We have seen many stories of large-firm clients moving some work to smaller, lower-cost firms.
It turns out that this goes beyond corporate law and extends to cornflakes. The Economist
($$) drills into this issue and quotes Eric Anderson, associate professor of marketing at Kellogg School of Management, Northwestern University:
The study will alarm packaged goods groups, as the most loyal customers – those choosing one brand for more than 70 per cent of their purchases in a category – should also be their most lucrative.
“Defection is top of mind for brand managers now because they’re the most profitable customers…â€
You could link that excerpt to convergence and ponder it for awhile. The good professor continues:
“Price and promotion have become so salient at retail, that what we thought was the loyal customer can be moved with discounts…â€
“Past recessions have seen similar defections from top-tier national brands to stores’ private-label goods, Mr Anderson said. Academic research showed that customers could be quickly persuaded to switch by a cheaper price but took far longer to switch back.”
Let’s assume for a moment that some of this retail phenomenon applies to professional services. My question is: will the flight work return to the largest law firms once the economy turns around?
My hunch: some maybe, most no. (The efforts of certain firms to hold on by giving discounts in consideration for future work is noted, but it will get a separate post.)
Certainly these so-called “branded” firms may have to try something different, marketing-wise, to make that happen.
One idea: how about this splashed across the firm home page?
