Improve Quality? Expand Marketing? How will I know?
By Gerard Badler and Joan Perkins

Many lawyers believe that offering high-quality services is their most cost-effective “marketing” tactic. Many firms spend virtually no time or money on traditional marketing activities. And not because they feel constrained by a code. Instead, they rely solely on reputation to generate business – in effect, they treat quality as a substitute for marketing. We heard this over and over again – from most of the principals we interviewed. And they readily acknowledged that this was a mindset created in law school and reinforced in their early firm affiliations. Traditionally, law schools (unlike like business schools) focus their curricula primarily on improving their students’ legal acumen and only very secondarily, on their marketing smarts.

The purpose of the following is to clarify the roles that quality and marketing play in a firm’s success and to show the relationship between these two business tactics.

There is profit in virtue

Empirical research across thousands of businesses in a wide variety of industries proves that there is a strong correlation between profit (measured by return on investment or return on revenue) and quality. Firms that offer a high quality product or service generally report higher profit rates than their opposites. Often their costs are somewhat higher than competitors with lower quality, but this is more than made up for by the price premium they are able to command. And sometimes, higher quality does not necessarily result in higher costs; getting it right the first time means less rework and more repeat business later on. So far, it’s a no brainer, right?

Here’s a caveat: success is not some absolute measure of your quality, but rather a measure of your quality relative to your major competitors, in the eyes of clients. So, if you provide great quality client service but your competitors do about the same (in the eyes of your clients), you don’t have a quality advantage. Unfortunately, achieving that quality level won’t necessarily lead you to greater profitability or a bigger share of the pot. Just ask U.S. car makers. Even with significant, widely acknowledged improvement, they just don’t catch up because their Japanese competitors keep raising the quality bar.

What are the implications for law firms?

• Continue to make efforts to improve your service quality. Quality improvements help profitability in most strategic situations—whether your firm has high market share or low market share, whether you’re in a slow growth or rapid growth market.
• Recognize that the competitive advantage of any incremental improvement is likely to be short-lived; your competitors will imitate your actions. So–and you’ve heard this before–quality improvements must be continuous.
• Educate your clients. The only quality improvements that count are the ones they perceive to be important. In a legal services environment, especially in complex cases, your prospects must understand why your offering is really significant to them. We’re talking marketing here.
• Find out where you stand. If you do surveys to assess your quality reputation, always ask about your performance relative to the performance of your top competitors. Example: “Rate how quickly we respond to your phone calls relative to the average response time of other firms providing similar services.”

Marketing amplifies the effect of quality

Research proves that marketing intensity is not a substitute for quality – rather, it amplifies the effect of quality. Firms with a so-so quality reputation relative to competitors, who spend a high percentage of their revenues on marketing, tend to show low rates of return. They are better off finding a niche in which they can carve out a better quality reputation or, perhaps, appealing to price- rather than quality-sensitive customers.

Firms with high quality reputations tend to have high rates of return on their marketing dollars. When they spend intensively on marketing, they strengthen their financial condition and they build a bigger business by gaining market share.

Everybody knows your name, but…

A firm with a good image may generate a lot of inquiries, but that may not bring in the firm’s desired portfolio of clients. Barry White of Foley, Hoag & Elliot, in Boston, wants his marketing program to “generate interesting, cutting edge work for the lawyers.” That requires targeting specific clients, not passively waiting for business to come in over the transom.

We have seen numerous professional service firms win awards, generate good press, etc. and still not bring in the volume of business they were looking for. Why? Well, here’s one last caveat in this marketing discussion: They forgot to look down the road. They didn’t grow their firms with an eye toward what was best for the long term. Instead they took the easy way out and spent most of their time responding to requests for proposals. Reacting. Let’s face it, those inquiries can be a real time sink, especially for a smaller firm. Unless they are properly triaged, they can generate an enormous amount of work with relatively little payoff. There is often a mismatch between client need and firm capabilities or interests. Even if a large portion of those inquiries turn into real work, you still need to be looking ahead.

So?

In short, firms that combine high quality and marketing aggressiveness will be able to chart their own courses, resist becoming largely reactive, and best weather the inevitable next business downturn.

Author Biographies

Gerard Badler and Joan Perkins are principals with Gambit Group, located in Newton, MA, a marketing strategy and communications consultancy serving professional service firms. You can reach them at 617-965-3511.

© 1999, Joan Perkins/Gerard Badler. All rights reserved.

Do not reproduce without express permission.