[Australasian Law Management Journal,General Management,Marketing & Business Development,People Management(HR),Strategy & Leadership] March 26, 2017

Putting clients at the centre of your innovation agenda will help keep your firm in the black and stop a cycle of reactive approaches to client demands, writes Trish Carroll.

Understanding how your firm’s innovation initiatives convert to competitive advantage for your current and future clients is akin to understanding why, in fashion parlance, black is always in style, regardless of seasonal colour fads.

It is important to appreciate the difference between fad innovations and other innovations that always work in the face of changing market dynamics. Many law firms successfully introduce innovations – temporary or otherwise – to their business operations, often at the behest of their clients. However, the innovation does not become fully embedded in the firm’s operating culture and occasional innovation is unlikely to be enough to create sustainable competitive advantage.

Reactive innovation – does it really help you and your firm?

What does successfully placing the client at the heart of everything really mean? Well, the first point to make is that many law firms excel at reactive innovation. For example, when a client lays down a challenge that it is seeking more innovative solutions to, say, engagement, pricing, resourcing, business process improvement, compliance, product development and so forth.

When clients lay down the gauntlet, the urgency to identify something is almost overwhelming, but a constant stream of reactive responses to specific individual client challenges can lead to siloed innovations that are often difficult to scale up to enable competitive advantage. Longer-term planning, by contrast, can deliver a more client-centric approach that also assists the firm.

But why does the client feel the need to lay down the gauntlet? One likely element is that the client feels it needs to take fairly drastic action to gain attention. This cry for attention can happen even for firms which are putting the client at the centre of everything, which seems to be almost every organisation’s goal, whether you’re a bank, an insurance company, a health fund, a telecommunications company, an energy company, a government or a law firm.

Nevertheless, the good news is that there are ways to ensure that clients do feel loved and that firms can put them at the heart of their business – to the mutual benefit of the client and the firm. Read on …

The David Jones story

There is no doubt that putting the client at the heart of your business is very important. Let us look at the uber competitive retail sector and the legal sector, as both have a few similarities. For instance, both are mature and crowded sectors that compete with online providers and disruptors; both face new entrants locally and globally; and both have diminishing customer loyalty and margins, as well as the challenges of fierce price competition and being lumbered with outdated legacy systems. Sound familiar?

I felt a bit let down when retail giant David Jones announced a few years ago that its “innovative transformation strategy” had among its key planks “further investing in customer service and engagement”. This did not strike me as being particularly innovative – although, of course, for anyone who had put up with the frequent experience of waiting 20 minutes or more for someone to take your money for a clothing purchase, it felt like the very least DJs could do. Did it take losing market share for DJs to wake up to putting customer service at the core of its strategy? DJs’ customer service and engagement strategy involved the following elements:

• employing more floor staff as a relative proportion of sales
• creating 200 new customer service roles
• investing more in training to improve selling and conversion skills
• providing better performance reporting to frontline staff to enable tracking against targets
• increasing the company’s incentive program for frontline staff to drive sales and reward high performance
• increasing resources for other critical customer service touch points, for example additional staff in fitting rooms, and
• hosting an additional 90 in-store customer events and promotions.

I gave up on DJs about the same time as this new strategy was announced. I avoided the place for a good two years. Now when I visit DJs I am fawned over almost as much as Julia Roberts’ character in the movie Pretty Woman, but without Richard Gere’s character doing my bidding. It is especially nice that there are plenty of staff around to help and who are helpful and friendly. They make suggestions about things I might like and they are often right in what they suggest. I have no difficulty being ‘sold to’ if the person who is doing the selling shows a genuine modicum of interest in understanding what I like. The frontline staff are also a diverse mix of cultures and ages and I like that, too.

Pain before gain

DJs’ future was looking a little bleak back when this customer service and engagement strategy was hatched. Not so now. In the 2015-16 financial year, the company’s results showed increased sales of 8.4 per cent, compared with sales in comparable stores growing by 7 per cent, and it posted a tidy $168 million pre-tax profit.

What can law firms learn DJs’ case study? They went back to a tried-and-tested formula where they put resources into client service and ensured that clients were truly at the heart of their business. Rather than being a reactive approach to a dip in sales, the retailer looked at innovations it needed to implement for the long-term benefit of its customers and stores.

DJs is again gearing up for a transformative few years, with its high-stakes plan to enter the food business and invest somewhere between $75 million to $100 million over three years, with losses expected in 2017-18, and a return to profitability forecast for 2019.

It is so encouraging to see a company telling you there will be a short-term dip before a longer-term lift. If I were a shareholder I would appreciate this level of honesty. As an employee it also helps me understand what to expect and, as a customer, provided the enhanced service I’ve come to expect is maintained and translates to the new food business, I’m happy.

I appreciate that most law firms are disinclined to voluntarily take short-term dips, but maybe they should adapt some of this thinking if they want a longer-term lift. The parallels in the David Jones story for law firms is that if you want to put customers at the heart of your business, you need to understand what matters to them and invest in those things regardless of the short-term pain.

If your business is finding it challenging in the face of the industry’s maturity, the level of competition and price pressures, think about what you can do for the people who matter most – your clients. Many of the elements listed above in DJs’ customer service and engagement strategy are apposite to law firms as they involve proactive rather than reactive approaches. If law firms wanted to heed the lessons from David Jones, they could match the retailer’s following actions and try:

• investing in people and training them to provide a consistently superior client experience
• setting service-related performance targets and measuring, monitoring and rewarding staff accordingly
• putting incentives in place for all staff to help drive a superior client experience, new clients and referrals
• increasing resources for critical client touch points, such as project and case management, client relationship management, joint matter scoping, business facilitation, shared resourcing
• hosting events that have a wow factor for your clients.

Takeaway lessons

As the David Jones example shows, a true focus on clients’ satisfaction takes time and resources, but such long-term planning – rather than responding reactively – is more likely to deliver sustainable gains. Law firms would do well to take note and appreciate that there are draining and profitable ways to be proactive and innovative, and the latter approach must be your goal.

On the other hand, if your firm has conquered the challenge of successfully putting the client at the heart of everything – congratulations, that is a massive achievement. Maintaining this achievement is an ongoing challenge because, as Geoffrey Moore pointed out in Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution, never resting on your laurels is an ongoing challenge. However, it is one you can deal with when your firm operates on the basis that putting your clients at the centre of everything you do is the best way to stay in the black.

Trish Carroll is the principal of Galt Advisory, a firm focused on helping law firms devise and implement practical and successful marketing and business development strategies.  She can be contacted at trish@galtadvisory.com.au and wants you to know that she has no shares in David Jones.