The "value" for the customer is the difference between the willingness to pay and the actual price for acquiring the product or service, for the company it would be the difference between the selling price and the cost of production.
How can we generate greater value for the customer? There are two basic ways to do this: As suppliers of a product or service, we can try to increase the customer's willingness to pay, so that the value provided by the customer is greater than in the initial condition. The second option would be to reduce the selling price, so that the customer appropriates a larger portion of the value generated.
Greater value for the customer does not necessarily mean that the supplier should charge a lower price for its service or product, or that the customer expects a lower price, in every industry there are a number of value drivers that may characterize the product or service and that are appreciated by customers in general. These are factors that increase the customer's willingness to pay and, therefore, the value that the customer can appropriate, as long as the supplier does not increase the price.
What are these value drivers for a law firm's clients? Since 2009, the Association of Corporate Counsel (ACC) has developed a value index, which is a systematic way of measuring what clients actually value about law firms. Through this tool, six key value drivers have been identified:
It refers to the knowledge of the client's objectives and expectations, beyond winning a single case, winning an isolated case, it is especially relevant for broad and recurring legal advice. They expect their legal advisors to be proactive, to help them solve problems, but also to anticipate them. The client expects his lawyer to keep in touch, a proactive support on a day-to-day basis.
The client expects the firm to deliver results with a reasonable use of time and financial and organizational resources. Continuous improvement processes need to be created and communicated to the client so that they have that image of efficiency. This is an area in which North American law firms are currently being most active, incorporating technology to automate processes, creating formal knowledge management processes.
Accuracy and clarity in the total cost of the legal service. This is particularly true for professional services. We are naturally adverse to uncertainty. We are seeing more pressure from clients for greater use of fixed, not hourly, payment methods. We are going to see more and more alternative billing arrangements.
According to the ACC this is the minimum condition for legal firms to be considered as viable suppliers.
It refers to formal and informal communication flows, such as response times for a client inquiry. They expect lawyers to be a proactive communicator, anticipating questions and problems and proactively and consistently offering solutions.
It is the most important of all. This is what senior management appreciates the most. It's not necessarily winning the isolated case or understanding the details of the process, but the way in which the executive understands that value is the impact that the result can have on the business, how much the firm's legal service saved him or her or how much it made him or her earn. To the extent that we can translate those results into more tangible, monetary terms, we believe that the client will appreciate it very much.
Excerpt from the webinar "The meaning of Value for the client of a law firm", given by Octavio Martínez Argüello, professor of the International Diploma Program in Business Administration for Lawyers - DANA.
