As the legal industry grapples with the impact of the Covid-19 pandemic, it may seem premature for law firms, law companies and legal tech vendors to consider how best to compete once life returns to whatever ‘normal’ the future may hold. Yet life will go on – and all legal services businesses will need to equip themselves to survive (and thrive) in the post-pandemic environment.

In this series of short guest articles, professional services business development and marketing veteran Tim Haveron Jones, principal consultant at Provergence, explores three concepts that legal services businesses should address now – so as to prepare for the highly competitive market landscape that is sure to follow the global crisis: strategic alignment, market segmentation, and positioning and differentiation.

Market segmentation: back to basics for legal services in the post-pandemic world

In the legal services market, the 2010s witnessed a dramatic rise in sectoral specialisation, as increasing numbers of law firms, law companies and legal tech providers sought to differentiate themselves by means of three classic weapons from the marketing strategy arsenal – Segmentation, Targeting and Positioning.

But whereas in some markets, such as retail, telecoms and financial services, the identification of groups of potential customers whose buying behaviour is likely to follow a particular pattern can be a highly technical matter, subject to detailed statistical analysis, market segmentation in legal services businesses is usually a fairly blunt instrument.

Typically, it manifests itself either as a distinction between ‘corporate’ or ‘enterprise’  and ‘mid-market’ clients – or as an alignment of firm resources along sectoral lines, so that a third dimension (industry) is added to the familiar management matrix, traditionally dominated by geographical business unit (office, country or region) and service line (practice area).

In fact, so common has it become for firms to go to market along vertical lines, it’s arguable that this in itself is no longer a differentiator, but rather a basic pre-requisite of success – and in a post-pandemic business environment, it’s a factor could prove crucial in determining which businesses will take the lead in responding to the challenges that will face clients. As such, it is incumbent upon legal services business leaders to ask themselves if they are making the most of their market segmentation efforts, or if they can do more.

Proper analysis of market segmentation is an exercise with which businesses will typically seek professional help, often from an external consultant – but as a starting point for such an assessment, it may be helpful for participants in the legal services market to identify what point they have reached along what might be termed a segmentation ‘maturity curve’:

  • Level 1: Team Alignment
    Firms are deriving some benefit simply by aligning fee-earners according to shared areas of interest and experience. However, the value created is generally limited to the ‘esprit de corps’ and sense of common purpose among team members.
  • Level 2: Knowledge Sharing
    Teams have begun to collect and share knowledge about the industry sectors or other market segments they have in common, mutually improving their understanding.
  • Level 3: Client Engagement
    Client service personnel are finding it easier to engage with clients in their segment because they are better able to understand market conditions, competitive landscape, topical issues and so on. In some cases, Account-Based Marketing initiatives are in place, leveraging segment knowledge, better to identify opportunities.
  • Level 4: Thought Leadership
    As well as pooling knowledge and keeping up-to-date with industry developments, teams have begun to create their own intellectual property that can be deployed in the market as part of content-driven campaigns – essentially shifting from monitoring the industry agenda to creating it.
  • Level 5: Customisation
    Horizontal offerings are being customised to meet the specific needs of a market segment (for example, a customised set of intellectual property offerings for the entertainment industry).
  • Level 6: Segment-Specific Offerings
    Unique offerings are being developed that only apply in a given segment or segments (for example, anti-money laundering offerings for the financial services industry).

The various maturity levels outlined here are characterised by a shift in mindset and an increasing degree of commitment. As with any other aspect of improving the performance of a legal services business, the higher levels will almost certainly require a modest investment of time and possibly money in tools, training, solution architecture and so on. But as we emerge from the pandemic, it will be more important than ever for legal services businesses to understand the implications of market segmentation in terms of positioning and competitive differentiation. This will be the topic of the next article in this series.

For Tim’s article on strategic alignment see: https://legaltechnology.com/tim-hav/