How to Bearproof the Legal Industry Despite Rumors of a Recession!
How to Bearproof the Legal Industry Despite Rumors of a Recession!
by Melissa Rogozinski, Chief Executive Officer
A version of this article first appeared in the September 27, 2022 issue of Legaltech News.
How to Bearproof the Legal Industry Despite Rumors of a Recession!
If you come across some turned over garbage cans with large footprints surrounding them, you have discovered possible evidence of a bear. Yet, it is usually hard to say for certain how nearby a bear actually is, much less its size or threat level.
The same can be said for a bearish market; just as possible bear sightings stir up whirling thoughts and rumors, fluctuations in the economy provoke fears of a looming threat of recession.
Why Recession Rumors are Rumbling
While talk of recession is prevalent, it does not actually mean a recession is near. Instead, it’s more of the same we’ve come to expect from media pundits: fear-mongering and paranoia-prompting for ratings and reviews. In fact, this blog will argue imminent recession rumors are little more than pundits regurgitating unoriginal talking points designed to stoke fear.
With that said, the legal industry needs to bearproof itself. That is, specific steps need to be taken to guard against economic slowdown. The fact that businesses operating for long enough will eventually encounter financial or economic challenges is as obvious as the fact that bears sleep in the woods. But just as there are countless ways to stay safe from the threat of attack from a real bear, there are several things that legal product and service providers can do to protect themselves from a bearish market.
Let’s begin with a review of what is meant by a recession and how a recession is declared.
What is a Recession?
There are several elements that need to be satisfied in order to declare a true recession.
According to American economist and Masterclass instructor, Paul Krugman, the elements of a true recession are two subsequent quarters of negative GDP growth and all the following:
· Rise in unemployment
· Rise in bankruptcies, defaults, or foreclosures
· Falling interest rates
· Lower consumer spending and consumer confidence
· Falling asset prices, including the cost of homes and dips in the stock market
Why the Recession Rumors are False
A recession is not forthcoming, despite the podcast, “A Rough Quarter Ahead for Salespeople” and other naysayers contending a recession is impending. Below are a few of the primary indicators expressed in the article, How to Grow Your Business in a Recession: Funding Profitability and Sustainability, of why a recession is not looming.
· Low unemployment. Treasury Secretary Janet Yellen, in a press release dated July 28, 2022, asserted the economy remains resilient. She noted, “unemployment rate stands at 3.6%, household finances are strong, and industrial output continues to grow”. Unemployment rates are not rising and job growth is exciting!
· Falling interest rates. Current home buyers can attest that interest rates are definitely not falling. The Federal Reserve has issued five interest rate hikes in 2022 trying to decrease inflation. The idea is higher interest rates will limit consumer spending by increasing the cost of borrowing and loans.
· Inflation fell. On September 21, 2022, NPR published an article stating that, “The annual inflation rate in August was 8.3% — down only slightly from the month before.”
Unemployment is low, interest are high, and we finally saw a very small dip in inflation, clear indicators a recession is not dramatically approaching. Yet, it is important that legal technology companies send the right messages and step up their games to grow and push through the current shifts in economic circumstances.
How Should Legal Technology Companies Market Their Services in 2022?
Evolving economic circumstances impact effective business strategies for marketing to clients.
· Understand consumer mindsets. It is necessary to recognize financial vulnerabilities facing customers and address their concerns. Harvard Business Review categorizes consumers as follows: slam-on the brake’s consumers, pained-but-patient, comfortably well-off and live-for today.
· Increase messaging. It is vital that the messaging of legal product and service companies consistently emphasizes how their specific wares will help their prospects continue to grow and survive the temporary economic challenges. Reassuring messages and empathy are helpful to keep customers connected. Communicating to clients you are a partner and not a vendor is a vibrant message.
· Focus on existing clients. Current clients are a positive source of growth. Linked In research indicates that repeat customers spend more money consistently. In fact, they spend 67% more than new customers. Research determined the percentage of revenue from repeat customers increases during recessions.
· Hunt for new prospects. Connecting and identifying new customers is extremely important during economic downturns. Sales professionals who have relied on existing business, become complacent with the status quo or realistically struggled on how to evolve through the pandemic can be retrained as HUNTERS.
· Conduct meetings with technology. Sales meetings help build relationships, identify deficits and foster creativity. Pre-qualify leads through BANT, CHAMP or MEDICC. Maximize everyone’s time by having all of your research ready (buyer personas, SAPs, value proposition), and use technology to sell in creative ways.
· Drive growth through process and workflow. Proper CRM maintenance, cold prospecting, follow-up tasks and deal cycles require process to drive revenue. Following is a detailed list of best practices to help your team leverage the power of process and workflow in sales.
What’s the Answer?
The economy is going to fluctuate with upturns and downturns, just like a bear might one day wander on your path. The answer is to be prepared and not succumb to the rumors. Keep focused on what you do best and perpetuate that message through marketing and sales efforts designed to solve your clients’ and prospects’ challenges, which ultimately, will lead to growth in your organization.