August 2009 Archives

August 23, 2009

Don't Let Pricing Be the Evil Stepsister of Your Law Practice

If Prince Charming had been a potential client, then Cinderella's evil stepsisters had the right idea.  When the Prince embarked on his mission to find the owner of the glass slipper and make her his bride, the stepsisters made sure that they didn't miss out on an opportunity to marry into royalty.  So when the Prince and his entourage galloped by, they invited him into their house, touted their virtues and even kept the competition away by locking Cinderella in a closet.  But came the moment of truth, neither stepsister could close the deal because the shoe didn't fit.   Likewise, even if your marketing strategy succeeds in bringing clients into your office, like the evil stepsisters, they'll walk away without signing your retainer letter if the shoe -- or in your case, the price -- isn't a perfect fit.

Price is a critical component of marketing strategy, and which that many lawyers overlook.  Of course, in some situations, you may not have much leeway in setting price.  In some practice areas, such as social security benefits, lawyers are not allowed to charge clients up front, while in other practice areas, such as personal injury, prevailing practices (such as fronting the costs of case) make it difficult to deviate (such as requiring personal injury clients to pay a retainer up front).  Likewise, for some prospects, the only price that fits is "free;" they're more interested in squeezing free advice out of you than hiring and paying for you. 

Exceptions aside, the majority of lawyers retain significant flexibility on pricing services.  And particularly now, at a time of less than plenty, you may find that tweaking what you charge for services may help you close more deals.  Below are some examples of pricing trends in the legal profession as well as some innovative pricing strategies from the retail world to inspire your imagination:

Flat fees and alternative billing:  As the Wall Street Journal reports, increasingly, large corporate clients are demanding flat fees and alternative arrangements.   A major benefit of flat fees is that it keeps costs down.  Those clients quoted in the article report an average 15 percent cost savings from flat fees, making flat fees the "glass slipper" for many clients in a down economy.

Though from a lawyer's perspective, you may not be interested in taking a 15 percent bath on income, bear in mind that flat fees may also enable you to make sales that you otherwise wouldn't.  Consider air carrier Jet Blue's recent variation of a flat fee strategy: a $599 flat fee ticket entitling customers to fly to any of Jet Blue's 57 national and international destinations, so long as all travel takes place between September 8 and October 8, 2009.  Attorney Jay Shepard highlights the benefits of Jet Blue's strategy at his Client Revolution Blog:

Now let's play law-firm lawyer: "But what if someone takes advantage of JetBlue and flies twice a day, every day during that month? That's 60 flights for $600? How can JetBlue make a profit on ten-dollar flights?"

Dumb question. First of all, no one's going to do that. Or at least not enough people to make a difference. (Maybe one guy, hoping to get on the "Today Show.") Who the heck wants to fly that much, even on a comfy JetBlue plane with individual TV screens? To be sure, some people will take an unusually high number of flights, lowering JetBlue's average revenue per flight for those passengers. But it's just as likely that some people will take only one flight (or even none), increasing the average revenue per flight. And even if it doesn't come out even, it's a safe bet that JetBlue will attract enough new customers to make up the difference -- and some of them will become raving fans of JetBlue. And they'll tell their friends and relatives. (Or get on the "Today Show," attracting more publicity and more passengers.)

Are there ways that you can incorporate a flat fee structure into your law practice?  If you're nervous about losing money, you could offer a flat fee for a limited period of time to limit any adverse effects.  Or not.  Because you might discover that the flat fee that fits your clients' needs is comfortable for you as well. 

Freebies:   No one wants to work for free.  But offering freebies as part of your service makes clients more likely to recommend you to others and come back themselves.  At Duct Tape Marketing, John Jantsch writes about a restaurant he tried out which sent him home with a free pint of soup.  That little freebie made enough of a difference to inspire Jantsch to write about the restaurant and most likely to return.

What can add on to your services to give clients incentive to return?  For example, what about a voucher for free "check up," where you'll review an estate plan or incorporation or terms of a custody agreement at some time in the future at no cost?  The voucher gives clients something of value as well as incentive to come back to your firm.  Plus, if it turns out that something has changed -- perhaps tax laws that apply to estate plans or the make up of a client's LLC -- you'll get some extra business as well.

Premium Pricing - The Five Dollar Slice:  It may be hard to believe, but even in a down economy, premium pricing may prove the right fit for some clients.  As this New York Times story highlights, charging five dollars a slice for a piece of pizza hasn't hurt business at Brooklyn-based Di Fara's pizzeria one bit.  As one customer quoted in the article exclaimed,

"It's [the pizza] is unbelievable...you're going to pay for quality."

Incidentally, this customer, an off-duty policy officer, waited an hour and twenty minutes for two pies. 

As relevant to your law practice, perhaps there are small touches that so greatly improve quality that you can justify charging more.  For example, in a down economy, many clients are nervous about keeping their jobs and are hesitant to take time off from work to meet with a lawyer or even to use a work phone or computer to communicate with an attorney.  If you offered routine weekend and evening office hours, clients might readily pay more for this convenience, particularly if it would enable them to avoid jeopardizing their day job.

In addition, premium pricing is also matter of context, with one client's high-end price might be another client's bargain.  As Mayor Michael R. Bloomberg remarked:

 "The real question, relative to the local economy, is whether people are trading up from a $2.75 slice or down from a $25 entree."

For some clients accustomed to paying bloated rates large firms, transitioning to a solo or small practice, even when they charge premium prices is a welcome surprise.  In fact, if you market to dissatisfied biglaw clients, you may need to raise your rates a bit or your target clients might disregard your prices as "too good to be true."

Serendipitous Pricing:  Lawyers are analytical and want to reduce pricing to a science.  But just as the fairy godmother's magic made Cinderella's foot a match for the glass slipper, there's a serendipitous element to setting prices in the real world.

The Washington Post describes the role of luck and serendipity in pricing houses for sale.  For example, one real estate agent uses prices ending in "944" for her listings -- it's the model number of the brown Porsche that she drove around town when she started selling houses.  Moreover, there's actually evidence that houses that appear more accurately priced (as opposed to ending in zeros) sell more quickly.  From the article: 

About two years ago, Redfin analyzed the list prices of all the homes in one county in Washington state and found that properties with a list price ending in "500" sold for more than slightly more expensive properties whose price ended in three zeroes. They also spent slightly less time on the market, an average of 69.72 days, compared with 70.25.

Redfin's findings were backed up by academic research published in March by Cornell University professor Manoj Thomas....After examining home sales in Florida and New York, [Thomas] discovered that houses with more precise list prices tended to have higher sale prices. In Florida, homes listed with fewer than three zeros at the end resulted in a sale price boost of about 0.2 percent. And for every extra zero added, the sale price fell about 0.09 percent.

Since most lawyers don't use flat fees, these pricing strategies might not transplant as well.  At the same time, using any edge to set your prices apart from competitors can't hurt.  (Just remember, that lawyers are ethically obligated to charge "reasonable fees" so naturally, make sure that any prices that you set will pass muster under ethics codes).

Conclusions:  Tools like SEO, blogging, client newsletter and the myriad of others which I've discussed at this blog are only part of the marketing equation.  Using these tools effectively will bring clients to your door, maybe even convince them to pay for a consultation.  But ultimately -- and also like a wicked stepsister -- prices that don't fit your customers needs will sabotage your best marketing efforts.   



August 19, 2009

Make Sure The Message Matches the Medium

When it comes to Internet marketing, there's no one size fits all solution.  The effectiveness of any of the tools that I've discussed here at the Legal Marketing Blawg, such as blogs, Twitter or video depends not just on whether your current or prospective clients spend time online but  also where and how they use the Internet.

To understand the importance of how clients use the Internet to your online marketing efforts,   consider the results of an April 2009 study by the Pew Internet Project released last month.  According to the study, 56% of those polled said they have at some point used wireless means for online access - a figure that's significant enough to convince most lawyers to either start or step up marketing measures online.

But the 56% figure doesn't tell the whole story about wireless use.  Turns out that even though African American Internet use via traditional means (such as home or office computers) is much lower than for the general population, African Americans represent the most active users of the mobile internet:

48% of Africans Americans have at one time used their mobile device to access the internet for information, emailing, or instant-messaging, half again the national average of 32%.

29% of African Americans use the internet on their hand held on an average day, also about half again the national average of 19%.

Based on these use rates, you'd be justified in engaging in any type of generic online marketing activities, such as putting up a website or purchasing online ads, if you wanted to attract and serve African American clients.  But given that nearly a full third of African Americans access the web through a hand held device, your online marketing campaign would be far more effective if you invested in those tools which are most compatible with hand held devices.  For example:

-Internet access through handheld devices is usually slower than through broadband wireless and a direct connection.  So a fancy, flash-driven website that may look impressive on a large screen might be clunky and frustrating to someone trying to view it on a cell phone. 

-Blogging can be an effective Internet marketing tool.  But lengthy tomes in small font don't mix with a hand held.  To keep a hand-held based audience engaged, either opt for shorter snappier posts that can be digested in a cell-sized screen or make sure that your blog is mobile compliant.

-Many mobile users frequently access YouTube.  For that reason, video may be an effective marketing option.  Likewise, Twitter offers several different mobile-accessible applications and could also serve as an effective medium to connect with mobile-enabled clients.

Depending upon what kinds of clients you intend to target, there are a myriad of other small tweaks that can make your online marketing more effective.  As I wrote in another context, you need to imagine your audience, or in this case, your clients:

What I mean by imagine your audience is to visualize the individual readers, from those who stumble across your site online to those who dutifully read your updates daily. Where are they reading your blog - in a Starbucks? Their office? At a basement computer after the kids are in bed? Are they dressed in stiff work clothes or wearing pajamas? Using an news reader or catch all site like Alltop to catch up on posts - or do they physically visit the site to get the information?  Printing out your posts in a public library because they don't have a printer at home, or scrolling through them casually on their iphone while riding the subway to a suburban mansion?  By imagining these details, you can refine the form of your post to match your audience's circumstances - for example, enlarging the font or brightening the page if you suspect folks are reading in dimly lit areas, or including an easy print or PDF option if your audience prefers hard copy.

Most lawyers would like to believe that online marketing begins and ends with search engine optimization, that by hiring a good consultant and driving traffic to your site, you'll generate clients.  But all of the SEO in the world isn't going to make a difference if prospects leave the destination once they arrive.  It's not until you understand how your target audience is reaching you online that you can make sure that their experience is pleasant (as opposed to frustrating and confusing) once they arrive.  That way, they're guaranteed to return, or even better, to stick around long enough to decide to give you a call.
August 3, 2009

Networking That Never Goes Out of Style

Every fourth Friday of the month, for more than a decade, the Washington D.C. area contingent of Solosez, the ABA's online listserv, has had a standing lunch date at an area restaurant, thanks to  Terry Berger, the Maryland solo who started it all.  Over the past ten years, the location and time of the lunch have changed just twice (the restaurant that played host for the first seven years closed down).  The agenda never deviates: fifteen minutes for informal mingling, then it's time to be seated and go round the table with introductions -- name, jurisdictions where licensed, and a quick elevator speech on practice areas.  Then the floor opens for discussion and questions on any topic, from an aspect of law practice to recommendations on different law products and services. 

Each month brings a diverse mix of anywhere from a dozen to forty lawyers of different genders, ages, and races.  The lunch group includes forty-year veterans to new grads and the occasional law student; corporate specialists who represent large clients to general practitioners who deal with only consumers.  Yet the conversations flow more smoothly than any other bar event I've ever attended because we all share the common goal of running a successful law practice and serving our clients' needs.  But perhaps one of the best kept secrets of this informal monthly lunch is that it's been responsible for the exchange of tens of thousands of dollars in referrals as well as the creation of longstanding business relationships and personal friendships.

In the Internet Age, it's all too easy to forget the value of personal, face-to-face interaction when it comes to building and marketing a law practice.  I'm equally culpable.  Most of my posts here at the Legal Marketing Blawg focus on 21st century concepts like search engine optimization, social networking tools, or video

But even these seemingly magical, modern-day tools have their limitations.  For starters, many lawyers still aren't engaging social media, which means that if you rely exclusively on those tools, you miss out on meeting older lawyers who can serve as mentors or a source of referrals.  In my own case, I've met several older lawyers through Solosez lunches who have helped me with my law practice but whom I would have never met if I'd limited my marketing efforts to social media tools.  Second, personal meetings can solidify online relationships, making them more likely to produce referrals or other financial opportunities.

There are myriad opportunities for lawyers to interact with other lawyers in person, from bar association meetings to business networking groups to pro bono activities.  All of those activities are worthwhile and should comprise at least a part of a lawyer's marketing portfolio. Yet as far as I know, none of these organization-sponsored events have consistently produced the same number of referrals and personal friendships as the Solosez lunches that I frequent and other similar, "organically-grown" networking groups with which I'm familiar.  So below are some simple but foolproof steps for creating a good old-fashioned regular get-together which provides a respite from the online world and can prove lucrative opportunities besides.

1.  Choose An Event and Location That Caters to A Broad Spectrum of Preferences

Don't try to be original in arranging an event or choosing a location.  You might think that hosting a monthly happy hour at a local punk rock or hip hop club is an original idea, but that kind of event is likely to exclude many older lawyers.  Ditto for holding a monthly lunch at a costly, five-star restaurant which may deter financially strapped new solos from attending.  Instead, focus on locales which cater to the greatest common denominator in terms of prices and menu choices. 

Location is also important.  Try to choose venues with access to parking and public transportation.  If you can't find a convenient location, encourage potential attendees to carpool.

Finally, if you're choosing an eatery with table service, be sure that the establishment will provide separate checks (if attendees are brown-bagging or purchasing food at the counter, a separate check isn't needed).  Nothing puts a damper on a companionable meal than trying to equitably settle up the check afterward.

2.  Make It A Regular Event From the Outset

Don't just organize a single lunch event because the event may take time to gain traction.  In addition, many times, potential attendees won't be able to attend the first event, so having a second event planned will help hold their interest.  You can start out with a few pre-scheduled quarterly or monthly breakfast or lunch events and refine the frequency depending upon interest.

3.  Open Up Your Contact List

Once you've decided on a location and a couple of dates, decide who you want to invite.  Do you want to reach out to all solo and small firm lawyers or your area?  Or limit the event to a certain sub-category, such as female lawyers or family lawyers?  Once you've come up with the group you want to include, invite everyone on your personal contact list who meets the criteria as well as those whom you know virtually through social media.  If you think that attendance may still fall short of what you'd like, ask your contacts to pass the invitation along to others who might be interested.

4.  Maximize Networking Opportunities

One reason why most networking functions fall short is that they do not offer any meaningful opportunities for attendees to get to know each other.  In planning your event, take care to structure to facilitate networking.  For example, when you send out invitations, remind attendees to bring business cards.  Allow time for attendees to mingle informally, but be sure to provide time for formal introductions and elevator speeches.  In that way, attendees can easily single out those whom they'd like to get to know.

5.  Relax and Have Fun

Too many networking events can feel awkward or tense, particularly if participants have spent a lot of money and feel pressured to come away with contacts to "get their money's worth."  But since folks need to eat breakfast or lunch anyway, they're less likely to feel that they've wasted their time by sharing a meal.  So encourage people to simply relax and have fun.

Marketing with Web 2.0 tools may be the current trend, but getting together for breakfast and lunch is a networking technique that never goes out of style.  More importantly, in an era where we increasingly spend more and more time online, getting together for a meal satisfies our all-too-human appetite for personal connection.