Business Development - Know Your Prospects Are Aware of a Problem

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1 Marketing to Prospects versus Clients by Jeffrey M. Horn and Terence P. Boyle Law Office Economics & Management, Vol. 34, No. 2, 1993 Stop for a minute and think about your most recent business development efforts for your office or your firm during the last few months. Has the emphasis been placed on: A Prospect that is aware of a problem? A Client that is aware of a problem? A Prospect that is not aware of a problem? A Client that is not aware of a problem? Perhaps it was a conscious response to an opportunity or perhaps the emphasis occurred without thinking. Chances are you know where the emphasis has been. As a professional, you should be aware of the differences and concentrate your business development efforts where they have the greatest potential return for you. Here are some of the basic characteristics of the four possible areas in which you might focus your business development efforts. (As well, we've included some "Case Studies" business development events our firm has dealt with ). A Prospect That Is Aware of a Problem The typical situation is that you learn that a prospect (an organization for whom you have done little or no prior legal work) is aware that it has a legal problem that needs attention. Unfortunately, you are not the one that discovered the problem, and it is apparent that someone else did. Given the size and experience of the prospect, it is likely that it has previously used the services of another law firm. It is also likely that the law firm the prospect currently uses is not only aware of the prospect's legal problem, but has either discovered the problem for the prospect or has provided some guidance on the problem. Marketing to Prospects versus Clients Page 1

2 With all this background, and knowing full well that it is likely the prospect intends to use its existing law firm to handle this problem, you will undoubtedly undertake a marketing effort which will include time and perhaps cost to pursue this opportunity. If the problem is outside of your particular area of expertise, it is also likely that you will draw on the talents of the more senior colleagues in your firm, rather than relying on the less expensive (and less experienced) junior partners and associates. This type of prospect is exciting because it presents a new opportunity. New opportunities always seem to take priority on the time and attention of professionals. Not surprisingly, your firm, as with most, will have a relatively low success rate on prospects that are aware of the problem. Typically, it's more of an uphill battle. This is compounded where the "problem" is not in an area in which the firm is a recognized leader. The greater the "stretch" as far as expertise is concerned, the lower the success the rate will be. You ask, "Why spend time on these low percentage prospects?" Because it's fun, exciting, and of critical importance, has your professionals in the marketplace. Case Study: A Prospect That Is Aware of a Problem Our firm received a request for a proposal from a large Minneapolis law firm. The RFP asked 15 questions about our firm, billing procedures, client list, etc. They were seeking assistance from an outside law firm consulting group such as ours to assist them in preparing and conducting a survey of their partners and associates (approximately 120 professionals) on the topic of business development. We were ecstatic. We had no prior exposure to this firm, and they undoubtedly "found" us through a directory listing. But this was a great opportunity to put a high-profile Minnesota law firm on our client list!! We studied the RFP forward and backward. We developed an extensive list of questions to ask them. We debated the virtues of flying to Minnesota to ask the questions in a face-to-face environment. Unable to justify the cost, we played "telephone tag" until we connected and obtained answers to our questions. We spent the weekend working on the proposal. We spent $1,500 on an outside design firm to make the proposal "look good." We were delighted to learn that we were one of five finalists. We flew to Minnesota and had a face-to-face meeting with the firm's marketing committee. Two weeks and many thousands of dollars later, we were informed that we were a "strong number two." We lost. We wondered how many of the other firms were also told that they were a "strong number two." We were told, "we decided our needs would be better served by working with a local firm." We wondered whether the prospect that is aware of the problem was also aware of who they wanted to solve the problem before they sent out the RFPs, and it wasn't us. Marketing to Prospects versus Clients Page 2

3 A Client That Is Aware of a Problem There are some critical differences between a client that is aware of a problem and a prospect that is aware of a problem. To begin with, you know the issues, the environment, the players, the culture you know the client. As a result, there is trust, confidence, and "chemistry." The client tends to make himself or herself more available, is less skeptical, and often less feesensitive (the client knows the value you deliver for your fee) than a prospect with whom you've never worked before. Because the client knows it's a problem, there is less selling and convincing. They just want help. Because of your knowledge of the client and his confidence in you, oftentimes you can staff the project with junior attorneys. Your marketing costs are nonexistent. Even more important, clients are far more willing to allow you to extend or stretch your expertise in new (to the firm) or developing areas of law. Unfortunately, this type of business development is often perceived as not being as much fun, as seductive, or as highly rewarded as landing a new client. Oftentimes, firms do not provide compensation for expanding the panoply of services provided to clients. The originator may play no role in developing the client, but will receive the benefit in the form of increased origination fees. Your success rate in these kinds of business development opportunities, however, is much higher, but for many, not as satisfying This type of marketing can be done by every professional. It requires that every professional be on the lookout for issues/problems that affect their clients. It requires a disciplined approach that has the lawyers constantly listening to the clients and increasing and expanding contacts with management to better understand the problems and concerns of the client. Much of this work is nonbillable time. Case Study: A Client That Is Aware of a Problem Our consulting firm has the benefit of a two-year assignment on which we are on retainer with a national firm. Our client has a significant quality focus, and we are delighted to provide services to them. The client recently called asking if we could develop a two-day sales training course for a large group of their senior professionals from several of their offices. The request came out of the blue. We were asked to "shoot us a note on what the timing and costs would be of putting together such a program." We sensed there were no competitors. It was ours. The approval process took two to three hours. The next day we received a voic indicating that we should begin work, and a project launch meeting was scheduled. There wasn't a lot of excitement, but there also wasn't a lot of investment in the new business effort. Our satisfaction must come from doing a great job for our client, but the "thrill of the kill" was far less than if we had been retained by the Minnesota law firm. We know, however, what pays our rent. Marketing to Prospects versus Clients Page 3

4 A Prospect That Is Not Aware of a Problem The third category again involves a prospect with whom you've had some prior contact, but minimal success in obtaining business. That's why they're a prospect, not a client. You are almost "cold calling" on them. Try as you might to make it appear otherwise, you are "selling," and they may not be "buying." You can assume they already have a relationship with one of your competitors. If you do succeed in finding a "problem" (during the course of what will undoubtedly be a brief new business meeting), you may come across as a hero. By the same token, however, you may be pointing out a problem they don't want pointed out and, as a result, end up being a persona non grata or a "pushy salesperson." This is not a situation in which junior attorneys have high levels of success. Senior professional involvement is critical. When it works, it's fun, it's a victory, and the internal perception is that there are high rewards for the individual who can succeed in this environment the "rainmaker." Animal charisma prevails. However, there is usually an extremely low success rate for this type of business development activity. As well, this type of business development is the least palatable to the professional. He or she often believes that it is "not professional" to be conducting this type of business development. Case Study: A Prospect That Is Not Aware of a Problem We spend a significant amount of time networking with various law firm contacts. We spend more time (than we'd like) calling managing partners at law firms saying, "Johnny Jones/Suzie Smith suggested we contact you to discuss the concept of business development for your firm." Because we live in a kind and gentle world (and because we're either incredibly persistent or dense), we have a number of new business meetings with prospective clients who have not put the problem of business development at the top of their list. We need to convince them they have a problem, and then we need to convince them that we're the ones to help them with the problem. It is an extraordinary challenge. First, the firms frequently have other problems that they view as a higher priority than business development. Second, they know us only though a mutual reference/friend. They are polite, but are they willing to part with their dollars? We've come to several conclusions regarding a prospect that is not aware of a problem. The more such new business meetings that we conduct, the better we get. Rarely does a single meeting result in a sale. It takes time, and it takes building a relationship. Marketing to Prospects versus Clients Page 4

5 A Client That Is Not Aware of a Problem The final type of business development that exists is a client that is not aware of a problem. Because the organization is a client, there is trust, confidence, and some chemistry. You know the issues, the environment, the players, the culture you know the client. Inevitably, the client is more available, giving you more access to information. Oftentimes, the client is less skeptical and less fee-sensitive than a prospect with whom you've not established a relationship. Ideally, you'll be perceived as being "proactive." However, there is also the chance that in identifying a potential problem, you may also be perceived as "marketing." There are minimal marketing costs associated with this type of business development. Unfortunately, your success in this type of business development is often taken for granted internally, and your professionals do not find this type of business development as fun, seductive, or rewarding. Senior management, however, knows that this aspect of business development has one of the highest success rates. Everyone can do this type of business development. Firms must target their efforts to get the most "bang" for their business development dollars. Prospects are exciting and rewarding when landed, but existing clients pay the bills and provide the most ripe opportunities for increased business. Finally, firms should not lose sight of the differences between a prospect and a client; the firm has been successful in building a relationship with a client, while it has not yet done so with a prospect. By improving and developing relationships, the likelihood of business development success increases. Case Study: A Client That Is Not Aware of a Problem We were recently hired by a large professional services firm to conduct external interviews of prospective clients. Our goal is as outside researchers to find out what these prospects' "hot buttons" are so that the firm's partners can establish relationships/make subsequent sales. As a result of dealing with this client in developing the interview guides and targeting the prospects, we became aware of a significant lack of understanding by the firm's management of the individual partners' and associates' attitudes toward business development. It was clear the marketing committee with whom we were working did not have a firm grasp on the beliefs of the firm's partners and associates on issues relating to marketing and selling. We knew we could help. We gently planted some seeds in our meeting despite the fact the meeting's focus was on our external interviews. We ended our meeting with, "If it makes sense to you, we'll send you a letter indicating how we could help you better understand the views of your partners and associates on business development." Despite the fact that the client did not jump up and down and say, "we'll be Marketing to Prospects versus Clients Page 5

6 waiting with bated breath!!!," we went ahead and sent the letter and followed up with a telephone call. And followed up with another phone call. Finally, we were told that this was not a priority at this time. Reprocessing that, we concluded that the key message was: Finish the current assignment on which we've hired you and do an extraordinary job and there will be other opportunities, but the first step is to do an extraordinary job on the project for which you've been hired. The message to us was that a client that is not aware of a problem is far more interested in having the problems that they are aware of solved before they're anxious to work with you in another area. So, where should you spend your time on business development? The truth is, you need to pursue all four types of opportunities. You can't ignore any of them. Firms must recognize, however, the inherent challenges of dealing with prospects, as well as the higher potential for success dealing with existing clients. Marketing budgets should be allocated appropriately to take these distinctions into account. In any of the situations described, however, it's still a matter of relationships. The stronger the relationship, the greater the potential for success. The Business Development Group, Inc. 18 Avon Road Bronxville, NY (914) info@thebizdevgroup.com Marketing to Prospects versus Clients Page 6