By John W. Olmstead, MBA, Ph.D, CMC
I am often asked to help law and other professional service firms design and implement strategic business plans and marketing programs. I also coach many solo and small firm attorneys in practice and personal development matters. In all of these situations the issue of cross-selling always comes up as a desired strategy and goal. However, my experience over the past 30+ years has been that cross-selling is talked about much more than it is effectively put into practice.
In the BTI Consulting Group’s 2007 report Benchmarking Law Firm Marketing and Business Development Strategies, the section on cross-selling was titled, “Achilles Heel for Law Firms.” When BTI interviewed 120 Chief Marketing Officers and Directors of Business Development at leading law firms, they found that only 4 percent of law firms rated themselves as highly effective in crossselling, and 77 percent thought they were ineffective. http://www.bticonsulting.com/publications/38.htm
My experience and our surveys of our clients and their clients has shown similar results. Cross-selling is talked about a lot and seldom implemented.
Cross-selling can be an effective strategy – but it is not easy and it requires trust, commitment, communication, hard work, dedication, and organizational alignment.
In essence cross-selling is selling additional services to an individual or organization that is already an existing client.
David Maister says it best in the book, The Trusted Advisor, that he co-authored with Charles Green and Robert Galford, in which he states that:
New relationships are at the very heart of cross-selling. In reality we have two strangers trying to get to know each other, each carrying a heavy burden of real and presumed reputations and expectations. Cross-selling is as much about strangers as it is about relationships. Cross-selling is like meeting your prospective in-laws for the first time.
Typical cross-selling opportunities involve:
As you can see from these four cross-selling opportunity levels cross-selling involves different challenges that have to be overcome in order to successfully implement cross-selling. Consider the following challenges and hurdles:
Research conducted over the years by numerous research organizations has shown that on average it costs five times as much (dollars/time investment) to get new clients than it does to get more business from existing clients. It just makes good business sense to leverage existing relationships.
Institutional clients are reducing the number of law firms that they use. According to BTI Consulting Group, corporations in the Fortune 1000 list are using 20% fewer core law firms than they did a year earlier. As a result fewer firms will be getting work from these companies and they will likely be the firms that successfully cross-sell their practices.
Recently I was doing a telephone interview with the general counsel of a Fortune 500 company for our law firm client and I asked him if there was an opportunity for the law firm to get additional work in a practice area in which the company had no experience with the law firm previously and if an opportunity existed what the firm needed to do to earn the business. Here is his response.
Obviously we currently have other law firms handling that work. However, we have been evaluating those relationships and may be making some changes. There is room for other law firms to earn our business in the practice areas that you have discussed with me.
I am aware that the law firm does other work other than what we have been using them for – but I am not sure exactly what those areas are.
In order to begin to forge a relationship into these other service areas:
We hire lawyers – not law firms.
IDEA #1: Stop giving cross-selling lip service – if you are serious – put in place organizational systems that will facilitate the process.
IDEA #2: Ensure that firm communication systems support cross-selling initiatives.
IDEA #3: Ensure that the firm compensation system does not encourage hoarding of work and discourage a cross-selling program.
IDEA #4: Foster a culture of “giving to get” in which professionals in the firm uphold a “firm first” attitude and are willing to invest the time and effort to foster relationship building and cross-selling efforts.
IDEA #5: Find ways to create, foster, and support trust building in the firm.
IDEA #6: Provide relationship management and client service training to all attorneys in the firm.
IDEA #7: Implement a client feedback system (telephone interviews) to enhance relationships with existing top tier clients. You may wish to outsource this effort to an independent party to ensure the greatest success.
IDEA #8: Increase the client’s points of contact with the law firm.
IDEA #9: Do whatever it takes to learn your client’s business.
IDEA #10: Meet frequently with other attorneys in the firm and learn in detail about their practices and areas of expertise.
John W. Olmstead, MBA, Ph.D., CMC, is a Certified Management Consultant and the president of Olmstead & Associates, Legal Management Consultants and Life On Balance. Both firms are based in St. Louis, Missouri. Olmstead & Associates helps law and other professional service firms change and reinvent their practices. The firm provides practice management, coaching, marketing, and technology consulting services. Their coaching program provides attorneys and staff with one-on-one coaching to help them get “unstuck” and move forward, reinventing both themselves and their law practices. Life On Balance helps clients improve work-life balance and improve overall quality of work and life. Work-life coaching, consulting, and speaking services are provided. Founded in 1984, Olmstead & Associates serves clients across the United States ranging in size from 100 professionals to firms with solo practitioners. Dr. Olmstead is the Editor-in-Chief of “The Lawyers Competitive Edge: The Journal of Law Office Economics and Management,” published by Thompson West. He also serves as a member of the Legal Marketing Association (LMA) Research Committee. Dr. Olmstead may be contacted via e-mail at email@example.com. Additional articles and information is available at the firm’s web site: www.olmsteadassoc.com
© Olmstead & Associates, 2008. All rights reserved.