The last few articles in our Flywheel series have talked about concepts that many legal BD professionals are used to discussing.
Client acquisition, client retention, service KPIs.
But today is different.
We’re talking about the third step in our Flywheel.
It’s the third step, right after you retain a client.
And it’s also the most important.
If acquisition is the hardest step, and retention is the middle step in client-driven growth, then expansion is the easiest.
Or at least it should be.
Expansion is about improving your client’s lifetime value.
That sounds like retention, but it’s different.
Retention is about extending the life of your relationship with a client.
It is about building a long (and happy) relationship.
It is about making sure they stick around.
It is an exercise in trust building and relationship maintenance.
Expansion is about moving forward into unknown territory.
It is about finding new ways to work with a client.
It is about discovering new needs.
It is about becoming a more holistic, one-stop shop for them.
And it is where a law firm goes from great to excellent.
Does that make sense?
One is about keeping a client; the other is about doing new things with them.
Both are important – one can’t exist without the other.
Good. Now let’s talk about the process of expansion.
Like all parts of the Nexl Flywheel, it’s not complicated.
But it’s something you must understand to start spinning the flywheel.
Just remember this:
It’s easier to offer additional services to existing clients than acquire a new one.
Step 1: Measure client lifetime value
The first step in expanding a client isn’t charging ahead with a new pitch or proposal.
That would be like getting on a flight without knowing the destination.
Exciting, perhaps, but unlikely to get you to where you want.
Your first step in the expansion process is measurement.
Specifically: measure the value of that client to your firm today.
Let’s take a step back.
Why value your client?
Yes, your client is a person.
And yes, you should always value them as a person first – not as a number or statistic.
Law firms are also businesses.
And in this business, it takes a lot of resources to land a client.
As a business, firms need to know the value each client brings.
Some will be very valuable because they historically paid larger invoices.
Others will be more valuable because they’ve referred other clients to you – the power of word of mouth.
And a few will be valuable because they give you exposure to a new sector or industry.
The important thing to note is that all clients are valuable.
It’s just that some will be more valuable than others.
And some will have a lot of future value.
These are good clients to target for expansion.
But you won’t know until you sit down and measure this value.
Only once you know their value can you work out whether there’s room to grow.
Your highest billed client is probably not the biggest source of future value for the firm.
Your biggest source of future value is probably those who are in the top half of your client list.
They may have the ability to pay, a similar business size and similar needs.
But they aren’t working with you at the same level as your current number one client.
These clients are the destination you need to start directing your BD staff and lawyers towards.
Double down on these clients.
They are the ones who are most likely to respond well.
More likely to work with your firm on more matters.
To put it simply: these are the hotspots in your client list.
Fortunately, Nexl has a feature that already covers this.
Nexl’s Practice Group Engagement and Reporting.
It instantly measures how your different practice groups engage with a client over time.
By capturing engagement details across every practice group, it gives you the data you need to identify gaps.
Many BD staff already collect this information.
So, while Nexl is perhaps easier and cheaper to use in this respect, it’s not unique to Nexl.
But what is unique to Nexl is how we use this data to make actionable insights for you.
Data is hard to understand.
Read: hard to action.
Data you can’t action is data wasted.
We understand this from working with law firms across the globe.
It’s a pain point that we believe technology has the power to solve.
That’s why we worked hard to build a simple and informative visual representation of client lifetime value into our Practice Group Engagement and Reporting tool.
The big blue shape is what your firm does for a client.
The white space not covered by the shape is what your firm does not do for your client.
In our example, you don’t have to be a data scientist to take a quick glance and know that:
Your firm already does a lot of Corporate work.
Your firm does a similar amount of Employment work, probably connected to the Corporate Work.
You don’t do much litigation or IP work and could probably try to do more work in these areas.
In less than 5 seconds, Nexl allows you to identify the gaps and leakages in this client’s lifetime value to your firm.
If you haven’t tried this before, we strongly recommend it.
The results may surprise you – and change your view of that client in a big way.
Step 2 – Test the waters
You know which client you need to talk to.
And you know what they’re underserved for (litigation / IP work in our example).
You are almost ready to start hitting that expansion trail.
But there’s one more step in the process.
You need to validate your suspicions.
You need some hard evidence that there is work to be found.
Because it’s one thing to know you can do more.
And another to know that the client needs more.
Remember that old saying?
You can’t sell snow to a snowman.
And as a law firm, you can’t sell services that aren’t needed to a client.
So – like a good scientist – you need to validate.
This raises an important question.
How exactly are you going to confirm this information with the client without wasting their time?
The answer is segmented marketing content.
Segmented = tied to a specific topic/industry.
By creating content and seeing whether the client is interested, you can test their appetite for an expansion of your services into a new area.
Nexl’s Contact Segmentation feature demonstrates how this works.
In our example, you know that your banking clients mainly work with you on M&A transactions.
And based on your measurement of previous matters and practice group engagement you think there’s room for growth in the financial regulation area.
This is your expansion hypothesis.
It’s what you think they want.
But you need to test it.
To do this, you:
Brief the financial regulation team on the potential growth opportunity to offer more financial regulation advice.
Produce a webinar that offers valuable updates and guidance on the financial regulation issues that affect the banking sector generally.
Send invites to your clients, including your banking clients, who you suspect may need more advice in the area.
After you send this invite, you will know exactly whether the banks need more of these services.
Nexl allows you to confirm interest.
It ties powerful engagement tracking (clicks, RSVPs, and frequency of interaction) to your expansion hypothesis.
In short – Nexl doesn’t just maintain relationships.
It supercharges your expansion into new work.
All within your browser.
We think that building contact tracking, client expansion and prospecting into a single, one-stop platform is a gamechanger.
It’s why we have delighted users on every continent, from law firms of all sizes.
Step 3 – Launch a tailored, personalised pitch
This is the last step.
You’ve worked out which clients have the potential to expand.
You’ve confirmed the services you should expand into.
And your lawyers are ready to go.
You’re 70% of the way to expanding that client.
You still have to pitch for the work.
It’s time for that “right hook” (see our article on client acquisition).
We’ll cover the pitching process in a future article, but for now let’s assume that you’ve prepared a strong pitch.
It outlines what your firm will do.
How the law is changing.
Why your firm is best.
But there’s a point of friction you need to overcome.
You need to show why your client needs these services.
You’ll already know they’re interested.
But now is the time to pull out the stops – to name-drop your multiple contacts at the client.
To revisit your email history and see any hints about new strategic initiatives and goals that client has mentioned.
And to show you understand the client better than any other firm.
You are matching the client’s needs to your services.
It seems like a small point.
But it can be the difference between getting the work and missing the opportunity.
And when it’s done right, it’s like hitting a bullseye.
If that sounds like something you’d want to be on top of, Nexl’s Contact and Client Management feature offers a seamless solution.
By providing clean contact and client data, you can instantly review your firm’s engagement with the client.
You can review any upcoming strategies and pending opportunities.
It means you can personalise the pitch materials like the whole firm has one mind.
In this article we discussed the three steps you need to follow to expand a client account.
Far from being a secret, it’s a matter of following three simple steps: measurement, validation and pitching.
Next week, we’ll talk about the need to project manage in our new hybrid working environment – so your firm can leverage the power of an aligned sales and BD team.