By Kalev Peekna, One North Interactive

Disruption is the steadily beating mantra of modern business. Everywhere you turn, whether it’s in a TED talk, journal article or conference keynote, someone is exhorting you to radically alter your ideas about business, marketing and technology – and to do it before your competitors beat you to it. The legal industry has not been deaf to this message. Driven by an increasingly competitive and unpredictable market, firms are trying to reimagine themselves and develop new models for delivering value, growing clients and attracting new clients.

As it stands today, law firm leaders, marketers and technologists use many different terms to compare their businesses to other kinds of organizations. They make these comparisons to explain the evolution of their own business models, to identify best practices for marketing and business development, to select the right tools and technology, and to benchmark the outcomes of their efforts. Here are just some of the labels and categories we hear our law firms clients use:

•       B2B (business-to-business) vs. B2C (business-to-consumer)

•       Boutique vs. Full service

•       Professional Services vs. Goods/Products

•       Aligned to the “legal” industry

•       Aligned to client industries

So, which of these categories is right? Well, you could almost take your pick: they are all correct. That, of course, is another way of saying that none of them are correct, or at least, none of them are complete. Even if you can confidently claim, for example, that your firm is a “full service, B2B law firm serving clients in the financial, energy and healthcare industries,” you won’t have a complete picture of what that means for how you find clients, build revenue, communicate to your markets or develop information resources. At best, you’re left perusing a conflicting menu of case studies, standards and best practices cobbled together by a scattered group of experts and insiders.

We Need a New Category

The legal industry is in sore need of a new category. Legal marketing and business development have shifted in ways that none of the terms listed above recognize. All the typical labels listed above are pre-recession, pre-mobile, pre-social, pre-internet, even pre-digital, and they don’t reflect how law firms find, service or even communicate with their clients today.

The legal industry needs to embrace a model that not only comprehends its current marketing and business development practices, but also explains how and why legal business development resembles or differs from other industries. An ideal model should:

•       Focus on your client’s experience with your firm.

•       Link your clients’ decisions directly to your marketing and business development activities.

•       Position individual engagements within a broader relationship.

•       Indicate how you are affected by social communications, not just between you and your clients, but also between clients.

•       Reflect clearly how your business succeeds.

Devising such a model means abandoning previous categories, and rethinking your approach to marketing and business development from the ground up. Any successful new model must not only center on your client relationships, but also contextualize those relationships within modern, natively digital communication habits.

Introducing the Relationship-Based Business

At One North, we’ve developed a new category to describe the marketing and business development strategies of certain kinds of organizations: the Relationship-Based Business. Here’s the simple definition:

A relationship-based business is one that is driven almost entirely by whom you know, or more importantly, by who knows you. Both new deals and ongoing revenue come primarily from networks, connections and referrals.

Many of our law firm clients can readily acknowledge that their businesses are based on relationships. We find that focusing on this particular aspect of business development inspires some unexpected comparisons and contrasts with other industries. So how does one recognize a relationship-based business, particularly outside of your own industry? Here are some of the most salient hallmarks of a relationship-based business:

•       Revenue generation is not transactional.

•       The buying decision is a long process – sometimes taking weeks, months, or even years of mutual evaluation.

•       Your value to clients isn’t easily or quickly replaced.

•       Client relationships are complex, involving multiple touch points between several individuals.

•       Current clients are an important source of new revenue. Often more important than new clients.

•       Buying decisions are collective or collaborative. There are multiple decision makers and influencers.

•       What your clients feel about (and say about) your business strongly impacts the decisions of other clients.

Looking at the legal industry specifically from a relationship perspective strengthens the comparisons that many make to professional service industries like management, consulting and financial services. However, it also invites more intriguing and unexpected links to industries like advertising, architecture, enterprise technology, and even certain kinds of consumer-focused verticals. The relationship-based business model provides both greater focus and more inspiration.

The Relationship Cycle

The realization that your business is based on relationships is only helpful if you can connect this understanding to your marketing and business development activities, and (even more importantly) to how your clients make buying decisions. In most industries, the dominant model is the “funnel”: broad-based awareness communications capture the largest possible audience, who then proceed through a narrowing evaluation process until they reach a final purchasing decision. And then, for reasons almost never explained, the process stops.

The “funnel” model has never made sense for relationship-based businesses, for so many reasons:

•       Sometimes reaching the right audience trumps reaching a large one.

•       Buying decisions don’t represent the end-game of Marketing and Business Development’s contribution. More often, it’s only the beginning.

•       There’s no room in the traditional funnel for loyalty – which marks the difference between a “repeat customer” and a true client or partner.

•       Buying decisions aren’t just driven by the messages you deliver to clients. It’s also based on what clients say to you, and to each other.

In developing a new model, we were inspired by recent insights from McKinsey & Co., whose research highlights the weakness of the “funnel” model and suggests a far more cyclical buying process. We developed a new model called the Relationship Cycle, based on McKinsey’s Consumer Decision Journey, which is specifically tuned to the perspective of Relationship-Based businesses:
The Relationship Cycle

The Relationship Cycle directly connects your marketing goals to each stage of your client’s decision-making experience, providing a comprehensive view of how your relationships affect the development of your business:

Client Decision Point                             Your Marketing/BD Activities
Identify Need                                                  Generate Awareness
Research Solution                                          Drive Consideration
Active Evaluation                                            Follow-up
Formalize Relationship                                   Establish Trust & Advocacy

The real magic to the model, of course, is what happens after an initial buying decision: inside the Loyalty Loop, which tracks your client’s actual experience of your services or products. It’s easy to see how positive experiences in the Loyalty Loop can short-circuit future buying decisions for a current client. What is sometimes less obvious is how that same experience can influence the purchasing decisions of other clients. This is about more than just reputation; your clients have never been better equipped to share specific details about their experiences across their entire professional and social network. For better or worse, the most effective marketers of a relationship-based business are your clients.

Conclusion

Is the Relationship-Based Business model the actual disruption that the legal market needs? Probably not. We developed the relationship model not to be the disruption, but to enable it. Tools like the Relationship Cycle help law firms assess their current strategies and measure them against long-term goals. It encourages a strong focus on client experience and prompts your individuals and teams to engage clients in meaningful ways throughout your relationships.

In this competitive market, recognizing the importance of relationships is only the beginning. Building a strong network of loyalists and advocates to differentiate your firm from your competitors requires thoughtful care to areas that are often neglected in the legal industry, such as developing a unique and compelling brand purpose as the foundation for your relationships. We have thoughts on that too, but we will save that for next month.

* Kalev Peekna is Managing Director of Strategy at One North Interactive. He and his team design interactive experiences that meet the marketing and business development goals of complex, relationship-based organizations. He consults with clients on the business goals, content strategy, information architecture and user experience design for websites and other interactive properties. Kalev can be reached at kpeekna@onenorth.com