Cross-selling simply doesn't work and, in most law firms, never will – at least for the time being

 

In theory at least, it should be considerably easier and cheaper to sell more to existing clients than to create new ones. It is no surprise, then, that in this cash-strapped and cost-sensitive time, the legal blogosphere is busier than ever with tips and guides on how to make cross-selling work. Most focus on aligning compensation systems and cultures, and getting these fit for purpose is just good common sense. However, in many law firms this is a case of very much easier said than done.

Putting this into perspective – there are few sizeable law firms that don’t have some sort of client review/satisfaction/retention/relationship management/key account programme in place, coupled with a shiny client relationship management (CRM) system of one sort or another. I can’t comment personally on how good these are as I’ve not been on the receiving side, but listening to many of the clients that we share with these firms, their effectiveness as cross-selling tools is limited.

There are a couple of themes that have emerged from the 50-plus conversations that I’ve had with clients over the past couple of years:

1. law firms are still not getting close enough to understanding their clients’ strategies and are looking for ways to help them achieve their goals; and

2. in the few instances where they do achieve this, the post-review information seems to get lost when the partner or whoever conducts the review returns to their firm, only to repeat the process 12 months later, having reverted back to their normal reactive approach – namely that the client will call when/if they have a problem.

This begs the question: what actually happens to the relationship information that is produced? In most cases, I bet if you’re lucky it gets posted to a CRM system and is then largely forgotten about – with the partner conducting the review ticking the metaphorical appraisal box, secure in the knowledge that he has adequately dispensed his relationship partner duties for another year.

In many cases – and I can only speculate on this based on 20 years of working with professional services businesses – the valuable information on the services that a client will require over the next 18 months or so gets placed in a client file, never to see the light of day.

Hand on heart, how many law firms use client review processes effectively, i.e. to identify opportunities to sell more services and then convert these into cold hard cash?

The real question law firms should be asking is: what’s the return on investment from our cross-selling activities? Now there’s a challenge to marketing and finance directors if ever I saw one.

The big problem for many firms is that the openness and accountability that cross-selling involves doesn’t sit comfortably at many lockstep practices, where the need to have a programme, although understood, stumbles when transparency is required. It also goes against the culture at the more individual performance led ‘eat what you kill’ firms, where clients are more likely to be hoarded and not passed around.

Also, the revolving management door that exists at many law firms doesn’t help the situation. It means that even enthusiastic partners regularly fail to have a clear and consistent signal from management of where cross-selling sits as a priority. After all, it’s not uncommon for managing partner elections to take place every three years and subsequently for marketing directors to move on after 12-18 months of the new regime as the firm’s strategy evolves to fit the new incumbent’s election platform and policies.

Making cross-selling work in a law firm is not a straightforward process and I don’t pretend to have the answer – there isn’t a ‘one size fits all’ approach. But, with the advent of law firms like Russell Jones & Walker securing potentially game-changing external investment from listed businesses, or listing themselves to access capital, the need to have an effective process in place is no longer optional.

What do I mean by effective? Well, that all depends on the type of client that you service. From my experience as marketing director of a full-service law firm, in 2011 we provided an average of 2.81 services to our top 100 commercial clients – and yes I do know the ROI of our cross-selling investment. However, what I don’t know is whether this is good or bad, as there are no reliable cross-industry stats on the effectiveness of law firm cross-selling.

That said, we certainly have room for improvement and, with about 100 potential alternative business structures at application stage with the Solicitors Regulation Authority, cross-selling will remain a priority for some time.