WORLD SERVICES GROUP HOW TO OUT PERFORM YOUR LARGER RIVALS.
Slide 1 WORLD SERVICES GROUP HOW TO OUT PERFORM YOUR LARGER RIVALS Slide 2 THE TYRANNY OF CHOICE: As A Prospective Client... Tell Me Please, Why Should I Choose Your Firm (difficult) What Makes You Distinctive, and What Added-Value Do You Bring To My Business Matters, (more difficult) THAT I CANNOT GET ANYWHERE ELSE? (most difficult) Slide 3 DIFFERENTIATION VIA CLIENT INTIMACY DEGREE OF DIFFERENTIATION PROVIDES NOTICEABLY GREATER VALUE Fell ShortTolerated Satisfied Redefined EXPECTATIONS RESULTS EFFORTS Slide 4 QUIZ: A Company You Consider Your Most Significant Client DURING THE PAST 6 MONTHS, GIVE YOURSELF ONE POINT, IF YOU... 1. Personally visited this key client at their place of business (off the current matter), just to see how things were going with the business? 2. Voluntarily devoted non-billable time to attending one of this clients management meetings? 3. Specifically invited this client to attend and participate in a practice, industry, or client team meeting in order to brief the group on new developments in their company or their industry? Slide 5 QUIZ - 10 Questions Continued: DURING THE PAST 6 MONTHS, GIVE YOURSELF ONE POINT, IF YOU... 4. Introduced your key client contact to some individual of strategic importance to them or some individual that represents for them a potential future customer? 5. Attended any industry event (meeting, trade show or conference) with this key client? 6. Proactively interviewed this key client and subsequently drafted and circulated a written report on what this client has told you about their specific needs? Slide 6 QUIZ: Give Yourself One Point If... 7. You have obtained a copy of and personally read the strategic plan of this company? 8. There is any active internal effort to subscribe to, read, and circulate pertinent clippings from this clients trade publications? 9. You have established a direct technology link or extranet to service this key Client? 10 You have developed written service standards, which identifies how you are working to address this clients needs? Slide 7 WHAT WE HEAR: From a clients perspective Slide 8 FROM A CLIENTS PERSPECTIVE: If I could say one thing to the two or three professional firms we work with, it would be for them to talk less and listen to me more. Slide 9 FROM A CLIENTS PERSPECTIVE: Of the firms weve used over the years, I can certainly confirm that they will do exactly what theyre asked... and nothing more. I dont think any of them could spell proactive! Slide 10 FROM A CLIENTS PERSPECTIVE: At least once a year, our bankers spend an afternoon with us to become familiar with our business plan. Neither our accountants nor our lawyers have ever even suggested it. Slide 11 FROM A CLIENTS PERSPECTIVE: These professionals think we are always on about costs, but some things are worth $600 an hour, some are worth $100. Our invoices seldom reflect this difference... unless we complain. Slide 12 FROM A CLIENTS PERSPECTIVE: I read professional service firm adverts all the time, look at websites, read newsletters. I cant see any difference between most firms; they pretty much all say the same thing about themselves. Slide 13 FROM A CLIENTS PERSPECTIVE: We got invited to one of our firms to hear a pitch on what they do and why we should use them more. Ive never been asked to come explain to these people what we do or how they could help us more. Slide 14 FROM A CLIENTS PERSPECTIVE: I walk into meetings expecting to see one or two professionals and find a room full of them. Must be a slow month at the firm and they need to up their billings... Wish they werent doing it on our tab. Slide 15 FROM A CLIENTS PERSPECTIVE: I spent about 90 minutes with a managing partner, and laid out two or three issues I had with some of his people. I never heard back from him or anyone else. Makes me wonder why I bother. Slide 16 MARKET RESPONSES OF: The FORTUNE 1000 (& Sophisticated) CLIENT MARKET Slide 17 FORTUNE 1000 LEGAL SPEND: The (Average) Fortune 1000 Companys Spend on Outside Legal Counsel in 2006: $ 19,500,000 (high of $200m to low of $150,000) Slide 18 WHERE THE BUDGET IS SPENT: #1 Litigation $7,020,000 #2 Securities & Finance1,852,500 #3 Employment1,813,500 #4 M&A 1,755,000 #5 Corporate1,677,400 #6 Regulatory1,657,100 #7 Intellectual Property1,598,800 #8 Environmental 799,600 #9 Real Estate 312,000 #10 Other1,014,000 Slide 19 PROJECTED 2007 BUDGET GROWTH: Class Actions 19.2% Regulatory 18.1% Bet-the-Company 16.7% IP Litigation 12.5% Securities 11.8% Merger&Acquisitions 11.2% Litigation 10.1% Employment 9.5% Intellectual Property 7.9% Investigations 6.3% Corporate 6.0% Restructuring 5.4% Bankruptcy 4.8% Tax 4.1% Environmental 2.7% Real Estate 2.2% Source: BTI Research - 2007 Slide 20 WHO GETS THE MONEY: CORE CATEGORIES: DOMINANT FIRMS (1-3) Awarded the most valuable work Have strong relationship predicated on confidence and trust SECOND-TIER FIRMS (8) Provide advice in specialized and high value practice areas CONTENDER FIRMS (30+) Receive only case specific, jurisdiction specific, or routine matters Slide 21 WHO GETS THE MONEY (on average): CORE CATEGORIES: DOMINANT FIRMS (1-3) Awarded $ 2.6 Million each SECOND-TIER FIRMS (8) Awarded $ 550,000 + each CONTENDER FIRMS (30+) Awarded $ 160,000 + each Slide 22 OUTSIDE COUNSEL UTILIZATION: In 2001 - Fortune 1000 Used 75 Law Firms In 2005 - Fortune 1000 Used 48 Law Firms By 2009 - Expect Fortune 1000 to Use ONLY 31 Law Firms in Total Average size of Approved List of Firms is being reduced by 1/3 every 4 years Slide 23 CONVERGENCE LOOMS: Are you planning to reduce the number of law firms you use? 37% completed first stage of convergence 35% currently in progress 27% planning reductions Of those Corporate Counsel who plan cuts, they plan to cut over 35% of the law firms from their current line-up. Research - July 2007 Slide 24 SATISFACTION DECLINES: In 2007, how would you score the performance of your outside law firms? 70.5% scored B for overall performance 10.5% scored C or worse Inside-Counsels 18th Annual Survey of General Counsel - July 2007 Of those Corporate Counsel who were asked if they would recommend one of their primary firms, only 32.1% claimed they would. BTI Research - February 2007 Slide 25 DEFINING QUESTION TO CEOS, CFOS & GCS: If a firm you never used, wanted to attract some of your companys work, what is the best approach they could take, to get their foot in the door? Slide 26 SO HOW VULNERABLE ARE YOU? CLIENT DEFECTION WARNING SIGNS: Rates become subject of continued discussion. Number of matters sent to firm is flat or reduced. Approvals for informal proposals continually postponed. Communications becomes more formal with less discussion about clients needs. Calls are not being returned as promptly. Invitees dont attend your functions. Access to key decision-makers starts to decrease. Well of constructive feedback dries up. You receive an unexpected RFP. Slide 27 AND IS THERE AN OPPORTUNITY HERE? While a minimum of 33% claimed to have fired or plan to fire at least one of their law firms in 2007. (Inside-Counsel - July 07) 75% claim to be open to accepting new firms to their rosters. (Edge) Slide 28 WHY COMPANIES RECOMMEND: 65% of recommendations are driven by SUPERIOR SERVICE AND CLIENT FOCUSED ACTIVITIES These firms understand the clients needs, the clients business goals, and the industry in which the client competes. Slide 29 THE LOGICAL ACTION PLAN: Initiate some Client Teams to better serve your signature clients. Slide 30 MISTAKE #1: FOCUSING ON SALES Most of these efforts are defined and managed to serve the firms interests. To us they are nothing more than thinly veiled sales campaigns. Someone comes in, asks how their firm is doing and if we dare say okay, they then want to immediately introduce us to a number of other professionals. Slide 31 MISTAKE #2: MOVING TOO FAR TOO FAST: Rather than being strategic, this would appear to be the latest fad; with some firms boasting of having anywhere from 75 to 120 clients in their exclusive key client program. Slide 32 DECIDE WHAT CLIENTS TO FOCUS ON? % CLIENTS = % REVENUES 1% =14% 4% =38% 15% =27% 80% =21% Slide 33 AND BEYOND THE LARGEST CLIENTS... Which of your key clients are strategically important to protecting your core strengths? What of the clients are really profitable and not just adding volume? Which of the largest companies you serve (not necessarily the largest revenue clients) have been declining in their annual spend with your firm over the past 5 years? Slide 34 DETERMINE AN INVESTMENT BUDGET: CATEGORY C CLIENT: Fee level of $200,000 $ 500,000 in annual billings Invest 30 non-billable hours per core team member CATEGORY B CLIENT: Fee level of $500,000 - $ 1,000,000 in annual billings Invest 40 non-billable hours per core team member CATEGORY A CLIENT: Fee level of $ 1,000,000 and above in annual billings Invest 50 non-billable hours per core team member Slide 35 CHANGE IN PROFESSIONAL FOCUS: ADDED-VALUE ADDED-VALUEADVISER (care why) BUSINESS ADVISER (know why) TRANSACTIONAL ADVISER (know how) TECHNICAL ADVISOR (know what) Slide 36 AND A LOGICAL PROCESS: strategic STEPS strategic STEPS Slide 37 STEPS: 1. 1.GATHER INTELLIGENCE 2.INTERVIEW THE CLIENT 3.DEVELOP YOUR CLIENT STRATEGY a.Your Value-Added Action Plan Strengthen the value you add and increase your differentiation b.Your Relationship Enhancement Action Plan Build and deepen key relationships c. c.You Business Development Action Plan Identify revenue goals by service offering Slide 38 STEP ONE: strategic STEPS #1: Gather Intelligence #1: Gather Intelligence Slide 39 CLIENT KNOWLEDGE? How much do you really understand about your clients business and their corporate culture? Slide 40 FROM A CLIENTS PERSPECTIVE: If you call them trucks, you dont understand the nature of our business. I recently fired a firm that had worked for UPS for over 40 years. The firm didnt understand what we were trying to accomplish. Teri P. McClure - VP Legal Slide 41 PURPOSE : To provide background on client company, snapshot of our work history, a marketing audit, and information about the competitive legal environment; Outline an account history and relationship matrix; Uncover potential opportunity or risk for client revenues; Identify potential client issues or challenges that could impact the demand for future services; and Aid in developing a client retention / expansion action plan. Slide 42 DATA GATHERING PARAMETERS: Revenue / profitability Areas served Average matter value Frequency of firm being used Geographic reach Client financial performance Clients goals and strategies Industry changes Competitive firms used Current wallet share Quality of relationships Position in client league table Satisfaction / loyalty Importance of service to client Client problem and needs Perception of firms How they select Use of outside firms Total revenue potential INTERNALEXTERNAL HARD SOFT Slide 43 WHAT INTELLIGENCE NEEDS TO BE GATHERED? What business / industry is this client in and how has that industry been changing? What are C-Executives saying about the company, and their place in their markets, their growth strategies, or their vision of themselves in the future? What are their short-term plan or initiatives and what do these initiatives imply about their need for our services? How is this company organized and what does their organization reveal about how they manage their business and create value for their customers? Where are their locations and which of these use our firm and which do not (and why not?) How is this company performing and where are they failing to reach their goals and why? Slide 44 IMPLICATIONS OF CLIENT INTELLIGENCE: CLIENT PROFILE INTELLIGENCE What did we learn about this client? SO WHAT? What are the implications for our client team? INDUSTRY AND MARKET ANALYSIS CLIENTS STRATEGY AND PERFORMANCE STRUCTURE AND MANAGEMENT POSSIBLE NEEDS USE OF OTHER PROFESSIONAL FIRMS Slide 45 STEP TWO: strategic STEPS #2: Interview The Client #2: Interview The Client Slide 46 PRINCIPLES OF INTERVIEW PROCESS: GET MULTIPLE PERSPECTIVES. Look for those corporate executives that can provide useful insight. DEVELOP QUESTIONS TO BE USED. Determine the various open-ended questions that will be asked. SEEK INFORMATION AND LISTEN. The only purpose of the interview is to seek information on the clients business objectives, current problems, and expectations for receiving exceptional service. DO NOT SELL OR SOLVE PROBLEMS. Agree that whomever on the team is doing the interviewing will not offer solutions to any of the issues uncovered no matter how tempted. Slide 47 HIERARCHY OF CLIENT NEEDS Slide 48 1: ROUTINE NEEDS Satisfying these needs does not add value, as these are considered by clients as your table stakes to even be able to play the game: Being responsive Easy accessibility Good interpersonal skills Keeping the client informed Meeting technical specifications Providing quality services Handling problems Providing value for the dollar Slide 49 2: EXPLICIT NEEDS Occurs where clients know what they want and can start to comparison shop: Providing commitment to help Unprompted communications Understanding the clients business Guiding national and international requirements Dealing with unexpected changes These needs are the easiest to identify and thus, value comes in helping the clients solve their bigger, more compelling needs - not in tweaking existing offerings. Slide 50 3: UNMET NEEDS Occurs where clients have a sense of what the service offering should be, but their needs generally exceed the scope of standard services offered: Develop proactive strategies Develop tools to manage the abundance of information Create solutions to manage internal staffing concerns Provide training in relevant changes in regulations Help company provide better service to internal departments Guide the coordination of PR related to high-profile litigation The market for services to solve unmet needs has been growing and will continue to grow. Slide 51 4 4: LATENT NEEDS Occurs where clients dont recognize they have a problem and / or they dont know exactly what services they are looking for: Adding business value to the organization Integrating your activities into the business Developing preventative strategies Defining meaningful performance metrics Defining and reducing overall costs Anticipating future business trends and challenges These needs can only be unearthed through active collaboration and an investment of non-billable time spent learning the clients business. Slide 52 SAMPLE INTERVIEW QUESTIONS: Please describe the top three ways you measure any professional firms performance? When youre stuck in traffic and youre thinking about the business, what issues are running through your mind? What could we be doing that would make your life easier? How could we better use technology to be of service to you? If you were appointed the Managing Partner for a firm like ours, what would you do differently? Slide 53 CLIENTS VALUE CHAIN Instructions Transaction Deliverables Billing Assessment & AfterCare Slide 54 STEP THREE: strategic STEPS #3: Develop Value-Added #3: Develop Value-Added Action Plan Action Plan Slide 55 EXAMINE CLIENTS VALUE CHAIN: Examine each TouchPoint in your interaction with the client: Instructions Transaction Deliverables Billing Assessment (Before) (During) (Upon Conclusion) Ask: What actions can we take to provide an experience that will RAISE AND REDEFINE our clients future expectations? Slide 56 1. INSTRUCTIONS (Sample Actions): Enhance the clients need for assurance and understanding with a letter of thanks, reassurance and commitment at the outset of the matter. Invite the client to identify three ways that you can add more value beyond simply doing the work. Slide 57 2. TRANSACTION (Sample Actions): Schedule some non-billable, offsite meeting time with the client to brainstorm about their business and what it is that is keeping them awake at night. Initiate an appointment to solicit specific feedback from the client mid-way through the matter - when the feedback might be of real value to enhancing both the work product outcome and the clients expectations. Slide 58 3. DELIVERABLES (Sample Actions): Have your client instruct you on the format and presentation of any written reports they request. Make your reports more useful for your client and easier to pass along within the client organization. Help the client with implementation. Coach the client on how to deal with others in the organization, how to present their action plans, how to handle difficult questions, and overcome resistance. Slide 59 4. BILLING (Sample Actions): Let the client design their own invoice by showing them a menu of options, offering alternatives, and inviting them to design something that meets their needs. Introduce greater transparency. Launch a work-in-progress service that enables clients to view their current matter details on-screen with a daily snapshot of time recorded on a secure extranet site. Slide 60 5. ASSESSMENT & AFTERCARE (Sample Actions): Introduce a Legal Autopsy process at the conclusion of a transaction wherein you analyze the matter and debrief with the client to see what can be learned: - future legal impacts of current business practices - ways to avoid litigation and liability - ways to accelerate the closing of transactions. Slide 61 STEP FOUR: strategic STEPS #4: Develop Relationship- #4: Develop Relationship- Enhancement Action Plan Enhancement Action Plan Slide 62 CLIENT DECISION-MAKER MATRIX: RECOMMEND US TO OTHERS STRONG FIRM SUPPORTER SUPPORTER INTERESTED NO INFLUENCE AT ALL HARDLY INFLUENCES DECISIONS SLIGHTLY INFLUENCES DECISIONS STRONGLY INFLUENCE DECISIONS MINOR DECISION MAKER DECISION MAKER MAJOR DECISION MAKER ONLY DECISION MAKER SEES US AS SAME AS OTHERS MILDLY NEGATIVE STRONGLY NEGATIVE RECOMMEND OTHER FIRMS Slide 63 CAPTIVE CLIENT STRATEGIES: What factors reduce a clients probability of switching firms? Quality of working relations High degree of integration Perceived switching costs Perceived risk in switching Slide 64 BUILDING BARRIERS TO CLIENT EXIT: Can we position our technical expertise to discourage this client from defecting? How do we become an inseparable part of the clients day-to-day business operation? Can we create significant transfer costs to dissuade this company from ever moving their matters to some other firm? How do we provide this client with an economic incentive to use our firm more often? Slide 65 STEP FIVE: strategic STEPS #5: Develop Business #5: Develop Business Development Action Plan Development Action Plan Slide 66 SOLUTION-SPECIFIC PREDATORY PROPOSAL: ISSUE (The clients current concern What it is about this that is keeping them awake at night) OUR PROPOSAL (What we would propose to do or provide) CLIENT BENEFITS (What our proposed course of action will do for the client) OUR PROOF (Validation and substantiation of our claims) Slide 67 ACID-TEST: Select your best performing Client Team(s); Review Teams written service plan; and Highlight every passage that speaks to how this team will deepen the relationship, add value and enhance the level of service provided. Highlight every passage that references how this team will attempt to schmooze the client in some manner, cross-sell, and get more work (sell these suckers more stuff!)