients and engage with them to ensure that they are thoroughly satisfied and will remain with you as clients. When was the last time that they heard from you? From time to time, you need to remind your clients that you value their custom.
Bite the bullet with cross-selling
The corporate marketer will research their target market and identify segments with similar needs, such as young families, empty-nesters, or high-net worth individuals. When targeting businesses they may group their markets by industry or by business structure such as owner-managed businesses, partnerships or franchises. By really understanding these groups, they can tailor their product offering, services and promotion to their particular needs, bundling services together where appropriate.
Such companies are masters of maximising your spend with them – they will leave no stone unturned in selling on additional services to clients. Law firms need to adopt the same approach.
Many law firms simply do not value the information that they hold about their clients, contacts and prospects. Maintaining a database of information that might help to identify needs is seen as a boring administrative task, not worthy of their valuable time! This must change.
Focus on quality
As part of their launch programme, the corporates will develop and test all their service processes and systems to ensure they adhere to or exceed service quality standards that have been researched and agreed with target clients. They will look at the whole customer experience from the first encounter on the telephone, to their perception of the office facilities and the friendliness of staff, as well as the quality of advice and follow up given. Investing in independent market research is standard industry practice for these marketing departments.
Law firms that are serious about competing need to address themselves to customer service. Few firms tackle this in a robust manner including independent research and remedial training where problems are identified. If you want to find out how clients really perceive your firm and drive standards up, consider investing in a mystery shopping programme and use the findings to inform your training and development activities.
Make sure you ask all new clients how they heard of you and record this information. This will ensure you can make informed decisions about which marketing activities yielded the greatest return. Does it really make good business sense to have partners researching and drafting articles for your firms’ newsletter or website? After maximising billable hours, you need to ensure that business development activities are handled as efficiently as possible, with fee earners focusing their efforts on personal contact with clients, intermediaries and potential new clients. Everything else can be outsourced.
Even a relatively small law firm can now buy in an impressive range of marketing support to ensure that they develop their market presence. Take some time to carry out a strategic marketing review and consider whether activities are being undertaken by the appropriate people or whether they can be outsourced more cost effectively.
Make the most of technology
Corporates entering this market will place a very high value on management information systems. Getting your database ship-shape will help you to market your practice effectively, and will also increase the value to potential investors as it ensures that you are in a better position to maximise returns on investment.
Recognise too that clients are techno-savvy and will simply expect you to communicate with them electronically. Failure to do so and an outdated website will automatically make you appear old-fashioned in their eyes. The same is true for potential employees; you will be in competition with companies who will compete aggressively for the best talent and take a very enlightened approach to adopting new technology.
Enjoy the ride
The opportunities for increased profits through increased efficiencies, economies of scale and effective marketing strategies are there for the taking – not just by corporates, but by proactive law firms willing to embrace change. For the ambitious entrepreneurial solicitor, it should be an exciting and rewarding time.Back to Blog
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