This short post is the next article in my discussion on how law firms can increase profits in 2017 and beyond. Yesterday I looked at how poor customer service decreases law firm profits. It’s important to understand that higher customer service leads to a higher rate of referrals. That higher rate of referrals, in turn, leads to reduced marketing costs. Those reduced marketing costs make your profit margin go up like this:
While lawyers who provide average to below average service will suffer from increased marketing costs and will wind up looking like this:
In this post I’ll quickly explain why providing top-notch service to your clients will also reduce non-marketing related overhead. Let’s get to it.
The reason why providing quality service reduces overhead is simple. It results in you completing tasks in less time. This leads to fewer hiring needs. These reduced hiring needs means you need less office space and the “savings” snowball will continue to roll from there. Think of it this way. If Joe Client pays you a $5,000 flat fee to handle a matter and you obtain result “x” and 20 hours then you have fewer staffing needs then the attorney who obtains the same result while taking 25 hours to do so. The lower your level of customer service then the more time you’re going to put into obtaining that same result and, in turn, your profit margin will suffer. Right now you may be thinking “how does customer service impact the amount of time I put into something?” Let’s answer that with some hypotheticals.
Let’s say Joe Client emails you with a question. You take time to read Joe’s email but you don’t respond. The next day Joe emails you again. You read the second email and respond. It takes twice as long to read two emails instead of one so, if you had responded to the initial email, then you would have spent less time handling Joe’s case. Now multiply this effect by every email that isn’t responded to the same day, every phone call that isn’t responded to the same day, etc. Now imagine if you don’t copy Joe on all the Court pleadings. Joe then emails you asking for a copy of the Motion that was just filed and you take the time to email it to him. If you had emailed him a copy once you received it back from the Court then you would have saved the time involved in reading Joe’s email which requested a copy. I could go one for quite a while with examples of how customer service saves you time, but I won’t. Just remember, again, that all this wasted time inevitably leads to higher overhead.
The above examples only deal with providing average customer service to your clients (calling them back promptly, etc.). Now imagine if you go the extra mile. Say, for example, you send your client a one page letter every month updating them as to the status of their case. Writing that letter does not take much more time than a phone call with your client and you’ll find that you’ll receive far fewer inquiries from clients as a result of providing regular updates. The reduction in inquiries saves you time which, again, saves overhead. In my next post I’ll be going over several tips which allow a lawyer to provide a higher level of customer service while simultaneously reducing the amount of time that has to be put into a case in order to achieve the same result.
Why do you feel so many attorneys fail to see the connection between customer service and their profit margins? Please chime in through the comment form below.