Growing a business is not mysterious.
There are only three ways to do it:
1). Attract more clients
2). Convince existing clients to purchase more frequently
3). Offer additional value to existing clients
Most business leaders think only of the first way. They spend most of their time, money and effort looking for the new client. Even big businesses get this wrong.
As an example, look at the mobile telephone companies and their incentives for new customers. They make it a point to antagonize customers who are locked into contracts. Their advertising disclaimers on new customer incentives are maddening for the person who just signed a two-year contract to stay with their current provider. It is no wonder this industry has the highest customer attrition rate of any consumer product. People leave out of anger, frustration and spite.
Attracting new clients is important. We spend a great deal of time talking about it because it is relatively easy to do.
Convincing existing clients to purchase more frequently is more difficult. Many businesses set themselves up for failure in this area.
So how do you handle this aspect of growth when your mission is to help people during the most difficult time of their life?
There are two ways:
First: Focus on referral sources. These can be past clients, people of influence in the community, and other professionals. Track the number of referrals they send you. Always provide them more incentive to send you new referrals. This starts with doing an excellent job and keeping open communication.
Next: Add an additional practice area that offers significant client lifetime value. Every litigation firm should have someone in-house who can do transactional work. Every corporate firm should have someone on the team who is skilled at intellectual property work. Every consumer-based law firm should be well versed in multiple areas.
If you are not a lawyer, things are a little easier. Talk to your clients. Find out what they want and provide it to them.
The third element of growth is probably the one that puzzles business leaders and attorneys the most. Raise your rates.
Convincing your customers to invest more money in your services simply requires showing them more value. If you can demonstrate more value to your client, you can command a higher fee premium.
An intellectual property attorney files a trademark for his client. The standard fee is $1,000 for the filing and $500 for each “office action” (communication with the government official examining the application). Then there is enforcement. It serves no purpose to have a trademark and not enforce it. Every time the attorney writes a letter to an infringer he charges another $500. Some years this happens several times, others, not that often.
An intellectual property attorney who wants to demonstrate value can make this offer: $4,000 for filing the trademark, answering all office actions, and one year of unlimited monitoring for infringement and sending enforcement letters. He can renew the monitoring and enforcement service at $1,500 per year thereafter.
The client has received great value through budget certainty. The attorney has commanded a fee premium and an incentive to be efficient.
What exactly should you take away from our time together this week?
Examine your business and determine which of these three factors you are missing.
Then take action.
You can probably find a few thousand dollars each month in one of these three areas.
Give it a try. You will make more money as a result.
Here are three additional articles to help you grow:
Use this formula to guide you on your entrepreneurial journey.
Show your clients what you’ve done over the years. Offer proof of the value you provide. It will make you more attractive.
You are a good business leader. See how you match up to the best.