What is the Relationship Selling Cycle?
We’re introducinging the Relationship Selling Cycle (RSC) as a proven method of creating and rapidly increasing a client’s long-term loyalty to your law firm.
Before we outline the individual steps of the Relationship Selling Cycle, it’s important to understand its ultimate goal. This will help you make the right decisions when allocating resources, training staff and communicating with clients as a Relationship Selling law firm.
As you already know, the key to Relationship Selling is its focus on earning client loyalty through value-adding actions that go beyond a simple piece of legal advice. You can read more about the difference between traditional law firm marketing practices and Relationship Selling here.
But there’s another thing you need to know about Relationship Selling that’s hidden in plain sight. Relationship Selling focuses on a special type of loyalty: earned loyalty.
Loyalty is often (and wrongly, we think) considered to be one and the same. This is not necessarily true. Not all forms of loyalty are equal. Take for example, your average law firm which will have:
- Some clients where the law firm has ‘earned’ loyalty by seeking out feedback, providing ongoing value to the client, and engaging multiple client decision-makers;
- Some clients where the law firm has ‘borrowed’ loyalty through the use of personal connections, law firm rankings, external ‘reputation’ or a client’s naïveté;
- Some clients where the law firm has ‘bought’ loyalty through unprofitable or borderline unprofitable pricing; and
- Some clients where the law firm has created no loyalty whatsoever.
Earned loyalty is the strongest and most valuable form of client loyalty. This is because no two firms can earn a client’s loyalty in exactly the same way. While different law firms can have similar strategies and goals for the same client – the forms of value that a firm offers and the relationships that the firm’s staff develop with client decision-makers are unique.
In other words, it is a form of loyalty that is worth investing in.
Another thing to remember about earned loyalty is that it tends to render competitor sales pitches and proposals invalid. Short-term sales ‘tricks’ and aggressive proposals will not sway a client if they feel that their needs and preferences are comprehensively satisfied by their current firm.
To ‘earn’ loyalty, the entire Relationship Selling law firm must be united in nurturing strong long-term client relationships. This may mean introducing new values, playbooks and priorities for teams and individual staff.
The first step of the process, which you are about to learn, is identifying your law firm’s target accounts.
What is a ‘target account’?
The word ‘account’ is another word for ‘client’: a person or business that a law firm provides its services to.
A ‘target account’ is a person or business that a law firm would like to win business from and retain in the long-term. A person or business may be desirable as a target account for several reasons, however for the purposes of Relationship Selling, the most important factor is that the account has a high lifetime value to the firm.
In practice this is a person or business that will need and be able to pay for the firm’s services more than once – which will create recurring revenue. There are other factors to consider when selecting your firm’s target accounts, but we will get into those later.
While the existence of these accounts may seem unlikely, particularly for lawyers or legal BD professionals who have worked with mostly one-off accounts, there is little doubt that recurring accounts exist in every legal market. Indeed, research shows that many users of legal services end up using a law firm multiple times.
The trick is identifying these target accounts with limited information and the pressure that comes with choosing a smaller number of target accounts in the hope that they pay off in the long-run.
The bad news is that there isn’t a ‘one size fits all’ target account that would suit every law firm. What may be a great target account for an international firm is unlikely to be an appropriate target account for a small firm with 5-10 lawyers.
The good news is that you can easily set up some filtering criteria to ensure that you only choose target accounts that match your firm’s size, expertise, growth ambitions and location.
Choosing your target accounts – a goal-focused process
Without a clear understanding of your firm’s strengths and ambitions, target account selection can feel like aimless guesswork.
Instead, with so much riding on the Relationship Selling Cycle, we strongly recommend that firm leadership has an open and honest conversation about the kind of growth that they would like to achieve through Relationship Selling. This ensures that the marketing team (or lawyers in a smaller firm) are able to identify the right target accounts to achieve that growth.
For example: is the firm looking to increase its profits by 100% over the next 5 years? Or is the firm aiming to consistently generate enough revenue to pay all of the firm’s staff?
These goals will lead to different target accounts.
For the first goal, not only would the account need to have ongoing legal needs – it would also need to have a high likelihood of growing legal spend. This might mean looking for small companies that are likely to grow or face greater regulation, or people who are likely to have increasing legal needs.
Meanwhile, for the second goal, it would be more important that the account has a need for legal services on a consistent, cyclical basis. And since the aim is to cover costs every year – the account should ideally be paying for legal services at least once a year. This might mean looking for businesses that need legal documentation for a routine, high-frequency activity (sales).
The question to ask is: what kind of growth or results is your firm looking to achieve over the next 5 years?
Once you can provide a SMART answer to the question (Specific, Measurable, Attainable, Relevant, Attainable, Relevant, Time-based) it is time to start listing as many potential accounts as you can on a piece of paper. If you’re a little stuck finding potential accounts, then check out FAQ #2 below.
At this stage, don’t cut any accounts from your list and ensure that you include any current and past accounts. It’s better to have more options to consider here, even if some of these accounts seem unattainable or unlikely – than to ignore the possibility altogether. In any case, you will cut this list down to create a smaller final shortlist using your SMART answer from earlier on.
You will now have a very long list of accounts that your firm could choose as a target account. Some will stand out as being more valuable or attainable than the others. It may be tempting to pick and choose target accounts based on these ‘gut’ feelings about an account.
Instead, so that you can maximise the chances that your law firm hits its ambitious growth targets, there’s a better way to filter this list: by applying your SMART goal and a detailed risk analysis to each potential account.
To create your final shortlist, we suggest you create a table with 3 columns:
- Column 1 – Potential target account details. This is where you would record the name of the person or business, with a short note about the nature of their activities – e.g. ‘NEXL (early stage legal technology start-up based in Australia but with clients all over the world)’
- Column 2 – How would this account contribute to achieving the firm’s SMART goal? Can we provide a justifiable $ estimate? This is where you must justify the account’s role in achieving the firm’s SMART goal – e.g. ‘Winning the NEXL account would help us to increase our profits by 100% in 5 years, because NEXL has spent $x with us for 2 separate matters, expects to have at least 1 more matter like this next year and is predicted to grow by 200% this year. Also likely to seek additional investment and hire more staff – which are new, legally complex tasks.’
- Column 3 – What risk factors should we consider? (Barriers to loyalty + future legal needs + future financial health) Can we minimise or address these risks?
Here you need to honestly identify two kinds of risks;
(a) any event, change or feature of the account that might prevent your firm from increasing the account’s earned loyalty; and
(b) any chance that the account’s legal needs or ability to pay might not be as you predict – e.g. ‘LOYALTY: While NEXL is currently a small organisation with the CEO responsible for choosing a law firm for any legal needs, rapid growth could introduce a GC or a procurement function.
These decision-makers could prefer other law firms to ours, though this is a risk we can counteract by developing new relationships with these staff and maintaining goodwill with the CEO. LEGAL NEEDS: Additionally, because NEXL is a start-up it might not grow predictably or its legal needs might change or fall away completely. This is not a risk we can control, but which we can monitor and predict early on through ongoing communication with NEXL decision-makers.’’
This table will allow you to quickly shortlist a smaller group of target accounts that are suitable to your firm’s growth goals – while simultaneously avoiding those that have unworkable levels of risk when it comes to earned loyalty, future legal needs, or future financial health.
You will now have a smaller, final shortlist of target accounts for use going forward – congratulations on completing the first step of the Relationship Selling Cycle!
If your shortlist is too long or too short, try running through the process once more – you may have been too easy or harsh during the filtering process. If you’re unsure about the number of target accounts you shortlist, see FAQ #4.
To be clear – while this is not a foolproof approach given the limits of the information you have access to, it is still a better approach than looking through a phonebook or email directory without any research. It is also worth noting that Relationship Selling does not suggest that a law firm choose a single target account – so even if some of your target accounts do not match expectations, others may perform (or even outperform) expectations.
In short, it is worth doing your research. Well-researched target account choices will lead to a better shortlist for your firm’s growth ambitions and ultimately, better Relationship Selling outcomes.
So to summarise the target selection process:
- Define your law firm’s growth ambitions and choose a SMART goal for your law firm to achieve in 5+ years;
- List all potential accounts for your law firm;
- Consider how each account could contribute to the SMART goal;
- Consider the key risks for each account (barriers to loyalty, future legal needs, future legal health);
- Filter out any overly risky or unviable accounts;
- Pick a smaller shortlist of final target accounts that best suit your SMART goal and risk appetite.
To conclude, we will answer some frequently asked questions about the target account selection process.
FAQ #1 – When should you choose your target accounts?
The short answer is: when needed and definitely not more than once a year.
The long answer is: while you should go through the target account selection process to create a new shortlist every year, that doesn’t mean you should choose a new set of target accounts every year.
It all boils down to the fact that it generally takes at least a year before the time, effort and engagement that you put into an account actually pays off with noticeable results – and opportunities for new work and up/cross selling follow.
If you keep choosing new accounts every year, you won’t see the benefits of your hard work with the Relationship Selling Cycle. Strong relationships develop slowly – and with very few exceptions, a year is not enough time.
However, in some cases, even after going through a careful target selection process a target account might turn out to be significantly different to your expectations. In this case, you should consider replacing it with a better target account from your new shortlist (which you are creating every year).
So – choose target accounts with care at the start of the Relationship Selling Cycle and create a new shortlist every year. But don’t fall into the trap of swapping out the majority of your target accounts every year – if you do, you risk seriously shortchanging your Relationship Selling strategy.
FAQ #2 – How do I find potential accounts?
To find potential accounts, you’ll be doing some good old fashioned research. While it won’t be quite as simple as one, easy Google search, it shouldn’t be a particularly difficult process – it just requires a little bit of thought.
Businesses make up the vast majority of accounts, and are easy to find. Every business needs clients, and that means every business will have either an online presence, a physical location, a contact listing, or a word-of-mouth connection that can lead you right to them.
Realising that there are only a few places to look makes your job a lot easier.
The trick is finding businesses that don’t have a strong online/physical presence. You’ll need to try some outside-the-box strategies: look for places where business owners congregate (business chambers, support networks, other professional services providers), or ask people which businesses they have used and worked with for a long time.
Try to get into the mind of this business owner. If you can’t find their customers, find the businesses they use – they probably have an accountant, a cleaner, a local lunch spot, an office supplies store. These businesses might be able to point you in the right direction or alert you to the existence of businesses you didn’t know existed.
Individuals are a little harder. Unlike businesses, most individuals don’t have a need to advertise themselves publicly. However, the principle is the same – look for the businesses they use and the places where they congregate.
There’s one more strategy that we would recommend: using cross-referral relationships with other law firms. This is an incredibly underrated source of prescreened accounts – as it puts real, paying accounts in front of your firm (provided that you also return the favour when possible!).
These strategies – if used together – should be more than enough to create a long list of potential accounts for your firm.
FAQ #3 – How do I use criteria to narrow down the shortlist?
In our target account selection process, we analyse each potential account in two key areas: the likely contribution of the account to the law firm’s SMART goal and the risk factors associated with that account.
We recommend that you use, at a very minimum, these two criteria when you implement the Relationship Selling Cycle in your law firm.
FAQ #4 – How many target accounts is ‘enough’?
The short version: no less than 3 – and no more than your staff can comfortably handle.
The long version: we think that 3 target accounts is the absolute minimum number of target accounts for most small law firms. Having just 1 target account makes your firm their in-house counsel (but without the security and comfort of a salaried in-house counsel role).
There is no hard upper limit on target accounts. Some law firms, which operate internationally, have hundreds of target accounts. This involves a greater amount of communication, monitoring and engagement – so the cost is also far higher.
This question should always be answered by looking at the firm’s resourcing constraints – and the quality of your target accounts. For a firm with no marketing staff and just a handful of truly viable target accounts, it would be best to stick to a small shortlist. For a firm with a full marketing team and multiple markets filled with target accounts – a high limit is suitable.
And don’t forget to consider the difference between merely ‘managing’ and actually ‘excelling’ with your target accounts. If choosing fewer target accounts means your lawyers and BD professionals can spend more time developing relationships with them, it might be wise to do so.
Relationship Selling is rapidly emerging as an edge in a competitive legal market – with a powerful advantage to be gained through earned loyalty.
The target selection process we’ve covered today will help you take the first step in your law firm’s Relationship Selling Cycle – all you need is some time and a piece of paper.
In our next article, we will cover the importance of developing an account-specific value proposition – the actual things you’ll do to create lasting impressions and drive earned loyalty even higher.