Rewards programs have become a staple of the credit card industry, offering everything from airline miles to cash back. Regardless of the gimmick, however, their purpose is clear: to encourage repeated use. The more you use it, the more you get back in return.
Sounds simple enough, right? But can such a simple concept translate to the world of large Canadian law firms? Given the changing legal landscape in Canada, large firms must find creative ways of retaining clients. The downside of losing a large client is greater today than ever before, as the marketplace for large clients in Canada is stagnant. Clearly clients have the power in this relationship. But surely more can be done to ensure continued loyalty between clients and large law firms.
While rewards programs can vary, here are two possible options for large firms. The first is the “buy today, save tomorrow” option, a variation on volume discounts. In any given year, for every additional piece of legal service a big law firm provides for a client, an additional percentage is taken from the costs of the total bill, up to a maximum percentage. For example, assume a Canadian bank wants to issue bonds. The firm will complete the service for X dollars. The next matter given to the firm from the Canadian bank will be charged at a rate of X-5% for example (X now being the cost of the new matter, not the bond issuance). A third matter would be X-10%, up until a maximum of say 25%. Some form of price predictability is created, allowing a client to more easily budget and allocate funds for their legal costs. Clients should also have the flexibility to decide on which matters they save, so they can get the greatest price reduction on the most expensive matters.
Some rules and parameters for the buy today, save tomorrow model obviously need to be set, including perhaps a minimum price on matters to receive the discount. But with a long term focus on client retention and a steady (if not increasing) stream of work in the future, a short term client pricing advantage is acceptable.
A second rewards option would be to allow clients to accumulate points which can be redeemed as price reductions in the future. Much like a credit card, a law firm can develop a formula that for every $1,000 spent by the client on services provided by the firm, the firm will award the client X points (at a conversion rate to be determined by the parties). The points can then be redeemed for price reductions on future matters.
Client loyalty has all but faded from the law firm/client relationship. The mindset is “what can you do for me today”? The law firm rewards program answers that question with “not only can we provide quality legal service today, but in so doing we can save you lots of money tomorrow”.
