The dangers of cross-selling

The dangers of cross-selling

26 August 2021 By Jerome Doraisamy

At a time when client expectations of legal service delivery are evolving, firms must be especially sensitive to the dangers of cross-selling – or, as Sue-Ella Prodonovich warns it can become – “crass-selling”.

Speaking earlier this week on The Boutique Lawyer Show, Sue-Ella Prodonovich (pictured), who is the principal of Prodonovich Advisory, said that cross-selling – that is, introducing clients to other services that a firm provides so as to get “stickier” with that client and “get more of their budget or more of their share of wallet” might sound good on paper for firms, but warned that it can grate on clients.

In short, she said, it can come across as “crass-selling”.

There are numerous potential problems with cross-selling as a strategy, Ms Prodonovich outlined: firstly, it can make fee earners complacent if they’re waiting for work to be cross-referred within a practice; secondly, it can be high-risk; thirdly, it can sour the relationship with a client.

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Fourthly, and perhaps most importantly, if one instead opts to refer work to someone outside of their own firm, that outside practitioner might respect or treat that referral with more attention, meaning that they will “work for it”.

“And, guess what – they might have clients that they can try to refer back to you,” she said.

“I find that when it’s done not because you have to refer, but because you had a choice and you referred it out, that the referral is treated with a higher rate of reciprocity.”

Such cross-selling should be distinguished from the addition of consulting arms to boutique firms, as has been done in recent times by various practices: “That’s a complimentary strategy where firms are expanding into adjacent markets, and expanding the number of services that they deliver, but these firms are also very careful to make sure that those services can stand on their own feet,” Ms Prodonovich warned.

When asked if it makes more sense for boutique firms to “niche down”, rather than have multiple practice groups, so as to avoid any semblance of cross-selling, she responded: “It certainly makes sense for firms to hone in on a niche, because then you have the opportunity to replicate work and to use scale experience, which is more profitable to scale your experience.”

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Ms Prodonovich stressed that she is not opposed to any lawyer servicing a client with multiple services. What she doesn’t like to see, however, is a “forced” cross-sell.

“It comes naturally when partners in firms, professionals in firms get on with each other, respect each other’s advice, respect the referral, and treat each other in that way. The difficulty with cross-selling as a strategy is when it’s done automatically and it creates that tension between who receives it and who sends it,” she said.

What firms should instead be doing, as the pandemic continues, is consider strategies that, in such stressed times, are “authentic, sustainable and in everyone’s best interests”, Ms Prodonovich suggested.

“If we look at serving a client from the client’s point of view, it might be that then firms can get together in different teams, and have a look at what products or services the client uses, and think about who they can connect the client to. Or maybe they can connect their clients to others in the industry, that can give them some insights. And maybe they can cross-serve in that way, and so build the pie in that sort of organic way, and I think, a more authentic way, rather than forcing themselves on the client,” she said.

It can also be invaluable, she added, to simply ask the client what more can be done for them.

“Ask for some feedback on how you’re going, and if you know you’re doing a good job, if you’ve earned the right to ask some more questions, step up the scale or the focus of your engagement and ask them what else they might be doing, or what else is on their plate for the next 12 months, or the things that might be vexing them. So, I think if we have that conversation, that can always help,” she said.

“It’s also good to do some self-analysis first and think about any blind spots that you might have in the relationship. Are you viewing the relationship through one contact only, or do you have a number of contacts in the firm, and are you able to take a wider view of their business and their strategy, what their key result indicators might be?”

Ms Prodonovich has previously appeared on The Lawyers Weekly Show, having spoken last year about business development in the age of COVID-19.

The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full conversation with Sue-Ella Prodonovich, click below:

The dangers of cross-selling
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