“It is not that straight forwards”
In our previous article, we examined the Art of Business Development. During our high-level review, all roads were pointing to these buzz words – long term value. Who are we creating long term value for? Client or firm? What does long term value mean? Is it all just fluff? Or the secret to successful business?
How we do business today is not the same as how business was conducted a decade ago or one hundred years ago. There has been a shift which no firm can ignore. Clients are in control now more than ever before. Clients want more for less. They want you to understand them and provide them with solutions, delivered in a style that suits them. How does such demand fit your firm’s ability to supply profitably?
Before we get into the weeds of trying to define the drivers of long-term value, we need to set the record straight. For those who continue to confuse business development with marketing or sales, or worse yet, those who still refer to all professions outside the scope of their own as ‘non-lawyers’ and bundle various administrative, accounting, tech, marketing, BD, PR, and other professions into the bucket ‘non-’, it is important we eliminate all ambiguity and define our terms. (This will help us later).
TO SIMPLIFY AND SUMMARISE:
- Marketing is what businesses do to build on their brand recognition and promote their business.
- Sales is focused on the short-term goal of selling. Salespeople use marketing to help them sell.
- Business development is a little like sales, as marketing is used to help the sales processs and the end goal is to sell, however, unlike sales, business developers are focused on improving profitability and generating revenues not only for the short term, but also, and much more so, for the long term.
When we talk about “creating long term value”, we mean creating value for both your client and for your own business or your firm, and the two remain very much intertwined.
In establishing how we create long term value, we must cast our attention to three key components that are crucial to any business development effort:
II. MARKETING & COMMUNICATIONS
Relationships are based on respect and trust. Relationships exist amongst partners, colleagues, clients, prospects, and strategic alliances. Whether you are managing relationships to enable long term value, navigating your relationships requires time, effort, commitment and for you to put your soft skills into action.
Seth Godin, a prominent business thinker, wrote in his book The Linchpin that we are living in the “connection economy”. The connection economy relies on relationships. The digital revolution has enabled the connection economy to reach a whole new level, with connection platforms such as LinkedIn connecting us with industry leaders, clients, prospects, potential employers and colleagues. There is no shortage of social networking apps today and it seems reasonable to observe that the connection age has monetised the value of relationships.
How you manage your relationships remains at the core of any business development and the management of your relationship with your clients and prospects is crucial to any successful attempt at achieving long term value.
How are you navigating your relationships with your clients and prospects to enable long term value and growth? §are your efforts fuelled by short term gains?§or are you looking beyond any immediate reward, in favour of setting in motion a strategy that requires you ask questions, show interest, offer solutions, and build a solid foundation from which a long term valuable relationship will ensue?
THE IMPORTANCE OF SYSTEMATIC CONTACT
Often, in between matters, there may be little interaction between the lawyer and client. Similarly, relationship development with prospects may be placed on hold when more pressing instructions require a lawyer’ azs immediate attention. Neither of these situations are conducive towards achieving long term value; and both compromise the integrity of any business development effort.
Since touchpoints need to be systematic in order to return positively, it is not uncommon for business development professionals to use CRM software to help in the management of their clients and prospects. However, the reality is that the legal industry is technologically still playing catch up since adequate CRM and matter management software is still in its infancy.
II. MARKETING AND COMMUNICATIONS
How you communicate internally amongst your peers and colleagues, and externally – to your clients, prospects and strategic alliances, impacts your success in creating long term value. It is important that you not only utilise marketing to create consistent positive impact, but that you go one step further to ensure your efforts yield long term reward.
Marketing is not business development. However, marketing can be a powerful tool in enabling business development and creating long term value.
Many firms send out numerous client alerts to keep their clients and contacts informed of changes in the law or other news items. Client alerts can provide useful information to clients, but they can also be irrelevant and dull. Some law firms view the effort of ‘getting into the client’s mail box’ as enough to satisfy the relationship effort – “they know we are thinking of them as we have just sent them a generic email”.
If we were to reflect back to what creates long term value, our first driver was relationships. Sending an email alert does nothing to help your relationship with your client. Back in 2015 when changes were made to carried interest, the partners at the firm I was working with wished to send out a client alert informing their clients of the changes made to carry. However, unlike the hundreds, if not thousands, of client alerts that had been sent out by this firm, I succeeded in persuading the partners to take a more strategic approach. This time, we gave enough information to tickle some interest, and sent the alert to both clients and prospects. Unlike any previous client alert we adopted the classic sales pitch doctrine of ABC (Always Be Closing).
Our sales pitch was subtle and our focus was on getting the conversation started. By starting conversations with our clients and prospects we are able to set ourselves apart from other legal vendors who were also sending out emails on updates to carried interest.
This effort cost us a little more time since we did end up visiting a number of clients and prospects. However, the return of our effort far outweight our time investment. By getting the conversation started in a knowledgeable and value driven way, we created ourselves the opportunity to actually develop business – to ask our clients and prospects the right questions, to show interest in their business, to follow up and continue to add value even after the point of instruction. That opportunity existed as we used marketing in a different way.
Sending out generic client alerts, or sponsoring events without having a plan on how you will generate an actual return from any such investment does not help you or your firm’s effort in achieving long term value. Using resources creatively and strategically can make a tremendous impact on creating long term value for your firm.
Business development is not reactionary or impulse driven. Business development requires you to be prepared and ready to identify market opportunities.
By markets, we are talking about i) delivering best in class solutions to your clients or prospects for the market in which they operate; ii) being responsive to changes in the market and being able to adapt effectively; and iii) identifying or adjusting your service offering to market opportunities. It is not enough to only identify an opportunity to enter a new market. Devising and executing a strategy to enable you to capitalise on the opportunity is critical in bringing you one step closer to achieving long term value.
Example: Some law firm have very niche practice areas. Transactional lawyers that operate in the distressed loan market may find themselves quiet during a bull economic cycle where interest rates are low. Despite the loan market not being very active (since distressed loans are priced above par), the skilled human capital employed by the firm remains a huge fixed cost. From an employee satisfaction perspective, office morale may nose dive since no one really enjoys being quiet.
Identifying an inversely cyclical transactional market, preferably in which existing credit and distressed loan market clients operate, not only keeps legal teams engaged, happier and busy, but further, helps employees develop their legal skills. In addition to enriching workplace morale, servicing existing clients across the markets in which they operate can further entrench the firm’s commitment to its client – which is good from a relationship management perspectice, and may ultimately boost the firm’s bottom line by improving on its profitability for those relevant clients.
Identifying opportunities to reach new customers by entering into new markets is one important gateway to unlocking long-term value. Clients operate in specific markets and at the core of creating long term value is being available in that market for your client.
Creating long term value draws on the various interactions of relationships, markets and marketing to work together. Managing how you promote your business, and navigating your efforts to ‘sell’ over the long term, all the while adding value to your client’s business, and of course your own, requires planning and a commitment that remains systematic, relevant and which can never be put on hold to attend to ‘more pressing matters’. Creating long term value is not something you do intermittently, it is something you do consistently.
“Opportunities are up for grabs. Many are being overlooked.
So, what are you waiting for?”