Effectively Managing through Legal Customer Seasons
There is always some ebb and flow to the economy, but this season of uncertainty definitely has business leaders worrying. After an unexpectedly robust post-COVID recovery, we’re now seeing the flip side of all that action: more money in the economy has dramatically increased inflation — and accompanying fears are prompting some employers to downsize.
These changes have been thoroughly analyzed in the media, so it’s easy to see why both consumers and business leaders are worried. Unfortunately, when customers or clients sense this unease, they’re less likely to invest in products or services that may have felt compelling in the past. This is a huge fear among today’s legal professionals, who require a dependable base of clients.
These concerns took center stage in the 2023 Thomson Reuters Report on the State of the Legal Market, which revealed the source of the unease: today’s clients are less interested in transactional work. The cited 0.1% contraction in legal demand might not seem like a big deal, but it’s certainly a change of pace from 2021’s 3.7% growth rate.
How Market Changes Influence Consumers
The appearance of an economic boom-and-bust cycle may induce anxiety, but it’s far from new. For decades, businesses of all types have endured fluctuations in demand.
From the pandemic to the swift evolution of AI, many factors have ramped up market fluctuations in recent years. Still, the concerns of yesteryear remain as prescient as ever: how can businesses keep customers or clients engaged when all signs point to a downturn? These worries are especially noteworthy in the legal sector, where economic unease translates to reluctant clients.
The Role of Customer Churn
At the center of this conundrum rests a phenomenon known as consumer churn. All businesses must deal with this to some extent.
While it may look different from one industry to the next, consumer churn occurs when customers or clients stop investing in or using products or services they once held dear.
Some customer churn will always exist, as some customers or clients will move on as soon as their immediate needs are met. Still, many organizations rely on return business, which has traditionally been easier to obtain than new leads. When customer churn increases, businesses may find themselves in a harmful cycle of chasing leads that ultimately don’t pan out. This can mean a lot of effort for a very small reward.
When customer churn ramps up, previous consumers are nowhere to be found. Many business leaders refer to this as customer attrition — but in the legal world, this concern is often described with help from another phrase: client retention. Its common knowledge that this is crucial in the legal sector, as long-term clients reduce marketing costs while boosting return on investment (ROI).
Strategies for Limiting Customer Churn and Boosting Client Retention
Moving forward, increased customer churn will be difficult to avoid. Now is not the time to panic, however. In fact, fear-based reactions can exacerbate the problem.
The aforementioned Thomson Reuters report explains, “organizations have a tendency to hunker down to protect against both real and imagined dangers.” Instead of cowering, address upcoming challenges with these proactive strategies:
Attract the Right Type of Client
If client retention is not specifically built into your marketing strategy, you can expect customer churn to quickly become a problem. A proactive approach will increase the likelihood of clients sticking around when problematic economic cycles take over.
As downturns occur, clients who are less invested in your firm and less attuned to your approach will naturally be the first to leave. Hence, the need for a highly strategic marketing effort, in which only the most targeted leads are nurtured. The goal is to build long-term relationships that will remain strong in the midst of outside pressure.
Tailor Your Approach
Client needs may evolve as new economic concerns emerge. At this point, a previously effective legal approach may no longer be relevant. Adjust as needed to reflect different circumstances.
These may surround the client’s individual situation or may be the result of overarching economic issues — either way, your clients’ needs will change with time and you will want to follow suit. Otherwise, they may depart for a practice that seems better capable of meeting them where they’re at. Look to detailed analytics to reveal where both issues and opportunities exist.
Make the Most of Automated Solutions
Low engagement is a recipe for customer churn. Even the most loyal clients require ongoing attention from your practice, even if they don’t have any immediate need for your legal services. Automated solutions should help you follow through with these important relationships, thereby resolving a common concern with client interaction: out of sight, out of mind.
To keep current and previous clients engaged, send periodic updates about your firm and what you can offer. For many practices, this takes the simple form of a newsletter. Chock full of interesting and informative content, this regular update should remind clients that you are an authority in your practice area — and that they can still depend on you for excellent guidance and service. Use drip campaigns to send just enough emails to keep your firm top-of-mind without bombarding your clients.
Don’t forget advanced case management solutions keep complex processes as organized and efficient as possible. These may also uncover inefficiencies that limit your practice’s ROI. While these are always problematic, there’s absolutely no room for such issues during a downturn.
Build a Referral System
A quality referral setup can bring a regular flow of new clients to your practice. At first glance, this might not seem to prevent customer churn, but remember: properly vetted clients are more likely to stick around — and there’s no vetting quite like insight from a fellow legal professional. What’s more, referral marketing can provide peace of mind during times of low demand, as referrals should still bring new clients your way with little effort on your end.
It’s perfectly natural to worry about client retention during these uncertain times. If, however, the ebbs and flows of the legal industry are built into your long-term strategy, you can weather these inevitable changes. Make the most of today’s advanced tools and prepare for downturns — you’ll one day thank yourself for planning ahead.