Many law firms focus far more on winning new clients – getting a bigger slice of the cake – than getting new business from existing clients – baking a bigger cake. Joe Reevy explains how to use customer relationship management to build an effective cross-selling process for your firm

The cost of taking on the first instruction from a new client is hugely greater than taking on additional instructions from an existing client, yet law firms spend a disproportionate amount of their business development budget trying to get a bigger slice of cake – winning clients from other firms – rather than trying to bake a bigger cake by creating new opportunities with existing clients.

Baking a bigger cake is the easiest way of building a bigger, better, more profitable practice, and it costs a lot less than trying to gain ‘market share’ through the acquisition of new clients. Plus, if you deliver what is, in the client’s eyes, excellent service, it is very easy to leverage these relationships to obtain referral, as well as repeat, business – so you can also get a bigger slice of the existing cake!

The key ingredient in that bigger cake is cross-selling: making sure your clients know about other services that you can offer, and they may need, now or in future. But not all cross-selling works. It’s only really effective if it’s done systematically rather than in a haphazard way, and this is where customer relationship management (CRM) can help.

In this article, I hope to persuade you that the future is bright for the high street firm if it becomes organised and systematic in exploiting the real value of its greatest asset: its network of relationships, starting with the client bank. Then, I will set out a simple, affordable process for cross-selling through CRM, which will help produce a reliable stream of instructions stretching into the future, making you more secure and adding value to your practice.

Why you need CRM

When it comes to cross-selling, CRM is essential. It turns a haphazard approach that depends on people into a systematic and orderly one that is based on knowledge.

In his book Cross-Selling Success: A Rainmaker’s Guide to Professional Account Development (Adams Media Corporation, 2002), Ford Harding recommends ‘training your people to recognise when the client needs other services your firm offers’. I’d argue that this is good, but it’s even better is to train your people to recognise the services your clients don’t yet know they need, but are likely to need in the future, and use that knowledge to guide the construction and approach of your marketing.

The problem is that unless people are trained to do this, assiduous about doing it, and (ideally) rewarded for doing it, in a busy practice the pressures are such that this process often falls by the wayside. In the last month or so, I have talked with the directors of more than 20 companies, ranging from small family-owned businesses to significant PLCs. Only one has so far had any contact from their ‘usual’ legal advisers concerning the potential impact of the General Data Protection Regulation (GDPR) on their business – even though the regulation will be hugely significant for every one of those 20 businesses, and every one of them will need to act now to ensure they are compliant by May 2018, when it comes into effect. Who is better placed to help them than their usual legal adviser? Yet those advisers aren’t taking advantage of this opportunity, because they have no system for cross-selling to their clients.

I have seen cross-selling efforts fail in law firms because the focus was on fee-earners: firms may spend a fortune getting fee-earners trained to cross-sell, but it just doesn’t happen in practice 

CRM helps you to nurture, maintain and capitalise on client relationships in a systematic way, by combining information about clients with the ability to use that information for mutual benefit. It allows you to categorise clients and contacts according to any feature – by age group, industry, employment status, relationship status, high or low net worth, and so on – which then allows you to identify cross-selling opportunities and exploit them.

How to do it

1. Work out the important things to know

Categorise your clients and contacts by putting them in contact groups based on what will be important for them – their ‘pain points’. So, most wealthy older people will be interested in inheritance tax planning or the likelihood that probate fees will skyrocket. Business owners will be interested in the impact of new compliance issues (like the GDPR) and so on.

Don’t go mad at this stage. Focus on the bits of data that are really important; the more you choose, the more time you’ll have to spend keeping the database up to date, and the more likely it will become out of date. The aim is to gather information that will enable you to predict what will interest your clients in the future: what will affect their aspirations and futures, as well as specific issues relevant to them (for instance, around compliance). This will later help you to flag issues to them that will lead to them asking advice from your firm, or at least keeping you in mind for future work.

2. Start with what you have

Now, look at the gaps between what you have done for your clients, and what you could have done for them. You’ll be amazed at how much unfulfilled need there is in your existing client base. This gap can probably drive your firm’s growth for years.

It will take time to capture the data for existing clients, but for new clients, you can set up your file with the necessary information from the start. My firm developed what we called a ‘new client instruction sheet’, which captured a basic level of information to guide future marketing. It worked because we wouldn’t let the fee-earner open the file unless it was completed! This simple step fuelled a high rate of growth for several years.

3. Having captured what you need, use it

Build your marketing plans around the profile of your client bank and potential unmet needs – and then build in marketing activity to meet those needs. I really can’t emphasise enough the need to be systematic in this marketing, by which I mean doing it in a regular, organised way: making business development part of a regular routine. Organisation is far more important than inspiration in successful business development.

You also need to ensure you offer only relevant services to clients, based on their pain points, rather than bombarding them with material and messages which are irrelevant or of limited interest. A targeted approach makes for much better response rates and return on investment.

Focus on content marketing rather than straight sales: keep clients up to date about things that are affecting them now or will do in future, and explain how the firm can satisfy those unmet current or future needs.

E-newsletters are a great vehicle for this, and a good email marketing system (we use a version of Campaign Monitor, which is brilliant) can help by allowing you to set up and send campaigns to a schedule, and capture data on the effectiveness of your marketing, which you can use to inform future efforts. Seminars can also be a great tool here.

How often and how ‘salesy’ you want to be in this is up to you, but in general, I’d recommend doing, for example, private client-related activities every two or three months, and business-related activities monthly.

However, if something important happens (especially if it is in the popular press), get on it immediately – before other firms do.

4. Systematise cross-selling

Time and time again, I have seen cross-selling efforts fail in law firms because the focus was on fee-earners: firms may spend a fortune getting fee-earners trained to cross-sell, but it just doesn’t happen in practice. So, whatever you do, don’t rely on them to deliver: give the task to your business development professionals, or outsource it.

The role of the fee-earner should instead be to make sure that important pieces of information are collected. This can be done by the fee-earner through a form or other process as suggested above, but it is also quite feasible for a fee-earner’s role to be to talk to clients about the sorts of things the firm can do in quite general terms, and then to suggest they have a quick conversation with a person who is trained to obtain the required information. Make sure your business development professionals prioritise this task: there is probably no other task that they can undertake which is of the same potential value to the firm.

Even if business development professionals take the lead on this, encourage fee-earners to keep their ears open for opportunities and ensure they know who to tell in the firm about these opportunities. I have acquired many worthwhile instructions because of comments made in passing by clients when we were talking about something else.

Timeframe, costs and benefits

CRM systems require some up-front investment, in both time and money. As a rough estimate, a medium-sized firm should expect to be able to cleanse data and implement a CRM system inside a month, provided the job is left to a person who has the requisite knowledge and skills, and who is allowed to get on with the task. However, some time will have to be taken beforehand to agree what data is necessary to capture, and to design the procedures to ensure the data you want is captured systematically in future.

Implementing and learning the necessary CRM system and email distribution software should take no more than a week. This training should be rolled out to fee-earners, partners and business development professionals, although training for each group may vary, depending on how the work of maintaining the data is assigned.

I’d reckon the average mid-tier firm should allocate about £5,000 (including licences) to get to the starting position. The cost may be reduced if your practice management system has a good and easy CRM system, but many don’t; the good news is that there are a lot of very easy, cheap and powerful cloud-based systems (such as Agile CRM, Capsule and Zoho, for example) that you can learn and use effectively within a few hours of first sight.

Once CRM is used for effective cross-selling and business development generally, the returns should be substantial and immediate. We have clients who claim to make more than £2,000 profit on every e-newsletter they send. As a rule of thumb, you should be aiming for at least 10 per cent growth for the first three years of use.