Think about this for a minute: venture capitalists are looking to “disrupt” the sock industry. As chronicled on Marketplace, $110M has been invested in a sock company(!). This kind of investment in a static, eminently mature market is even more proof that disruption is coming and will continue for the legal sector, a $100-$400 billion-dollar piece of the U.S. economy. Plainly stated, there is simply too much money at stake for law firms and the standard legal services model not to be scrutinized and pushed towards change.
The bulwark surrounding the legal services industry is starting to show signs of strain. Consultancy firm PwC recently announced it is opening a law firm within its business; and, a Silicon Valley startup named Atrium is actively harvesting the insights and tracking the routines of attorneys to build an automated, A.I.-driven, low-cost law firm.
If disruption is to be expected, how can marketing and communications help in adapting to the changing marketplace? For this aspect, let’s consider the humble men’s razor. (No, really.)
The men’s razor industry traditionally was a bit of a two-horse race – Gillette was far-and-away the leader and Schick was in second place. In 2010, Gillette held 70 percent of the market. Then, the disrupters came in. By 2016, Gillette had lost 16 percent of its market share to the combined Harry’s and Dollar Shave Club. What are some of the key lessons that translate for law firms?
Geographic Fiefdoms are Over – Law firms can no longer rely solely on being, or having an office in, a particular location as a guarantor of business. Gillette owned all of the key distribution channels and still does for the most part. However, the internet has made physicality far less relevant. It’s important that marketing be done in a bimodal way – regional when materially important, but primarily national. “We’re a San Francisco firm” and a website containing only images of cable cars and the Golden Gate Bridge is limiting when looking to work with national clients.
Generational Habits are Changing – The next generation of decision-makers is fundamentally wired differently than its peers. Millenials survived the Great Recession and emerged with levels of cost-sensitivity not seen in Gen Xers. In addition, the latter portion of the Millenial demographic group has no concept of pre-internet times and sees online marketing on even footing with traditional ads, despite the massive investment difference between Facebook and print ads. For Gillette, this meant that cheeky, cheap YouTube ads from Dollar Shave Club (NSFW) ate market share even when countered by big budget sponsorships, such as the NFL.
Brand Building is Exponentially Easier – Gillette literally invented the safety razor. It then pushed the limits of design, adding all the way up to five blades (plus a sideburn trimming one). Generations of fathers taught their sons to shave with Gillette razors. Harry’s, in less than 10 years, swooped in, contracted out manufacturing and scored market share. Harry’s ads are ubiquitous on podcasts, a low cost way to target Millenials. It scored a halo effect with mentions on popular programs and offers of promo codes. Harry’s brand grew in strength to the point that Target now features it in stores and on its website. All of this says to law firms, your reputation and carefully curated brand are important, but they only go so far. If a firm isn’t exploring new marketing and content distribution channels (especially social media), it risks being usurped by the new kid(s) in town.
Cost (and Transparency) Matter – As the name implies, Dollar Shave Club has pitched itself as a way to get a quality shave at a much lower price point than Gillette or Shick offers. Gillette for years added blades and increased cost. With a 70 percent market share, it had the leverage to do so, reaping huge profits with each successive product enhancement. An argument can be made that this dynamic led to complacency, which allowed disrupters to enter a market deemed inefficient. Recently, Gillette announced that it was dropping prices and now spends major TV money to convey this point. For law firms, having and promoting alternative fee arrangements is critical. The “taxi meter”/surprise bill for “services rendered” may boost short term profits, but in the long-term it hampers client relationships and impacts future engagements.
Quality Counts, To a Point – If lined up side-by-side, the fanciest Dollar Shave Club or Harry’s razor may very well underperform compared to the top Gillette model. But, as stories like this one illustrate, Millennial consumers are not swayed by marginal performance advantages. All things equal, a good shave at a good price point often beats a slightly better shave at a worse price point. For law firms, championing (and then demonstrating) cost-sensitivity and rejecting needless perfectionism or bill padding is essential. Just like the battery-powered “Fusion Power,” Millennials see through hype.
From a personal perspective, and as a regular shaver, I think Gillette razors are much better. But, from a marketing perspective, it would be foolish to assume that all are like me. This is a trap into which law firms can fall. It’s critical to understand and consistently deliver an entire suite of professional services – from prospective marketing and communications, to client service, to billing, to post-engagement outreach – that continually adapts to fend off disrupters. You can either change or be changed. Choice is yours.