Is your firm customer obsessed?
I have written before (here, here, here, and here) about how a law firm's focus should be on its customers (clients) first and profits second. In this post in the weblog A VC, the author (a New York City venture capitalist) writes about the companies he likes to invest in:
I like to say the way you start a company is you build something for not a lot of money, sell it to a few brave customers who you then develop deep relationships with, listen to them very closely, follow their lead and improve your product and develop new products around your customers feedback, and soon enough you'll have a good business that will be profitable and loved by its customers. It's not easy to do but that's the model I like best.
Elsewhere, in article in Fortune Magazine (registration may be required) talks about Jay Leno's focus on his fans:
One reason he does not use an agent anymore is that he doesn't want anyone to speak for him and possibly offend a client or fan. "That's really what this business is about," Leno says. "Contact with the customers. Because it's really feast or famine. You meet a guy on the elevator and you say hello. Well, for the rest of your career, you are the greatest guy in the world. But if you go, 'Excuse me, I'm busy,' you are just an asshole. Lyndon Johnson used to say that every handshake is worth 250 votes, and it's really true, especially in television. (From the Church of the Customer)
Lastly, in this post John Moore reviews a Harvard Business Review article, "The One Number You Need to Grow," penned by Frederick Reichheld.
Reichheld’s research indicates that there is a strong correlation between a company’s growth rate and the percentage of it’s customers who are willing to recommend the company to a friend.
Moore quotes Reichheld, "You only have to ask your customers one question: How likely is it that you would recommend [company x] to a friend or a colleague." Do you ask you clients that question?
The New York Times on Business Lawyers:
This article in today's New York Times (registration required) talks about the sometimes rocky relationship small businesses can have with big firm lawyers. According to the article, "There is a yawning gap between [small companies'] practical requirements and the legal culture. Small companies must watch costs and focus on cash flow, while law firms can lose sight of the cost effectiveness of their work and may be driven by the perverse incentives inherent in hourly billing." Small business owners were quoted about their relationships with lawyers:
"Lawyers for small companies take on a patronizing role.""They (lawyers) will consume as much time as they possibly can and will assume as great a role in a transaction as they can."
"You find that the whole deal is negotiated, and you haven't even seen it."
"An attorney, to me, is like an expensive pen. It's a tool. You should negotiate the business points yourself. They should document what you've negotiated."
"They (lawyers) tend to fascinate themselves with all of sorts of trivial things,"
"They (the law firm) did a great job, but I knew when I walked into a gleaming conference room with Dean & DeLuca pastries that there would be problems."
At hourly rates exceeding $500, "it can cost $20,000 or $30,000 to have a question answered and a couple of letters written."
"You don't want to hit a flea with a sledgehammer."
The article also gives some tips small businesses should follow when hiring a lawyer:
• Ask for a flat fee. If the lawyer will bill only by the hour, get a cap. Request frequent updates on how much time has accrued.• Insist on approving all staffing. Require the lawyer you hired, rather than a green associate, to do the important work; a busy, but experienced lawyer will generally be cheaper than an underused young lawyer, even at a higher hourly rate.
• Do not allow more than one lawyer to attend a hearing or deposition. Do not pay for travel time or for ordinary overhead like photocopies and phone calls.
• If the bill contains the names of lawyers and paralegals you have never met, work you did not ask for or fees out of proportion to the problem the lawyer was hired to solve, do not be afraid to question it.
In general, Ms. Lodenkamper said, small-business owners should stay away from larger law firms."You want either a sole practitioner or a small firm," she said. "If you get into a large law firm, you're going to get a lot of theory and 70-page contracts."
The article is right on, and should be required reading for all business lawyers.
Words matter
You would think that lawyers (above all other professionals) value language and realize the effect our words can have on our clients. This article discusses how certain words can limit a salesperson's liklihood of closing a deal. The lessons are helpful for lawyers as well -- if for no other reason than to remind us of the significance our clients place on the language we use. The words:
1.Contract. Even though salespeople generally have good associations with this word because it implies a sale, most customers have a negative view of it. To most, it means something binding, lawyers, maybe even court -- yuck! Replace it with the word "agreement."
2. Sign. This is unsettling for the same reasons as "contract." Many people are warned by their parents not to sign anything -- they might be signing their life away. Replace "sign" with "approval." "I just need your approval here," you say, while pointing to the appropriate spot on the agreement, "and we're all set."
3. Buy. Buying something is the painful part of the shopping process. It's where we part with our money. Owning, even enjoying, is what consumers want and what smart salespeople talk about.
4. No! I was taught a long time ago to avoid saying no to a prospective customer because it puts a speed bump into the sales process. Fair enough, but there are times where you have to say no to prospects. For example, let's say a prospect tells you that your product is the same as all the others, and your product is actually different, even superior. Not disagreeing is essentially agreeing with him and could be damaging to the sale, especially if your product is priced higher. "Actually" is a respectful alternative.
5. Quote, estimate or bid. These words should be avoided, especially if your product is superior and higher-priced than others. These words suggest the purchaser is going to shop around, get multiple quotes and probably choose the lowest price.
6. Cheap. Cheap implies poor quality. Just yesterday, a TV show was discussing consumer trends. A lucky retailer was chosen for an in-store interview (you can't buy advertising better than this) and was asked by the reporter what people were buying. His answer: "They seem to be buying the cheap stuff."
Via the FreshInc. weblog.
Another post on the same topic comes from Joyce Wycoff in her Good Morning Thinkers weblog. Good stuff.
Managing Client Expectations
Another great example from Priceless: Turning Ordinary Products into Extraordinary Experiences is Xerox. Xerox was receiving numerous complaints from its customers that repairs weren't happening fast enough, so they revamped their service-delivery process.
Under the new approach, each time the customer called in she was allowed to identify her need on a scale from routine to critical. Service personnel would then arrive faster for a critical call than a less urgent one. By involving the customer in the service delivery process Xerox not only increased customer satisfaction but surprisingly found fewer service personnel were needed. Rather than take advantage of the situation and define every call as critical, the customer was more interested in having a choice than instantaneous response.
As a lawyer, I find that my clients are willing to give me extra time to complete a task when I tell them I am swamped -- but they are most understanding when I tell them when the assignment begins, and not when it is due. If I am able to get the project done before I promised, they are doubly happy. David at ethicalEsq knows all about Underpromising and Overdelivering.
Putting Customers First
In Priceless: Turning Ordinary Products into Extraordinary Experiences, authors Diana LaSalle and Terry A. Britton look at how businesses can create value-adding experiences around any product or service. One of the companies they highlight is Deerpath Medical Associates in suburban Chicago
Every morning, Monday througth Saturday, its offices open at 7:00 A.M. For the next forty-five minutes, any patient can walk in and sign up to see a doctor that morning. . . . To handle the load, two or three doctors from the group are assigned each morning to see patients. . . . Because patients can easily access a physician six days a week, they are less likely to self-doctor or wait until a minor ailment becomes a serious illness. They are also less likely to jump ship for a group that doesn't offer such convenience.
In a later chapter, the authors cite Frederick F. Reichheld's book The Loyalty Effect, and his statistic that, "an increase in customer loyalty of just 5 percent can increase profitability 35 to 95 percent." Certainly a staggering statistic, and I've not read the book to know if Reichheld argues that the reverse is also true -- that is, does a 5 percent decrease in customer loyalty have as significant an impact upon profitability?
What lessons can lawyers take from Deerpath? How can we increase customer loyalty? Step one would be to return those telephone calls.
Customer-centricity for Law Firms
Can law firms be more customer-centric? My first exposure to that term comes from this post on Chris Lawer's Creating Positive Context weblog. Chris says:
[By] thinking broadly about the challenges people face, rather than narrowly about what firms can sell them, new ways to make their lives easier and their decisions simpler can almost always be found. Individual-centric customer innovating businesses understand this and aim to overcome these challenges. They focus on creating a more positive brand, marketing and customer context; one that reconfigures mostly intangible (and hitherto unrecognised) aspects of people’s needs and problems into new forms of social, relational and brand capital. These intangible value dimensions include new drivers such as time, attention, knowledge, uncertainty, trust, privacy, personal productivity and simplicity.
Though a bit heavy on business-speak, Chris' ideas dovetail with my thoughts on value billing that I've been trying to articulate in this weblog. By focusing on those "intangible value dimensions" important to my customers (trust, certainty, security), I am hoping to build a lasting legal relationship with them that isn't tied to the time I spend working on their individual matters, but rather the value they get from me. Chris continues:
By viewing markets from an explicit individual value perspective . . . customer innovating organisations are able to locate and address the new intangible forms of customer value. ... [B]y shifting from a world view of an assembler or value-added player in part of a supply- (or demand) -chain to one of becoming a nodal or partner player in an enhanced interactive positive context customer value network, the opportunity to identify, define and unlock new forms of holistic customer and business value are simply, huge.
I think Chris is right on. We lawyers need to concentrate on the value of our services to our customers. Finding the "price" of that value is never going to be easy (I'll post more later on my efforts to "zero-in" on the price I'll charge for certain legal services), but begin by asking a potential or existing client, "What do you think X would be worth to you?" And remember, "X" is not a contract, will, or deed, but rather peace of mind, security, or some other intengible benefit tied to the specific legal service you'll be providing.
How not to treat one billion potential clients.
The Nub reports about how law firm Dewey Ballantine is "fast gaining infamy among Asian-Americans." It seems that an e-mail sent by a partner in the firm's London office, responding to a note about a puppy up for adoption, suggested: "Don't let them go to a Chinese restaurant." This comes after a racially-insensitive poem got the firm in hot water last year.
Word having got out, Asian-American legal representative bodies are distinctly unimpressed. They are treating the e-mail as 'a racial incident' and want answers from Dewey Ballantine leaders as to how they intend to respond. The firm has apologised and plans a fresh round of sensitivity training for employees.
Read the entire article here.
FedEx gets it.
In another Information Week article, FedEx chairman, president, and CEO Fred Smith talks about his company's business strategy for the next decade. Instead of tackling big project after big project, Smith says,
the one thing FedEx won't do is pursue its goals in what he calls "dim-the-lights" projects, big undertakings that suck up lots of resources. "There have been a lot of enormous screw-ups trying to do that," he says. "We try to do a lot of work on the front end, divide things into bite-size pieces, do things in a more evolutionary way."
The article continues:
The end-game is to make FedEx so valuable to customers that they keep coming back for more services. "What I can do is make the services and systems I offer so easy to use that I'm going to get a real sticky relationship with you," [Smith] says. "We want to give you end-to-end visibility and [let you take] cost out of your business."
Shouldn't a business law firm have a similar goal? How many law firms focus on "taking the cost out of" their clients' businesses?
How not to treat clients.
True story. A friend's brother called her this morning and asks her to accompany him to a doctor's appointment. The doctor's nurse had called a few minutes earlier and told her brother, "The doctor need to see you right away, I can't tell you on the phone why, and -- by the way -- bring a family member." The doctor's office calls back about fifteen minutes later and says, "The doctor can't see you until 3:30 this afternoon." Now, I don't know much about what is up with my friend's brother, but what a horrible way to treat your customers.
Anticipation
In this post Jennifer Rice at What's Your Brand Mantra? asks:
If the purchase process in your company includes a waiting period, what can you do to alleviate "buyer's remorse" and create anticipation?
As lawyers, there is often a significant waiting time between the time we take on a particular assignment and complete it. In litigation, the "waiting period" is often years. How can we keep our clients engaged from the time they retain us until their work is complete?
Setting Expectations
In this post on his Ripples weblog, David St. Lawrence writes:
Hindsight is so humbling. It took me 45 years of professional life to arrive at the following conclusion: Setting expectations correctly is far more important than the actual work that you do.
I hate voicemail. However, I have heard of a consultant who has voicemail that says, "Leave a message and I'll return your call in 90 minutes." He always returns the call in sixty minutes or less -- or has an assistant do it. He sets a client's expectations and then exceeds them. If we lawyers were able to consistenly do the same thing, we wouldn't be the butt of so many jokes.
It is not just a legal problem.
Adrants had a post commenting on an Association of National Advertisers study which revealed:
a third of marketers think their agencies are suffering from "creative arrogance", charge too much for their work and the work that is produced is off strategy. Seems agencies dirty little secret has been found out. Without bashing all agency creatives, the problem stems from the inability of some in advertising to realize that making an ad is not art. It's a commerce of craft. While agencies do need to stand their ground on creative and strategic direction if they truly believe in it and it's backed up by research but at the same time, they need to realize the client is the one paying the bill and is the one who has the final say. This is not to say agencies should just roll over at the wim of the client but they should realize they are not creating the next Mona Lisa to be hung on the wall or entered into the awards show of the month. An ad has the very important purpose of moving consumers to a distinct mindset or action.
Replace "marketers" with "clients" and "agencies" with "law firms." Sound familiar?
Solo lawyers as developing countries?
The dilemma most small firm lawyers face -- especially when they first hang up their own shingle -- is a lack of resources. In a new article on the Harvard Business School Working Knowledge site, authors Donald N. Sull, Alejandro Ruelas-Gossi, and Martin Escobari talk about how innovation is often stymied in developing countries. The impediments to innovation faced by developing countries seemed much like those barriers I faced (and continue to face) when I decided to become a solo lawyer:
1. Developing countries generally lack a solid technology base of trained scientists and world-class research universities.
2. Companies in developing countries must manage to eke out a profit while serving customers with low disposable income; per capita gross domestic product in the advanced economies is on average ten times that of developing nations.
3. Managers in these companies must often innovate on a shoestring budget, since the high cost and scarcity of capital preclude massive spending on R&D. As a result, they must innovate from other areas of their business's structure, including manufacturing, logistics, marketing, and customer service
The three keys to innovating on a limited budget, the authors argue, are: knowing your customers' mindsets—intimately; innovating around—rather than through—the technology; and scouring the globe for good ideas. Each key comes with great examples from successful companies in the developing world. My favorite:
Employees of China's Haier, for example, discovered through visiting rural customers that they frequently used their washing machines not only to launder clothes but also to clean vegetables. By making a few minor modifications to the washers they manufactured, Haier was able to market the machines as versatile enough to wash both clothing and vegetables, and rapidly became the market leader in rural areas of its home country
.As a lawyer, a limited budget should not keep you from becoming an innovative service provider to your clienst. Listen to your customers, use your technology efficiently, and look outside the legal profession for great ideas.
The "Southwest Airlines" of Law Firms
In my last post, I talked about the book Creating Customer Evangelists and how it used certain companies as examples of how to create buzz and build customer loyalty. One of these companies was Southwest Airlines.
The subject of Southwest Airlines as a model business for lawyers comes up in Larry Bodine's Professional Marketing Blog where he summarizes a speech by Deborah Ackerman, VP and GC of Southwest Airlines. Ms. Ackerman said that a law firm run like SWA would:
-Be the low-cost producer. -Have excellent service. -Focus on clients as customers and not as a legal matter. -Have no layoffs. -Have an annual chili cook-off. -Have a tradition of fun. Halloween is a major holiday at the headquarters, and everyone comes to work in a costume, including the CEO. -Relax the dress code. -Be family-oriented. There is no expensive artwork on the walls of SWA. Instead there are pictures of employees with their families, pets and hobbies. -Display "brag boards" everywhere where employees can put up notes about their own and their kids' accomplishments. -Have many employee recognition programs. -Establish an Employee Catastrophic Fund to help employees in cases of an uninsured loss or serous illness. -Communicate in a timely fashion to employees. -Give hugs and praise from to staff as a daily occurrence.
Bodine calls this a "total fantasy" and says, "There will never be a law firm run like Southwest Airlines, because law firms care about partner profits, not employee happiness. The employees are there to serve the partners and help the firm make more money. Law firm goals are to move up the chart of the AmLaw profitability tables."
Why can't a law firm be run like Southwest? Don't clients deserve a choice? Airline passengers choose Southwest in no small part because SWA employees enjoy their jobs so much, they make travelling fun. How many lawyers enjoy their jobs so much, their enthusiam rubs off on their clients? Not enough.
Creating Client Evangelists
I just finished the book Creating Customer Evangelists by Ben McConnell and Jackie Huba and found dozens of great ideas to build my ideal firm. In the book, the authors profile several companies that have created amazing "buzz" from extremely satisfied "customer evangelists." The companies profiled included Krispy-Kreme, Build-a-Bear Workshops, and Southwest Airlines. Each company was held out by the authors as an example of a good business made great through fervent customer support and word-of-mouth advertising. A singular focus on the customer experience (and not on stock price, shareholder value, or even profits) differentiated these companies from their competitors.
Th first step in creating avid customers is to learn what those customers want. Huba and McConnell set out ten golden rules for learning -- and valuing -- customer feedback:
1. Believe that customers possess good ideas.2. Gather customer feedback at every opportunity.3. Focus on continual improvement.4. Actively solicit good and bad feedback.5. Don't spend vast sums of money doing it.6. Seek real-time feedback.7. Make it easy for customers to provide their feedback.8. Leverage technology to aid your efforts.9. Share customer feedback throughout the organization.10. Use input to make changes -- and communicate changes back to customers.
I've been meeting individually with my best clients for the past month to learn what I can do to make my services more appealing to them. Now I have to identify and meet with my unhappy clients and learn how I screwed up my relationship with them (and how to keep it from happening again). I'm also beginning a Customer Advisory Board (another of the authors' great ideas) by asking my best clients to serve on a sort of "board of directors" for my firm and to help me learn to become indispensible to them.
Visit McConnell's and Huba's weblog Church of the Customer for a daily dose of their wisdom and insight.