7 tactics for taking market share
In January I tuned in to BTI Consulting’s annual webinar on the Market Outlook and Client Service Review of US Law Firms. There were some very practical insights relevant to all professional service providers, including 7 tactics for taking market share. Here are my highlights:
1. Client Development is the absolute best source of new business for firms.
In mature, low growth markets competition is dialled up because firms need to win work at the expense of others. The largest firms are redirecting marketing expenditure away from activities like events and sponsorships and spending around one third of their total marketing/BD budget on Client Development activities (an increase over the previous year’s findings). In terms of client development programs BTI found the most effective activity for revenue growth is independent in-depth client feedback.
Other initiatives include client specific training, multiple annual client visits, preparing research or original content, and funding ‘Top 25’ client teams and their activities. And because big firms have a greater need for revenue growth, their client development activities are more formalised, disciplined (measured) and regular. Client Development is a key performance measure valued in the same way as financial performance metrics.
2. Alternative Fee Arrangements aren’t ‘innovative’ and they’re not for everyone.
BTI’s research indicated that the number of companies using AFAs has fallen from 79.3% to 66.1%. Large companies with big budgets embrace AFAs - they even separate AFA law firms leaders from others. But smaller clients are turning away (back to hourly rates?).
3. A common challenge for firm leadership is redirecting funds to fewer but higher value projects.
Linking activity to revenue growth certainly helps meet this challenge. BTI’s research of 159 firms suggests marketing activities that have the most impact on revenue growth are (in descending order).
- Client feedback
- Proposals to clients for more work or new work
- Client Referrals
- Client Teams
- Industry teams
The next challenge is how to implement activities that will drive growth …
4. Start by mapping your practices
Take a leaf from the framework developed by BTI in their industry-wide analyses and assess your firm’s portfolio of practices according to (1) Growth prospects and (2) Relative fee rates.
- Priority practices – high relative fee rates + high potential for growth
- Tactical practices – average to low relative fee rates + high potential for growth
- Opportunistic practices – high relative fee rates but with no growth potential (or decline)
- Cornerstone practices – low relative fees and no growth potential (or decline).
And then apply these 7 tactics for taking market share
- Concentrate on Key Account Plans: Have a marketing plan for each major client (or major referrer). Start with those clients or referrers who contributed the top 50% of your total fees in 2016. Critique your clients (keep that bit to yourself!) and get feedback from them. And make sure each Key Account Plan identifies the key risks that client faces and the key result areas of decision makers.
- Act on Client Feedback. Install a regular program of client listening and large-scale use of independent client feedback (dozens to hundreds of interviews by a third party) and let this drive client development plans.
- Adopt a ‘One size fits one’ approach to client development. Each client will have unique demands for service and style, metrics and measures. So take a ‘concierge-level’ approach and create custom designed strategies, client and team education, process design and services delivery.
- Be selective with BD Skills training and coaching: Provide BD skills training and coaching provided for high potentials only – invest in those professionals willing and able to deliver.
- Do one thing that is relevant and memorable in your market. Create one piece of original content and use as a marquee-messaging vehicle for the firm.
- Dive into the data: Analyse client types and buyer profiles, fees and matters, feedback and workflows - look for opportunities and recommend improvements to process.
- Empower Partners to commit the firm. If you’re going to play the AFA game have clear protocols and processes on matter and client specific bases so Partners can commit at the time of negotiation.
BTI's 60 minute presentation is now available on You Tube.
Get in touch if you'd like to find out more.
Subscribe to our Practice Builder Blog and get our latest ideas, insights and opinions on what it takes to build and run a successful practice.