I recently wrote a blog about a firm that was being charged £750 a month to have a firm's e-newsletter sent out once a month.
Yes, it was a rip-off. But why was it so expensive?
I think this was a case of the supplier seeing a credulous customer, who, absent of a proper yardstick, had no idea that the charge was astronomical.
However, there's another reason why law firms pay over the odds for a lot of the inbound consulting etc. services they buy. It is the procurement process.
Take an example from our area of knowledge: business development.
Here's a typical procurement process (simplified).
The firm decides they have a need.
They either do research to find out who is in the market (typically firms take a lot of effort to make sure their people's time is not wasted by people trying to 'sell to them', so they start without a great deal of awareness of what is available in the market) or they approach firms they know of – probably through inbound marketing, an even such as LegalEX or near offer) to tender or invite them to present to the fi
Then they typically spend several months making their mind up what to do and trying to choose between the (say) 4 tenderers.
Now, if you have service that is NOT expensive, you'll go broke if you use those methods since they are all very expensive…and in the long run, your customer must carry all your costs.
To do a decent tender (add the sizzle!…add the glitz!) is quite a bit of work. Then you normally have to go and present it…and then it makes sense to work on having the likelihood of success that is equal 100% divided by the number of firms) even if the process is real: in many cases the work will go to a partners' mate anyway…
You then have the issue of making sure you do the follow-up and so on, so it doesn't fall out of the nest (the partner might meet someone new and be impressed). Lastly, when you get the job, you should reckon that you have (say) 5 years to recoup your costs.
So, you are asked to tender for a job. Your costs are (say) £2000 and you have a 1 in 4 chance of winning it and it lasts 5 years. The £2000 is built into the cost of every tender proposal as an additional charge to the client. This isn't wrong. It is necessary if that is the procurement process. So is the £6,000 for the tenders they didn't win.
There are, of course, better ways to procure than by tender. Lots of them. DFor example, you could invite anyone who tells you that they have a better way of doing X, to send you some information on your solution and why it is better. If it seems plausible, then follow up…if they offer a free trial, look at it: if what they are offering is genuinely good, a free trial means they are confident that you'll want it enough after you try it to keep it. (Sales pitch -75% of the firms that take out our LegalRSS free trial offer and subsequently access the system at least once become clients).
At the end of the day ALL the costs of your suppliers are paid by their customers/clients, assuming your supplier is profitable…if they aren’t, they may not be there next year!
But there's another issue. Your time. Your time is valuable. If you spend a lot of time making decisions, the decision-making becomes expensive…and the in-house costs of the TIME spent to make decisions often dwarfs the 'hard' process costs they'll pick up because of the costs burdens they impose on suppliers.
Here's an example from our business.
We were recently approached to have a small stand at an exhibition. By the time all the costs had been rolled in, it would have been £5k. In the great scheme of things, that isn't massive. Our average client pays us about £2k a year, so to break even, we'd need to gain 2.5 new clients. We'd probably do better than that.
However, it would also mean, in effect, 4 days out of the office, and (due to logistics), my choice was either do that or spend 4 days spend out of the office doing talks for RBS (and catching a few prospects and clients on the way to and from the events). In this case, the costs are minimal (thank you RBS) and the time taken to prepare and practice was about 5 hours – mainly practice).
I'll speak in front of about 120 lawyers. I expect a third won't like what I say and a third will have forgotten me within a week. But I'll strike a chord with another third and, in time, I'd expect to gain 4 to 6 clients from the talks. It is a better use of my time.
And this illustrates my final point. Success doesn't come from making good use of your time, but the BEST use of your time. We try very hard to make the best use of all the resources we have in our business because we are perfectly well aware that if we can run a very low-cost operation, we don't have to ask our customer base to pay unnecessary costs.
So, please don't ask us to sponsor events or awards, tender for work or spend our client firms' money on things they haven't asked us to do and which add little or no value to their businesses. We value them too much.
For better faster business development using a content-based approach, see www.words4business.com and www.legalrss.uk.