Source CX Industries Legal Winning the Customer Retention Battle in the Legal Sector

Winning the Customer Retention Battle in the Legal Sector

In a sector where new client acquisition can cost up to 15 times more than retaining existing clients — as reported by legal software provider LawWare — the economic rationale for focusing on client satisfaction to boost retention is clear. Yet despite this, many firms continue to dedicate their limited business development resources towards chasing new clients, often overlooking the potential profitability within their existing client base.

This isn’t unique to law firms, it’s a common pattern across many industries. New business development feels like an active process — where success is immediately rewarding. By contrast, client retention can feel passive — more about preventing a negative outcome (a client leaving) than securing a tangible “win”.

The good news is that meeting — and even exceeding — clients’ expectations consistently and keeping them on board for the long haul has never been easier, thanks to a range of technological developments that complement those all-important personal relationships.

In this 5-minute read we’ll explore:

  • The links between client satisfaction, retention, and profitability
  • Strategies to engage prospective clients early in their journey
  • Technological solutions to effectively boost retention
  • The importance of “Voice of the Customer” to reducing churn
  • Why retention is the best strategy for new client acquisition

The business case for client satisfaction and retention

The economics of client satisfaction and retention in the legal sector are compelling. As mentioned in the introduction, the cost of retaining a client is dwarfed by the cost of acquiring a new one. But that’s not the whole story — the same article reveals that just a 5% increase in client retention can lead to an overall profitability increase of up to 25%.

There are plenty of quick wins for law firms looking to improve client satisfaction and therefore retention, or so it seems. Brand perception experts ReputationX report that many firms aren’t even getting the basics right yet, citing a Law Technology survey that reported only 10% of customers getting to speak to a lawyer on their first contact, 40% having to wait 48-72 hours to hear back after filling out an online contact form, and 11% ending calls early due to frustration at not being put through to their named contact.

Failing to invest in the customer experience can have serious consequences for retention. The Birmingham Law Society reports that “following a badly handled call, 36% of people will take their business elsewhere, 34% will make a complaint and a quarter will leave a negative review”, and that, overall, 75% of people rate good client service as a major differentiator.

It’s clear then that many law firms need to realign their strategies, focusing not just on acquisition but also on the retention of their customer base by optimizing the experience in line with their clients’ expectations. The focus should be on creating a balance that not only attracts new business but also keeps loyal clients engaged and satisfied.

Aligning business practices with client expectations

Understanding and aligning with client expectations is crucial for successful retention. Clients seeking legal services are not only looking for expert legal advice but also value a personalized and collaborative relationship with their legal counsel.

While this might seem like common sense, in many firms lawyers and clients may have differing perceptions of the quality of the customer experience. The disparity between the two can be significant — as this extract from Clio’s Legal Trends Report makes clear: “Only 3% of legal professionals expect clients to want to tell them details of their matter in person, yet this is the preference for 70% of clients. Only 2% of legal professionals expect clients to want to make appointments over the phone, yet this is the preference for 59% of clients.”

To bridge this gap, lawyers need to prioritize effective two-way communication. Demonstrating a willingness to change and improve plays a pivotal role in enhancing client satisfaction — and encourages clients to return for future legal needs.

The power of feedback in enhancing client retention

One of the most effective ways to understand what clients really want from a legal service is through a detailed analysis of their feedback. Metrics such as Customer Satisfaction (CSAT) or Net Promoter Score (NPS) provide valuable insights into client satisfaction levels — by asking clients to rate their experience on a percentage scale or report the likelihood of recommending the firm to others, law firms can gauge their overall satisfaction and loyalty.

Of course, these scores are only a starting point — it’s important to understand the client experience in-depth and act on the insights gathered. Addressing client feedback is crucial to achieving significant improvements in client retention. Firms that are responsive to client feedback are better positioned to make the necessary adjustments to their services to enhance overall loyalty.

Apart from formal feedback requests or surveys, each client interaction, from emails to phone calls contains valuable data which can help to build a more complete picture of their needs and preferences. Traditionally, analyzing client data at this level of depth was prohibitively time-consuming, but AI technology has made it a realistic possibility for legal firms of all sizes, as we’ll explore in the next section.

Technological advancements: aiding client satisfaction and retention

Today, law firms can significantly enhance their client understanding and service delivery by leveraging AI tools. One application of AI in this context is the analysis of interactions to understand the “Voice of the Customer.” By using AI-driven analytics, firms can sift through client communications, feedback, and reviews to reveal clients’ needs, preferences, and pain points, enabling firms to tailor their services more effectively.

AI can also play a crucial role in client messaging. Legal firms often deal with critical timelines and deadlines, and AI-powered systems can ensure that clients are consistently reminded of important dates or document submission deadlines. Automated reminders and updates can be sent through a range of channels including email, SMS, or web portals, according to client preferences.

AI-driven chatbots can also handle basic legal queries, offer preliminary guidance, and even help clients navigate through the firm’s services. This not only improves accessibility for clients but also allows lawyers to focus on more complex tasks.

Cultivating a client-centric culture for retention and growth

While the capability of AI-powered technology is impressive, and ever-improving, focusing too heavily on automation risks losing the personal touch — the nuanced understanding of client needs that only human interactions can offer. This is particularly true of the types of high-stress, high-stakes conversations that form part of the day-to-day work of legal firms.

So to excel in client satisfaction and retention, law firms must consciously foster a client-centric culture. This involves embedding the ethos — and importance — of client satisfaction in every aspect of the firm’s operations, and securing buy-in from the front-line staff to the partners. Leadership plays a crucial role in setting the tone for this culture, demonstrating through their actions and policies the value placed on client relationships.

Training and development programs should be implemented to ensure that all team members have the skills and mindset necessary to deliver consistently high-quality client service. Outsourcing customer experience (CX) to specialist teams can also be a strategic decision for legal practices — allowing legal professionals and other in-house staff to focus on what they excel at.

By nurturing a culture that places the client at the heart of all decisions and actions, law firms can build strong, lasting relationships that not only drive loyalty and retention but also pave the way for sustainable growth and success.

Client retention as a business development strategy

Perhaps the most important point to make about whether to focus more on client retention or acquisition is that it’s not a zero-sum game. In an integrated approach, optimizing the customer experience for retention becomes a powerful strategy for acquisition as a byproduct.

When existing clients receive exceptional service, they naturally become advocates for the business. Their satisfaction leads to positive online reviews and word-of-mouth recommendations, which are crucial in today’s digital age. Potential clients, especially millennials and Gen Z value online reviews as a first step in evaluating a service or product, so the positive experiences of current clients serve as a compelling and authentic marketing tool.

By prioritizing the customer experience and ensuring that current clients are not just satisfied but delighted, law firms can create a self-sustaining cycle of growth. Happy clients are more likely to stay longer, purchase more, and share their positive experiences with others. This organic form of promotion is not only cost-effective but also tends to be more credible and persuasive to potential clients than traditional advertising.

Conclusion

Focusing on client retention isn’t an end goal — it’s the beginning of a virtuous cycle. By focusing on retaining and pleasing existing clients, law firms can also create a powerful client acquisition engine. This approach underscores the importance of viewing customer experience not as a cost center, but as a critical investment in the future growth and sustainability of the firm.

Of course, the process of transitioning can be complex, and time-consuming. Law firms looking to pivot quickly to a more customer-centric model may benefit from the expert input that a partner such as SourceCX can provide — whether to navigate the technologies discussed, to introduce flexible CX expertise on demand, or simply to provide tailored guidance on the right approach to take.