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Milkshakes and why clients hire professional services firms

January 7th, 2013 |

Note, I wrote ‘hire’ and not retain”. Over the year-end break I came across this intriguing statement in a post on the way clients of law firms make procurement decisions. Written by Ron Friedman–a well-known USA-based blogger on law firms–the post references the research of Harvard Business School’s Clayton Christensen in this video in which Christensen examines why buyers, in his words, ‘hire’ a product. That is, what is the underlying–and not necessarily obvious at first glance­–reason someone buys a product or service?

In an everyday, easy-to-grasp example Christensen explains people do not buy a milkshake’s flavour, colour, texture, temperature or even the service attitude of the shop attendant; these are features of a milkshake. Rather he uses the colourful language of ‘hiring milkshakes’ to show they are bought for the benefits they offer, for example to allay hunger or to provide entertainment during a boring car journey or, for parents, to help calm children with a treat. The answer as to why people buy milkshakes is not as apparent as one might think.

For B2B services, like those provided by professional firms to corporate and government clients, it’s a whole lot more intricate than milkshakes. Buying these services almost always involves several decision-makers, entails complex decision criteria and takes days or weeks, all unlike everyday consumer decisions. This complexity makes understanding what Christensen is referring to all the more important for professional firms that want to understand why they are hired–and fired–by clients.

Ron applies this thinking to the corporate legal market and suggests some benefits that clients seek in hiring outside lawyers:

  • Address tough legal problems
  • Augment a lean in-house team with additional resources
  • Supply highly specialised legal expertise not available in-house
  • Deploy a big team of lawyers for a one-off matter
  • Solve a problem at a lower cost than the in-house department can
  • Signal to an adversary, by retaining a particular law firm, that the company is committed to winning this dispute
  • Relieve in-house counsel from effort or worry
  • Reduce the total cost of legal services for the company
  • Insulate the law department from the fall-out of a poor outcome.

In the Beaton Benchmarks in each profession we measure more than 15 attributes that include ‘technical competence’, ‘friendly rapport’ and ‘service reliability’. So is there a difference between Christensen’s benefits and Beaton’s attributes?  Yes, there is and there is also a critically important relationship.

Our attributes are generic to firms in a particular profession. We initially derived the attributes from qualitative research and have spent years refining them to the point where they collectively explain a very large proportion of the outcomes we measure, e.g. the value of the service as perceived by clients. By contrast, benefits as explained by Christensen are client- and situation-specific and (and this is an important ‘and’) are reliant on the Beaton attributes for their delivery. For example, in law to be able to ‘address tough legal problems’ outside lawyers must at least have (1) specialised knowledge of the law, (2) deep understanding of the client’s business and (3) the commercial nous to apply this knowledge and understanding in the precise circumstances of the client’s matter. Beaton measures and benchmarks firms against each other on these and other salient attributes. They are fundamental determinants of whether a firm and its practitioners are capable of addressing tough legal problems in any situation.

Further, from the many thousands of respondents to each of our surveys we also capture a great deal of rich commentary on what makes for superior (and inferior) performance on each attribute. These verbatim comments are firm-specific and provide subscribers to our reports with unique insights on how they are rated by their clients, what they need to do to lift their game and where the their priorities lie.

Christensen stood in a fast food outlet for many hours watching customers buy milkshakes. But only after his researchers talked to those drinking milkshake in the parking lot and asked them about why they bought one did he start to understand the real reasons and gain actionable insights. Beaton Benchmarks does just this for professional services firms.

So in 2013 deepen your understanding of how to get hired; think about the milkshakes your firm makes. Are they better than those of your competitors’? If not, do something about it–now. And if you believe you do make superior milkshakes, ensure you know what it is about them that clients value.

By George Beatonis a director of Beaton Capital and Beaton Research + Consulting. You can find George on Google+ at +George Beaton.

Posted in beatonbenchmarks, Professional Services | Comments Off on Milkshakes and why clients hire professional services firms

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