(Reprinted from Legal Marketing Association Strategies)
As marketers, marketing partners and managing partners, our job is to identify and satisfy our clients’ needs and wants. Marketers have at their disposal a number of tools to accomplish these goals: Communication strategies, pricing strategies and new product and service development are just a few ways we help our law firms win market share and increased profits. One of the most valuable tools we have in our professional toolbox is marketing research. This article introduces five valuable research techniques.
#1: Getting to Yes
Savvy marketers and rainmakers know that achieving a positive purchase decision depends on two things. First, you must understand the motivations that influence choice. Second, you must establish a unique reason to choose your firm rather than the competition.
One technique used to discover the motivations underlying firm choice is called Laddering.
How It Works:
Laddering is an in-depth probing technique based on a theoretical construct from behavioral sciences known as the “Means End Theory.” The theory holds that the link between tangible attributes of a product or service and the clients’ (or consumers’) social or intangible needs predict choice (see Illustration #1) Laddering is the technique used to identify the links. The relationship or links can be graphically illustrated by benefit chains or hierarchical value maps (HVM).
The benefit chain, or HVM, is derived from a series of questions. The interviewer may start by eliciting the attributes that are sought or avoided (when soliciting an attorney or firm). Through a series of techniques, attributes that are unique to one firm or another are also identified. Subsequent questioning determines why those attributes are important (consequences). Questioning continues until the underlying desired value or end state is identified. A value is an enduring belief that a specific mode of conduct or end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state of existence.
Illustration #2, below, is an example of a hypothetical map illustrating the links a benefits manager might have for choosing an insurance company:
Laddering can be particularly beneficial whenever complicated purchases, such as legal or financial services are involved.
Ten years ago, Brinks Home Security Service and its competitors focused on the tangible differences of service providers (e.g., “wired or wireless” hardware, “local or remote” monitoring, “response time,” etc.). Competitors made the same claims. Brinks wanted to develop a value proposition that distinguished its service from its competitors and motivated action. In-depth laddering surveys were conducted.
The findings of the research indicated that no matter what attributes were sought or avoided, the benefit or consequence of those attributes was that a break-in would be thwarted. So why then were break-ins so important to avert? Popular belief at the time was that the primary concern (value) was to protect possessions (a consequence). The Laddering surveys showed that prospects were not concerned with the property loss. Instead they were concerned with providing a safe, secure home, free from violation (value). Once this benefit chain, or “ladder,” was developed, the ad agency revamped the advertising to include the implied key message that with Brinks, you and your family could rest easy, feeling safe and secure. Further, it tied in to the psychological need for parents to fulfill this sense of responsibility for their families. The new ads resulted in increased market share.
Wirthlin Worldwide applied the technique during the Reagan/Bush Presidential campaign in 1984 (See “Applying Laddering Data to Communications Strategy and Advertising Practice,” Journal of Advertising Research, July/August 1995). Ernst & Young, McKinsey and Mutual of Omaha are just a few of the organizations that have also used the technique to position their services, identify new service opportunities and segment their target audience based on values. Kirkpatrick Petis has used the technique to structure recruiting and compensation plans to attract and retain exemplary brokers or employees.
#2: Assessing Value
One of the most interesting marketing challenges is to determine the appropriate pricing strategy. There are numerous methods to access pricing strategies, ranging from simple, direct queries to more theoretical, black-box techniques. Recent work by Peter Van Westendorp, a Dutch economist, has produced a cutting-edge approach, which is easy to administer and interpret.
How It Works
The technique identifies the optimal price point and a range of acceptable pricing. It hinges on the premise that a theoretical buyer of a service is able to articulate four price points:
- the price at which the service begins to get expensive but would still be considered;
- the price at which the service would be too expensive to be considered;
- the price at which the service begins to be inexpensive but would still be considered; and
- the price at which the service begins to be so inexpensive that the quality or value is questioned.
Based on data from the four questions, a graphical presentation of the pricing can be prepared and the optimal price point and acceptable ranges are identified. Sample graphs are illustrated in Figures 1 and 2:
Ernst & Young employed this technique several years ago prior to the introduction of a new service that helped clients understand how their financials might be affected pre- and post-merger. Initial concept research revealed there was significant market demand for the product and helped to identify the target audience and key messages. However, Ernst & Young still needed to know how to price the product. To determine the optimal price range, E&Y employed the Dynamic Price Sensitivity Modeling (DPSM). The technique allowed the firm to value price the service well above the firm’s hourly fees.
How might law firm marketers apply this technique to determine pricing scenarios for privacy audits? Legal audits? Value case management software or services? Pricing document prep online legal services? These are just a few of the services that might be priced on a fixed-fee basis rather than an hourly basis.
#3: You Can’t Always Get What You Want
Like pricing, determining the right levels of service for a specific target market may present a challenge to many marketers. Disaster response, for example, may require different levels of service and pricing than reviewing a partnership contract. Conjoint can be a very useful technique when defining levels of services.
How It Works
Conjoint is based on the theory that in the real world, purchasers are not able to maximize all of the desired service attributes. The theory states that purchasers must make a series of tradeoffs. Conjoint is a statistical technique to help marketers value each unique combination of service offerings. Clients are asked to rate or rank hypothetical service offerings. Each offering is constructed with four to eight independent attributes, each with two to
five objective levels of performance. The technique quantifies the relative importance for each level of each attribute and for the attributes overall.
EDS provides Web hosting for a variety of business segments. The company uses conjoint to determine the ideal service bundle for each segment. Attributes and service levels might include the following:
According to Al Clary at EDS, “Conjoint has been an invaluable tool for EDS. Often we have learned which product will be most successful in a specific market, and we can determine the value the EDS brand brings to each service bundle.” John Forsyth, principal at North American Marketing Practice and manager of the Global Customer Insights group at McKinsey & Company, uses “quick conjoint” when conducting face-to-face interviews with high-level executives.
#4: Mirror, Mirror on the Wall
The illusion of central positioning may cost many law firms their market share. So what do other professional service firms do to make sure that they know what their clients think? Many professional service firms go beyond client satisfaction surveys to determine marketplace attitudes by conducting third-party win/loss surveys. These are specific, targeted, individual, in-depth, one-on-one interviews conducted by a third party to determine why the firm won or lost a specific piece of business. Still others use third parties to check their own and competitors’ references and prices.
Are you using all of the tools in your toolbox? Competition among law firms is increasing. In the next five to seven years we will see firms fail. Staying current on these and other techniques can give some firms an edge. As Clary put it, “In a nutshell, it’s all about competitive advantage. He who has the best information and applies it the best wins.” Will your firm “win” market share this year?