Thursday, October 21, 2010

Client Diversification Minimizes Revenue Risk

Over dependence on a small number of accounts can put your law firm at great risk. As Corporate Counsel increasingly conduct account reviews in an effort to reduce outside legal costs through convergence (i.e. reducing the number of law firms they work with) or alternate billing arrangements, your law firm may draw the short straw.

A law firm Managing Partner can inadvertently be in this position for several reasons. During stronger economic times, many law firms did not feel the need to conduct any aggressive legal marketing campaigns. As the economy has contracted, however, so has the flow of incoming leads. Suddenly a law firm has a dwindling client base.

Alternatively, a law firm that is lucky enough to sign a new large account can quickly get wrapped up in the day-to-day needs of client fulfillment. Before the attorneys think about the longer term implications, the firm may be overly reliant on one or two major accounts. If one of these large client leaves unexpectedly, the ability to pay salaries or the rent can suddenly become difficult.

What is the answer? Attorneys must find a way to meet the daily demands of court deadlines and client expectations, while also investing in an on-going legal marketing campaign.

If internal staff resources are tight, law firms can reinvest some revenue in outsourced business development activities. The right law firm marketing consultant can recommend an integrated set of programs that will increase visibility, generate leads, and help the firm to create more revenue opportunities with existing clients through up-sell or cross-sell initiatives.

You can learn more about protecting your law firm's revenue base with my legal marketing book Courting Your Clients: The Essential Guide to Legal Marketing. It's now available in a 2nd edition, which includes social media marketing, blog syndication, and a recommended guide to scheduling your marketing activities. Order your copy today.

Wednesday, October 20, 2010

Client Segmentation in Legal Marketing

If 80% of your law firm revenue comes from only 20% of your clients, the Pareto Principle is at work. Think of this like a pyramid, where a small number of accounts represent your “Priority A” clients, while you are likely to have many low priority accounts.

Segmentation is the process of dividing all your accounts into 3 or 5 prioritized categories (like High, Medium, and Low). Revenue levels usually determine the priority of an account, but other factors can include client-generated referrals or client prestige.

Five Reasons to Segment your Clients
  1. Segmentation helps you to create appropriate law firm marketing strategies
  2. You will be able to allocate your legal marketing time and resources more effectively
  3. Client segmentation provides guidance on account prioritization to fellow attorneys and other staff members (although you don’t want to openly publish your prioritization strategies) 
  4. Common characteristics of your best accounts can help you target similar clients for new business development
  5. Not every account is a good one. It's OK to fire your low level accounts (within ethical guidelines, of course).
Learn More about "Courting Your Clients"

Client segmentation, cross-sell, and up-sell techniques are just a few of the many topics covered in the 2nd edition of the legal marketing book "Courting Your Clients: The Essential Guide to Legal Marketing." Click on the title to order your copy today.