Market forces (published in 'Managing for Success' Feb2010 Law Society, Law Management section)
2nd March 2010
This is the time of year when many firms are fine tuning their marketing plans and budgets for the next financial period. Given the rollercoaster economic ride of the last 18 months and the challenges facing the profession over the next few years, what are the lessons to be learned and factors for future consideration when planning your firm’s marketing programme in 2010 and beyond?
Marketing is typically one of the first departments to feel the pinch during a recession, and this time was no exception, with many marketing staff from large firms losing their jobs or reducing their hours. Small firms, too, decided that they could manage without a marketing manager, external consultant or public relations (PR) agency as, with major cuts to the budgets, they would not be implementing any labour-intensive events programmes. Many proposed projects and all non-essential marketing activities were put on hold. Activities that had previously been outsourced, such as PR or copywriting, were stopped, reduced or brought in-house as fee-earners had time on their hands.
However, now the initial redundancies and cuts have been made and firms have become acclimatised to doing business in a recession, marketing services are beginning to be in demand again, but for different reasons. Gail Jaffa, manager of the Professional Services Marketing Group, a membership organisation for marketing staff within professional firms, comments: “we have seen a clear increase in demand for events relating to business development, pitching and presentations, and other client-facing skills. Firms are looking to their marketing and business development teams to help them develop strategies and new business tactics to maintain market share and identify growth sectors. As always, the downturn has focused attention on profitability."
Firms are also turning to innovative and cost-effective marketing solutions, such as telemarketing, either by employing sales staff or outsourcing, to generate new business. While the legal profession has been slow to adopt telemarketing, and it is not uncommon to come across an attitude of ‘over my dead body’, some adventurous firms have been reaping the benefits of attracting new business clients in this way.
According to Peter Rosenwald, director of Chartered Developments, which currently runs projects for around 30 law firms, “once they have tried telemarketing, partners are quickly converted to the idea, as the success is directly attributable to the investment”. He adds: “Firms that have continued campaigns through the past year have had most success with sector-based campaigns, particularly where there is new legislation specific to that industry sector.”
When the economic upturn comes, it is likely that these trends will continue, as firms will be hesitant about increasing the marketing payroll burden too quickly, and will continue to focus resources on client development and driving direct sales, rather than less accountable profile-raising activities.
Having battened down the hatches, partners have, rightly, been concentrating on protecting their client base for the future. However, this has generally been achieved via careful low-key entertainment and relationship-building rather than the lavish corporate hospitality of previous years. One commercial property partner recently commented to me: “Starbucks now plays a vital role in my entertainment strategy!”
Another partner commented that, although entertainment budgets had been slashed, the corporate hospitality industry has been in such dire straights, too, that there are some excellent bargains around, if you are in a position to take advantage of them.
This time last year, webinars were a hot topic, but they have not taken off as a marketing tool to the extent anticipated. However, this may be because hosting seminars online does not provide the same benefits as a seminar held on a firm’s premises. Such an event creates an opportunity for face-to-face networking, thereby building and strengthening relationships – the debate and networking can be as important to delegates as to the host firm. While a webinar still provides some benefits to delegates, as an efficient means of gathering CPD points, it fails to provide the relationship-building opportunities that were the raison d’etre for seminars, both for firms and delegates.
There are a number of interesting developments in the ways firms work to ensure client satisfaction. Firms are starting to use email software for client satisfaction research, rather than sending traditional postal questionnaires. As well as saving postage costs, the automated analysis saves the cost of time spent producing reports.
Bernard Savage, director of professional services consultancy Size 10 ½ Boots, has also noticed a change in how firms handle client satisfaction interviews. “With budgets being tight, we have seen a reduction in demand for face-to-face interviews and an increase in the demand for telephone interviews as a more affordable alternative. It also enables firms to interview a wider portfolio of clients.”
While certain service sectors have had independent comparison or review websites for a few years, the concept is new to the legal profession. Travellers will be familiar with websites such as Tripadviser.com, where you can find out what others say about a destination before you visit. There are now a growing number of websites that offer this facility across all services, such aswww.TouchLocal.com, which describes itself as “local businesses reviewed by you”. Anyone can go onto such a site and review their lawyer.
In 2009, we helped a law firm to have a negative review removed from such a site. It was interesting to note that the site agreed to remove the negative review only because an individual member of staff had been mentioned. If the review had only referred to the firm, the negative comment (which was the only comment about this firm) would have stayed online.
Firms that are involved in tendering for legal services have seen a real fall in the number of tenders being issued, and a significant increase in competition, as anyone with capacity chases down every piece of work. Price competition has become much sharper, too, as large firms are prepared to buy in work to maintain activity levels.
Aside from recessionary forces, competition is hotting up from the corporate sector as the Co-op and Halifax marketing machines have started to create a presence. Several probate lawyers have mentioned that their clients had already received a call from the Co-op about probate services when a loved one had died. At present, they are not competing on price, but, on its website, Co-op FuneralCare offers to match any like-for-like quote from a solicitor.
As part of the changes in the legal services marketplace brought about by the Legal Services Act (LSA), 2009 saw the introduction of two new legal marketing networks – The Legal Alliance and QualitySolicitors.com. Both entered the market to take advantage of the new opportunities and provide independent firms with support to enable them to tackle, or take advantage of, the likes of the Co-op.
Craig Holt, of QualitySolicitors.com, explains: “I’m not usually one for rhetoric, but I believe that 2010 will prove to be determinative of many firms’ futures. It is the critical year for firms to attempt to position themselves for the future before the LSA changes start to come to fruition in 2011/12. Waiting until 2011 may be too late, as the competitive advantage or difference that will be needed to ensure a law firm survives an era of unprecedented change needs to be formed quickly.”
“Our single aim for 2010 is to begin to make QualitySolicitors.com a more recognised, household name for people needing legal advice and representation, with a strong body of firms across the country immediately visible as QualitySolicitors.com firms for the public to go to. In short, to develop the first true national legal brand with a branch network ahead of the new entrants.”
On one hand, these networks can offer the obvious benefit of marketing (and other) economies of scale. Having worked in the hotel industry in the 1980s, I have long thought that there was an opportunity for a marketing network like Johanssens or Relais & Chateaux, which allows each member to retain their individual identity but provides shared promotional and purchasing opportunities across the group. It will be interesting to see how the networks develop over coming months.
On the other hand, these networks are building groups of law firms which will then be able to contract with the new big brand providers via affiliate programmes. Given that consistency of service quality is a major factor for those big brands, it will be interesting to see how this is negotiated. It is hard enough implementing quality service standards in one firm, never mind a series of essentially unrelated ones.
One of the problems that a number of firms have mentioned regarding the new networks is the quality of the referrals that they are receiving, in terms of whether they are properly qualified leads, in the right geographic area, and whether the potential clients are willing to pay market rates. To have the best chance of converting a web-based lead to a new client, the enquiry needs to be followed up by email, and possibly by phone. The response needs to be tailored, particularly in the networks where the enquiry is forwarded to more than one firm and there is a race to respond. One managing partner in a seven-partner firm commented that it was getting up to 30 referrals per month, and this was taking up a vast amount of time and effort, while leading to very low conversion rates.
Another common problem is that people enquiring via a website are often looking for free information and are not inclined to pay. Some referral networks do not make information on costs easy to find on their website.
Particularly in the business-to-business market sector, the quality of web referrals was perceived to be very poor in comparison with the typical referral that they would receive from a fellow professional such as the bank, accountant or property agent. In these cases no referral fee is payable and the opportunities tend to be much hotter as the potential clients are generally on the point of instruction, rather than simply gathering information.
For several years now, firms have been moving a percentage of their marketing expenditure away from traditional print media to electronic media.
One area that is clearly suffering in this regard is printed directories. Yellow Pages remains the main hard copy directory delivering enquiries and new business among the firms that record this information. However, it is obvious that Yellow Pages is feeling the squeeze, as it is encouraging all advertisers to use dedicated phone numbers, in order to be able to provide evidence of the number of enquiries. In a move to capture a share of your online expenditure, they are even offering free (but low quality) mini websites as an encouragement.
While newsletters remain a popular way of keeping in touch with clients, we continue to see a move towards e-newsletters for business clients, and firms with a frequent seminar programme have really taken to email as a way of promoting events more effectively. Many firms that we talk to recognise the potential for email, but struggle with building a database of client email addresses, due to problems with their client information system and prevailing attitudes to collecting and sharing email addresses.
Investment in websites has continued where there has been a compelling business case, and we are seeing more and more ‘single service’ focused websites, which really drill down into one particular area of expertise. For example, despite the downturn in the property market, Elliot Mather Solicitors in Derbyshire launched a dedicated conveyancing web site in Spring 2009,www.newhome-solicitor.com, which provides online quotations and accepts direct instructions.
“Naturally, we would not have chosen the prevailing market conditions to launch, however this was an investment in the future of the conveyancing team, which would enable us to respond to our potential clients no matter which introduction channel they chose, whether personal contact, agency introduction or website. Despite the slow property market, we regularly receive instructions from the site and expect the number to improve with market conditions in the future,” comments partner, Paul Hollyer.
Mylawyer.co.uk also launched in 2009, differing from the networks mentioned above by focusing on providing online services directly. Previously, legal documents on the web were typically Word files or pdfs that could be downloaded. MyLawyer.co.uk offers a combination of a web application that interviews the client online, backed by a review by a law firm which can advise further on the matter. A number of well respected law firms have added this facility to their web offering, including Nelsons, Pannone and Hugh James.
In the last few months, I have noticed a significant growth in the use of video on websites and in email campaigns – sometimes to great effect and sometimes not. One of the disadvantages of digital photography is that, in theory, anyone can now create a video and upload it to their website – in the same way that they might take amateur portraits of the team rather than engaging a professional photographer for half a day (a distinctly false economy!). Unfortunately, I have seen some awful examples of stilted monologues – usually in front of an antique bookcase! Fortunately, I have also seen some superb examples, following an interview style, with creative scripting, location and lighting, and where the presenters have obviously rehearsed and polished their performances.
While many firms have really embraced the power of the web, it is, sadly, astonishing how many legal websites look distinctly ‘last century’, and how many have ‘latest news’ that is months (and occasionally years) out of date. Given that most potential clients will look at a firm’s website, even if only to check the phone number and address, this really is inexcusable.
Maybe it is an age thing, but the jury is still out for me on social media, as I have yet to hear many credible examples of it consistently delivering new business. Maybe I have seen too many examples of blogs that are as out-of-date as the news pages!
LinkedIn, Twitter and so on can clearly play a role in building the profile of an individual (rather than the firm, which should be noted) and developing a network of personal contacts, if the solicitor is prepared to invest their time in this (also outside of a firm’s contact management system).
On the other hand, many good articles and messages are now swamped in irrelevant sales pitches, which can be off-putting, and discussions tend to attract more comments from people with something to sell than from the people whose opinion you would value most.
It all comes back to understanding your clients. Clearly, if social media is important to your client base, then you need to include it within your communications strategy; for example, if your clients are in the IT, media and entertainment industry, they are more likely to respond to it than if they are in traditional manufacturing sectors.
Given the rapid changes in the market, there would be significant merit in the Solicitors Regulation Authority continuing their programme of research into consumer experiences and attitudes in order to provide valuable market intelligence and help firms with their strategic marketing planning.
As Holt said, the coming year is a critical time for firms to position themselves for the changes in the legal marketplace. It is vital to plan for this and evaluate your communications strategy in this context, if you aim to thrive rather than simply survive in 2010 and beyond.Back to Blog
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