Professional Services Accounting ARTICLE -
Your current clients may hold the key to higher profits

Target Audience: Legal Professionals, Professional Service Firms, Law Firm Partners, Law Firm Marketers

A well-known marketing maxim states that it’s more cost-effective to generate new business from an existing client than to rustle up a new client. This is as true in the legal profession as any other — after all, you already have relationships with your clients. But how can you leverage those relationships to generate additional revenue?

Avenues to additional revenue

A law firm’s work with existing clients can be expanded in several ways:

• Expanding current services — the firm provides even more of the services it already provides the client.
• Expanding geography — the firm provides the same services to the client but across a wider geographic region, perhaps through branch offices.
• Diversifying services — the firm provides the client with services beyond the services it currently provides.

Firms might attempt to expand their portfolios with clients through more than one of these routes, but it can be difficult to simultaneously market new services and expand geographic reach.

Targeting the right clients

Not every existing client is ripe for expansion. With business development resources often under a tight rein these days, it’s critical that your firm identify and target those clients most likely to provide additional work. This process will require an in-depth analysis of your firm’s current client base.

Much of the relevant data is financial in nature, and your CPA can help you navigate the appropriate accounting records and financial statements to locate it. You should consider each client’s gross amounts billed and net amounts collected, profitability, billing rates and potential revenues, as well as types of work performed, results achieved (both qualitatively and quantitatively), and the client’s potential as a referral source. Your CPA can crunch the numbers to measure the cost-effectiveness of your firm’s relationship with each client, too. You’ll need to evaluate how firm costs for the client compare with the costs for similar matters and other clients over time. Note that you may be able to use this information to show your firm’s value to the client.

Securing additional business

Once you’ve identified existing clients with a strong potential for expanding revenues, give those clients reasons to entrust your firm with additional work. Begin by demonstrating that your firm already possesses extensive knowledge about them. You must have a thorough understanding of your client’s product or services, divisions, growth history, strategic plans, locations, ownership, and competitors. A firm armed with such knowledge can more easily and quickly create value for the client.

You can show further commitment to the client by attending its trade or industry conferences, conducting on-site seminars, and monitoring relevant legislation and regulations.

You also can win over clients by making cost adjustments for them. Many attorneys and firms resist this measure because they believe that cost adjustments signal they’re responsible for the high cost of a matter. But offering strategic, unsolicited cost adjustments to key clients can inspire loyalty and confidence. This, in turn, may increase the odds of your firm landing additional work. Law firms that understand and share the client’s interest in controlling costs are indispensable.

It starts with service

When a client feels that it’s receiving excellent service at a reasonable price, it is likely to hold its law firm in high regard. Once your CPA helps you identify which clients have the potential to provide more revenue, it’s up to your firm to nurture those relationships and tap into them to cost-effectively increase your profits.

Research makes for smarter prospecting

Although existing clients can serve as a valuable source of additional revenue, law firms also must drum up business from new clients. Firms can best target their business development efforts by thoroughly researching prospective clients.

Specifically, a firm should research:

• The prospect’s industry (what are its products or services?),
• The extent to which the industry is regulated,
• The prospect’s ownership (is it privately or publicly owned?),
• The prospect’s decision makers,
• Any significant purchases, mergers, layoffs or litigation involving the prospect,
• The prospect’s current legal and accounting representation, and
• The prospect’s major vendors and suppliers.

Your firm might also mine its staff — legal and nonlegal — for people who might have contacts at the prospect company. And your attorneys might pick up additional useful information by networking with the prospect’s executives or officials at industry gatherings and similar venues.

Find out how our expertise in professional services accounting can add value to your business. Email us or call us at 1 (888) 875-9770.

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