Fred Flintstone lived in a time when the concept of modern counting for tallying and tracking was coming into widespread use. As Big Data and AI try to muscle their way into law firms—you can still rely on a few Stone Age tools to reliably develop business and keep more clients.
Counting clients and their billings annually is a simple, important, and woefully underutilized business development tool, especially this time of year. Go count how many top clients you have this year—and compare this list to last year—name by name, billings to billings. Perform this analysis on your top 50 to 200 clients. If you’re brave, perform this analysis for each of the last 3 to 5 years—where some of our clients found a gold mine of new work.
Any top client who shrank to become a regular client deserves immediate attention, as does any client where billings shrank at all. It doesn’t matter how much they shrank—nothing good ever comes from shrinking fees.
Immediately investigate and learn exactly why these clients dropped down the list. Don’t be fooled by the premise of “one and done” or “the case ended.” There is always a reason. Clients have ongoing needs and ongoing spending—and they keep using law firms on a regular basis. This just-lost source of business is fertile ground for client and business development. Client feedback is invaluable with these clients.
This client retention and measurement calculation is your roadmap for landing new business right now. Go and develop clients where your relationships are still warm. Your clients just may be wondering why no one from your firm ever followed up after the last engagement.
BTI research shows only 48% of law firms calculated any kind of client retention rate in 2017, up from 40% 3 years ago. The typical law firm calculating its top client retention rate kept 85% of their clients on a year-over-year basis, up from 80% 4 years ago. The increased retention alone can be worth $30 million dollars in new revenue at an Am Law 200 firm—and the same proportionate gain applies to smaller firms.
For my money, I would stop or postpone another project and calculate my firm’s client retention rate for the top 50 clients, at least. I would look at 3 factors:
- Changes in billings, year over year
- Rank in the top 50, year over year
- 3-year compound growth rate in billings
The numbers will tell the rest of the story. And define your path.
All you need to do is reinvigorate 1 major client and even the most skeptical partners will be inclined to shout: “Yabba dabba doo!”
(This research is based on interviews with more than 180 law firm marketing leaders conducted over the last 12 months.)