Wednesday, March 27, 2013

Why Cross Selling Fails

Cross-selling clients is one of the most talked about yet least understood activities in law firms today. While just about everyone agrees on the benefits (and that it must be done), few understand deeply the myriad of reasons why it so often fails. In fact, it’s odd that the phrase ‘Cross-selling’ has caught on so well in law firms. “Selling” is what used car salesmen do. But what is really happening when the cross selling process works effectively is ‘consultative cross marketing’, meaning the attorney is not selling another attorney’s services; he is working together with the client to develop the best solution to the client’s problems. And, sometimes those solutions will not be among the mix of practices in the attorney’s firm.

Back to the point, why does cross-selling so often fail to live up to its promise? Most formal cross selling programs start with flawed assumptions and suffer from a cultural misalignment between rewards and risks, an economic challenge found in the firm’s compensation and incentives program and business development training programs which are light on the unique challenges of cross marketing in professional service firms.

1.           The process typically starts with flawed assumptions.

a.           Clients are willing to lock in to a single provider for multiple solutions. However, clients often see a great benefit in maintaining flexibility and scalability.

b.           Clients will benefit financially from aggregating legal services. However, the reward is typically too small to warrant the disruption of existing relationships and the added hard and soft switching costs.

c.           Clients evaluate quality in the same way that attorneys evaluate quality. Attorneys tend to evaluate quality in technical terms including legal strategies, work product quality, educational background and case or matter experience. However, many of the recipients of a proposal are non-lawyer business executives who use a different set of criteria in their evaluation. These often include an economic analysis such as a return on investment calculation, the intuitive trust and personal appeal of the attorney, the value added services offered, the speed of proposed resolution of the issue, and other criteria.

d.           The relationship attorney and their partner equally trust one another. Trust is the most critical element of any relationship. While building trust with a new client is recognized part of the process in new client engagements, it is not so well recognized need in internal cross marketing initiatives. You must trust your partner before your client will trust him. Adequate time and attention needs to be paid to building trust among the partners.


2.           Neither risks nor rewards are compelling enough motivators.

a.           The reward of selling another attorney’s services is less than the risk of disrupting an otherwise good, productive relationship. (What if they screw up?)

b.           The risk of losing a client relationship is not worth the reward of cross selling. (What if they like her better than me?)


3.           Compensation and incentive systems are misdirected or underdeveloped.

a.           Compensation systems fail to create a large enough individual incentive to overcome risk aversion.

b.           Compensation systems and incentives often fail to directly link cross-selling performance to individual attorney compensation. Even where this path exists, it can be quite murky.

c.           Compensation and incentive programs often fail to incent group activity. Even though doing so can focus peer pressure on breaking down the barriers to cross-selling.

d.           Compensation and incentives that do reward cross-selling typically reward the short-sighted goal of landing new work versus the long term benefits to the firm of the lifetime value of a more entrenched client. Continuing to expand work in the existing practice area is just as important, if not more so, than adding additional practice areas to the client relationship.

e.           Quotas and billing requirements often force attorneys to focus first on growing their own book of business over expanding their partner’s book of business. The subtle choices the attorney makes as a result can grow into unrelenting barriers to cross selling success.


4.           Consultative cross-selling skills are underdeveloped in law firms.

a.           Cross-selling requires a different process and a slightly different set of skills than landing a new client- the focus of most attorney business development training programs. Most attorneys have not been properly trained in ‘consultative cross marketing’ techniques within the firm.

b.           Ineffective or incomplete pre-qualifying analysis. Too often, attorneys rely on their partner’s knowledge of the client to be briefed on the client’s business. This is often insufficient and should be only a part of the preparation prior to meeting with a client.

c.           Hording key information and intelligence about the client or misinterpreting its importance. It is not unusual for the relationship attorney to hold back on key client information under the guise of confidentiality, reluctance to share unpleasant experiences or even passive aggressiveness toward cross selling the client.

d.           Inability to clarify and communicate the value of another attorney’s experience and capabilities. Attorneys often have difficulty articulating their own value to a client. Articulating the value of a partner is even more difficult.

e.           Selling the practice instead of the solution. This is a common mistake in many professional service firms. Clients do not buy the practice, they purchasing the benefits of your practice which is the value of the solutions you offer. Attorneys who understand how to articulate the ways in which the business will benefit from the attorney’s experience, win a greater share of their proposals.

Cross-selling is an incredibly effective way to improve the profits of law firms and lock in long term client loyalty. However, it is equally difficult to implement in most partnership-structured organizations. The good news is that there are relatively simple ways to lay the foundation which can ensure improved cross-selling activity in the firm.
Are you interested in improving your cross selling program? It costs nothing to talk. Call me at 502.693.4731

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