Use the Christmas break to reflect on how your firm really competes, and start off 2018 with some positive improvement plans.
This time last year I encouraged readers to think about how they allocate time. This year, I want to talk about competing for business, and how to better understand what matters.
A colleague, Mark Vincent, used to say there were only three ways to compete: you can be cheaper, better or different. That’s it… so I’m going to discuss what these words mean. To start with, the terms are all client-defined, and potential client value flows from that.
Cheaper means different things to different people. All clients like paying less, but is cheaper their main driver? Your expertise (viz, better) will often get you onto the shortlist, and then some competitive amalgam of cheaper and different might win you the bid. Depending on the circumstances, cheaper may not even have to come into it. It is a kind of zero sum game – that is, better and different credentials give you some scope to trade out of cheaper. Different has many incarnations – hotlines, matter tracking portals, self-service components, payment terms, paperless relationships, and so on. Indeed, what the world sees as different today is often normal but just better tomorrow.
Remember – the terms are what the client defines them to be. Cheaper doesn’t just mean lower price. It can mean removal or reframing of annoying extras. If your payment terms are different, cost of doing business with you may be interpreted as cheaper. Do you talk partner rates or blended rates? If you get your bills independently assessed, does the removal of potential opportunism translates into cheaper for your clients? Inexperienced clients think all legal costs are expensive. But by making appropriate comparisons, you can almost make $475 / hr look cheap. The key is to understand what is most important to your clients. And remember, if you are committed to lower pricing, figure out how to concurrently lower delivery costs.
In the hyper-competitive wills and estates space, the benchmark pricing in some cases is free of charge. This can be challenging! Pricing for reasonably standard testamentary trusts ranges from $800 to around $7,000. A crazy difference you might say. But in this kind of market, better is very hard to sell on legal technical grounds. Most clients wouldn’t know. Better typically gets traction through an ability to articulate competing risks in a personable way. The greatest change going on in this market is all about different: new artificially intelligent portals enabling fast, convenient access for accountants and financial advisors. Firms developing such channels and linking them to their own legal services will do very well.
NewLaw is a good microcosm of all three approaches. For most potential clients, online-sourced NewLaw providers are different as a channel type…. Not your average suburban firm. Then again, within NewLaw there are many service offerings, and clients are able to judge which attributes they regard as better than comparative others. The criteria are up to them. And finally, because so many NewLaw providers are built around some kind of cost and infrastructure sharing, they can be cheaper versus the overall market, while being better within the channel, and different simply by being a NewLaw channel.
You have to decide how you will compete. The short examples above are just a drop in the ocean. Where will you place your emphasis – on cheaper, better, or different. Remember, professional expectations are relatively low so you may discover a beneficially different way of practising without too much investment! If in doubt, ask your clients (ask them anyway). Then think about potential improvements over Christmas. Have a good break.
Published: Queensland Law Society – Proctor – December, 2017