In Macquarie Bank’s 2015 Legal Benchmarking survey, by far the two biggest concerns for small law firms at firm level, were:
- Maintaining and growing profitability
- Attracting enough new target clients
Naturally these two concerns go hand in hand. If you don’t attract enough clients, you are likely to struggle to grow or even maintain profitability.
Some practices such as commercial law and business law practices will have a higher level of recurring work from existing clients and hence they can put more effort into cultivating existing client relationships.
Other practices such as family law practices are likely to need a steady stream of new clients as not as many clients have recurring matters.
In my opinion a focus on both cultivating existing client relationships and also generating referrals from existing clients and Centres of Influence is by far the easiest way for most firms to attract enough target clients and hence to maintain or increase profitability.
Based on my experience, both areas are often neglected particularly by smaller firms and that is a major reason why too many small firms don’t achieve the financial returns they should.
Your existing clients and why you need to cherish them.
Your existing clients are what gives your practice it’s value. Without them, your practice is just a few computers and office furniture.
Looked at that way, they deserve to be cherished.
For many firms there is great potential to simply provide a full range of services to the clients the firm already has.
I often suggest at seminars that many commercial or general practice type firms are missing out on up to 50% of the fees that they could and should be earning from the clients that they already have. This is without having to find another new client.
If you accept that figure is anywhere close to reality, based on Macquarie Bank’s benchmarking survey, if a focus was made of identifying the extra work that could be done for every client, this could increase total firm revenue by around 20%.
For many firms, fully servicing the clients the firm already has, will result in a substantial uplift in profits.
New clients and why finding them should be easy
Finding new clients does not have to be hard work, particularly if you already have a well-established firm.
If your firm is providing great service and you have delighted existing clients, it should not be difficult to increase the referral rate from those clients by taking a systematic approach.
Rather than explain this here, here is a link to another article on an “Existing client referral system”
By turning your existing clients into advocates of your firm, you achieve great leverage in the market place as you have many credible third parties singing your praises.
Having made sure that clients understand that you need them to refer, you can turn your attention to building up your relationships with fellow professionals ( Your Centres of Influence). Many of them will have many clients that they can readily refer to you if you give them a reason to.
Indeed I have recently posted an article explaining how a new firm generated $1 million in new revenue from just one new Centre of Influence in their first year of operation. While they may be exceptional, who knows what potential there is within your existing contacts or potential ones.
I can understand why the concerns that Macquarie’s survey identified are concerns. I am just thankful however, that for the majority of established firms, addressing these concerns is actually not that hard.
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