Avoid the cross-selling sandpits

With the rise of marketing in the legal profession, greater focus has been given to the role of sales in the professional marketplace. Some firms still find the thought of ‘selling’ distasteful, but, as Mungo Dunnett, an independent consultant explains, every successful firm will utilise selling techniques in one way or another. It’s just a question of avoiding the familiar mistakes to sell well.

Some of the most disastrous attempts to commercialise UK business in the last decade have come about through the simplest notion. Because of the concept that ‘relationships’ help businesses sell, working practices have been altered, expensive IT systems have been brought in – and the relationships have in numerous instances disappeared under a landslide of misconceived and incompetently managed cross-selling. I spend much of my time in the financial-services sector, where some staggering costs have been expended on customer-relationship management (CRM) in the name of cost efficiency and revenue generation.

The same practices are now beginning to appear in the UK law sector, as law firms adopt some of the management practices of their US counterparts and of other professional-service sectors in the UK. One of the most notable new arrivals is the concept of ‘managing by database’: the notion that your clients, their history, recent business and future prospects can all be loaded onto a PC-based system and then analysed to identify trends within your own firm’s activities, or specific opportunities within your own client base. In theory, it offers all sorts of efficiencies: centralising client information (from personal data to billings); making data easily accessible; allowing analysis of business trends; and generating targets for further fees. The more advanced IT packages are delivering a full range of CRM benefits, covering all of the areas mentioned. The same approach can also be applied, at a more modest level, by a simple Microsoft Access database, with links to a standard accounting package, such as Sage.

The theory is fine, but you need to be careful. The whole issue of managing clients through the use of IT is an area where success is much more elusive than it appears, and the risks of damaging your business name are dangerously high. Of course, one of the real problems is that establishing any form of rapport with customers is not really anything to do with IT at all; it’s about people. But not only does IT become the tail that wags the dog, but IT itself is frequently approached wrongly. It happens in a number of ways.

How not to buy the IT system

Most often, there simply isn’t enough clarity of thought before the system is bought. Typically, there would appear to be a number of sound reasons for making the investment. For example, various jobs for the same client have become separated into different parts of the accounting system, with no proper overview possible, or there is a growing sense of unease at the firm’s increasing dependence on a given type of work, or firms realise that sensible approaches to existing or past clients are hugely hampered by the lack of available information on their past business. These are just a few of the many issues that can be addressed by an upgraded IT system created with client tracking in mind.

However, no matter how brilliant your chosen IT system, if you don’t give your full consideration to how the firm is going to use it, you will be throwing your money away. Here’s the first rule of thumb. Make sure that you need the new IT and that the old one can’t simply be used more intelligently. It’s amazing how often the new system is expected to right the wrongs of the entire firm. If you are not thinking sensibly about your IT needs, and why your IT is not delivering the value it might, you will simply spend money on a shiny new system that is beset by all the old problems, and merely spins them around faster. Before you open your chequebook, therefore, draw up a painstaking list of precisely what has gone wrong that is eminently fixable, and what really does require a new system. And consider precisely what functionality you want. It generally costs a fortune to customise – and if your staff don’t understand what the fancy gadgetry does, your money will again be largely wasted. I’ll talk a little about the functionality itself later on.

Here’s a second rule of thumb that might scare you. It is generally recommended that companies installing information systems spend an additional 25-30 per cent of the cost of the system in making sure that people understand what it is there for, and how they are supposed to use it. Never underestimate the power of the sullen staff member to dismember your IT processes. If views are not sought and listened to, if training is not comprehensive (and as much fun as possible), and if the IT is not positioned as a positive benefit in your firm’s working life, the system will expire quietly.

Internal resistance to IT systems can be astonishingly powerful. People don’t like the intrusion. Any client-facing environment that has depended on a degree of personal latitude and initiative – and that’s a fair summary of the laissez-faire sales practices permeating law firms – will resent the supervisory element. Even where there seems eminently good sense about the new identification of sales opportunities brought about by IT systems, the sub-text is new and somewhat threatening: this is work that now has to be done – it’s defined, explicit and monitored.

Using the data properly

It is easy to lose sight of the fundamentals in client management. People buy when they are impressed by the firm and believe that you are capable of delivering a valuable service to suit their needs. Clients want specific messages, not big generic promises, woolly background credentials or menu-style lists of your areas of expertise. To deliver these messages (in whatever format you prefer: advertising, letters, phone calls, e-mails – all will work if they are specific), you need to assemble the information. This involves a number of simple steps. First, determine whether the firm actually wants (and can profit from) this type of business. All too frequently, this initial filter is missed in a rush of business-development enthusiasm. Second, assemble the available information about the client. This will be a combination of previous billings and work summaries, notes from conversations, and ideas for future opportunities. Crucially, it will depend on intelligent reflection on all of these things, to consider what the client is most likely to want, based on where they (or their business) is going. The final aspect is merely the packaging: the sensitive articulation of your firm’s proposal, couched in terms that the client will recognise as being specific, and specially created, for them.

All of this depends on data: the careful and comprehensive pooling of known information into a single accessible place; establishing profit margins, and, therefore, the selection of priority clients; and the intuition that gleans from raw facts those areas where the client is likely to move to next.

The data system itself, of course, is only as good as the people using it, and the degree of focus it is given within the firm. The starting point is this: focus on where the profit will be made. It sounds so basic, and yet so many elements of law firms’ current practices are driven by the belief that all customers are equal. At the most basic level, any form of ‘selling’ is avoided by law firms, either because it is seen as ‘pushy’ and likely to rattle clients, or because it entails a particular type of sensitive proactivity that is quite beyond many people’s experience. For those law firms that do actively seek further business from existing clients or prospects, however, their enthusiasm and proactively can be misguided: for many firms beginning to gear up their sales efforts, any sale is a good sale, and any customer is a good customer.

This is dangerous, costly, and (at best) wasteful. Consider the economics. There is an enormous gearing effect in focusing on certain types of customers, and certain types of sales. Broadly, the old Pareto truism dominates your business: 20 per cent of your customers will be responsible for anything between 65 per cent and 90 per cent of your total profit. Profit – not fees, not sales revenue. You need to know which are your most (and least) profitable customers, services, business sectors, locations – or any other criteria that will help to cut your business into meaningful chunks. If you don’t do this, every allocation of the firm’s resource is being diluted by spreading it too generically, across too many customers. If you have not done this data analysis, do it now. Cross-selling, where it is done effectively in retailing, financial services, online (by the likes of Amazon) and even on occasion by the dreaded utilities industry, entails the careful collection, analysis and utilisation of customer data. There is no excuse for not doing this – it will be the single most cost-effective element of cross-selling you will undertake.

Remembering how to sell

If the management information is coming through, you are now able to identify the clients who will make the biggest commercial impact. But none of this effort has yet made you any money. It’s now back to the people – and remembering why people tend to buy in the first place. Why is it that people seem to forget what it’s like to be sold to, as soon as they start doing selling? We all know how annoying it is to have a bad sales pitch pointed at us when we least want it – and yet the blinkers descend whenever we’re trying to flog our services to someone else.

Of course, not all law firms even approve of the concept of ‘selling’. For these firms, tradition is generally paramount, and the careful preservation of a long-established reputation impedes the adoption of new client-facing practices for fear that the firm’s reputation will suffer. Others are less conservative, and are exploring more proactive approaches to clients, while (in the main) keeping a careful eye on client responses. However, all law firms are interested in selling: the concept of finding what the other fellow wants, and suggesting that they consider making use of your services, is a fundamental of successful business. The concerns about reputational risk are entirely justified. The key issue is how law firms can position themselves to sell while staying true to their own tradition, and the service their clients expect from them.

There are two reasons why poor sales results occur. One is just an obtuse selling technique – which is the result of bad hiring and training, and almost invariably the cause of the reputational damage the more cautious firms fear. The other is lack of thought and preparation. I’ve already mentioned the old maxim about legal services being ‘a people business’ – that it’s all about relationships, trust and convenience. But the heart of good selling is exactly those concepts – it’s just that it’s devilishly difficult to do well. Selling is all about people, but don’t make the mistake of assuming that this means charm, smarm and a golden sales patter. Instead, the most effective selling comes about when the client truly believes that what you are offering is in their best interests, and that it is their own best interests that you have at heart.

One of the most powerful consumer research studies I have ever seen was in the banking sector a few years ago. It transpired that an astonishing number of people, irrespective of salary level or educational background, opened their monthly bank statement in the unspoken belief that ‘the bank manager’ was the last person to have read it before it was posted to them. They felt that somebody older, wiser and caring had skimmed their month’s transactions.

A very human response

People will always be impressed when it appears that you have done your homework. They love to think that they are important enough – either as a business, or as an individual – to warrant special focus being given them by another firm. Then, when that firm contacts them with real evidence that their movements have been tracked and reflected upon, and that there is a particular solution that has been selected just for them, there can be an extraordinary – and very human – response.

It is these feelings that the best selling will trigger. And this is where good IT comes into its own. What you need is a system that will allow you to track your key clients, so that you can spot what they’re doing, where they’re going, and (by extension – using your intuition) what they are going to need next. This is not difficult, but it takes a combination of accessible management information, intelligent application of thought to their precise needs, and then the wit to put across engagingly that you have been going through precisely that process.

Customers want a good deal – and without inconvenience – but value is not a simple monetary equation to them. Value means a lot of things, many of them rooted in old-fashioned concepts such as personal attention, caring, making yourself approachable, and giving something back. Customers want to be valued: they want to know that you care about them, bother thinking about them, and continue to have their interests in mind. And they want communication: they want to know that you’re still there, and are still trying hard on their behalf. Think of your own customer communications in this light. What evidence do you give them that their business matters to you? How can you say something to them that is both timely and relevant? If you haven’t got this right, they’ll know in the first ten seconds that you’re wasting their time. Finally, how can you get this into the hands of your own people? After all, you will always have better results with a real person-to-person contact than you will with laser-printed direct mail – or, heaven forbid, unsolicited calls from unknown call-centre operatives.

You get what you pay for

There is a science to picking the right customers, message, staff and the reward packages to get the best effort from them. Evaluate it, test, learn, and improve, or you are wasting your time. This is not a low-unit-cost activity, but it is at your peril if you continue to drive down the cost of doing business with your own most important customers. The game is won and lost on profit and fee generation and, if you are looking for real return on investment, you won’t get it by operating on the cheap. There is a lot of truth in saying that you get what you pay for.

And in this regard, how do your own people rate? Ultimately, the most important (and elusive) skill of all is the ability to understand a customer, make oneself likeable, and close the sale. This is a recruitment issue of course, and also a training issue. But it’s also a question of priorities, workload and remuneration. If law firms are to create the environment necessary for cross-selling to flourish, they need to think about the profitability at stake – and raise the rewards accordingly.

It’s about the intelligent use of simple data systems – and an approach to clients that demonstrates style and common sense. Your business depends on people meeting people – and if the technology isn’t helping them to do that, then you might as well simply stand around the IT box and admire it. But your efforts can just as readily be killed by a clunky approach to sales. It’s a combination of hard facts, and soft people skills. If you don’t have both, you’re left with intrusion or smarm; and you wouldn’t buy from a firm like that, would you?

Mungo Dunnett has held senior positions in the financial-services sector, and now runs Mungo Dunnett Associates, a consultancy for professional-service firms. He can be contacted by e-mail at mungo@md-as.com