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By Timothy B. Corcoran, Principal, Corcoran Consulting Group, LLC
Many law firms invest valuable resources pursuing the wrong targets, and waste time and energy nurturing the wrong clients. This is a variation on the oft-repeated and oft-wrong maxim that “all revenue is good revenue.” In fact, even in recessionary times when top line revenue is hard to find, it pays to pursue the right targets and nurture the right clients. But who are they? How can one distinguish the poor targets from the rich targets?
Many years ago as I was beginning my sales career, I struggled with time management. More specifically, I didn’t have enough time in my day to pay equal attention to all of my clients and prospects, and without a system to prioritize my time it seemed I was always in the wrong place at the wrong time. This was compounded by the fact that I couldn’t easily recall which client had already purchased or rejected our many products, so I wasted a lot of time re-selling.
A helpful sales manager explained to me the concept of a “white space” analysis. In short, she explained, list your clients on one axis and your products on the other axis to create a simple grid. Where a client has already purchased (or rejected) a product, put an “X” in the intersecting box. Do this for all clients and all products. The open boxes, the “white space,” reflect your opportunity focus.
Preparing a white space analysis is a simple but effective tool to allocate your limited time and energy to those opportunities that matter. When I conduct law firm business development workshops, if there isn’t a white space analysis in place already (and there typically isn’t) then we prepare one. And many organizations stop there. But savvy marketers know this isn’t enough, not nearly enough, to truly identify the appropriate targets.
The greatest challenge with the white space analysis is its lack of context. Sure, Client 4lacksProducts A and D, but this says nothing about whether or not Client 4needsthem. The car salesperson who exerts a lot of energy trying to sell the off-road package to the 75-year old grandmother purchasing an SUV may not generate a good return on his investment of time. The law firm trying to cross-sell its IP practice to its mutual fund clients may find a less than receptive audience. The legal vendor trying to sell complex litigation case management tools to a law firm engaged primarily in estate planning may end up buying a lot of free lunches for uninterested buyers.
Similarly, no organization should promote every product equally. Some generate higher profits, some create long-term switching costs, some products are new and need traction whereas others are fading in prominence. Many law firms, in part because of a lack of marketing sophistication and in part due to politics, will pay lip service to providing marketing and business development support equally across all practices and partners. This is folly. Why invest equal time and energy promoting the practice that has the greatest price pressure, the one in which clients are fleeing to the low-cost providers, while another more lucrative and in-demand practice struggles to stay on top of its RFP responses or to manage its networking functions?
The more advanced approach is to incorporate internal and external data points to generate a more robust footprint of theidealtarget or client. In most organizations, a great deal of attention is directed toward the highest-revenue producing clients. But a large purchase could vault a client onto this list in a given year, while next year it fades back into oblivion. A better metric is lifetime value. In a law firm this may be the client that generates above-average fees for 5 or more years, ideally across multiple practices. For targeting purposes, perhaps the company within a specific SIC code in which the firm has unique expertise, that has a geographic footprint similar to the law firm’s, and with needs spanning several practice areas, is a more appealing prospect than the Fortune 50 or FTSE 100 corporation which just happens to have a large facility nearby.
The incorporation of these other data points is what I call a “green space” analysis. We start with the white space grid and then we continue to narrow our focus. Of the clients and targets identified, which best fit the model of the ideal client? Furthermore, which of these clients are in growth industries and are on a solid financial footing? Internally, which practices generate—at the moment—a proportionally greater return than the others? Which practices have a true competitive advantage (something more definable than “our lawyers are better”)? Which practices have the bench strength to mobilize quickly if our efforts generate new leads?
The data points one selects will vary by firm. And they’ll vary from year to year. The “ideal” client is a moving target, of course, but it’s far more beneficial to pursue ideal clients and targets than to assume the highest revenue-producing clients from last year, or the biggest companies in town with whom we don’t already have a working relationship, are the best opportunities for us.
The tools one uses are immaterial if the underlying concepts are forgotten. In fact, I submit that the first attempt at establishing a green space analysis should start with a flip chart or whiteboard, and the opening exercise is establishing which internal and external drivers we value most. Long-term retention or short-term growth? Enjoyment and intellectual challenge or less exciting but repeatable work?Big clients with many needs or small clients with limited needs? Complex businesses with ongoing needs and significant negotiating leverage or businesses with isolated, one-time but substantial and potentially price-insensitive needs? And so on. Once we establish the parameters, we now know the queries to enter into our existing systems, or at least we’ll have an understanding of the types of tools we need to acquire to conduct this analysis.
When farming your internal and external data to narrow your focus, there’s no perfect planting or harvesting season, though it makes sense to start early in the year when budgets are available to deploy against the greatest opportunities we identify. But don’t wait too long, because every day you wait another X is added to the grid by your competition.
Timothy B. Corcoran authors the Corcoran’s Business of Law blog. He advises law firm leaders on matters of strategy, business process improvement, legal project management and business development. He also advises legal service providers on market strategy and sales force readiness. He can be reached at +1.609.557.7311 or firstname.lastname@example.org.
© 2013 Corcoran Consulting Group LLC
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