If existing clients offer such attractions, why is it that so many professional firms devote the vast bulk of their non-billable marketing time (and budget) to the pursuit of new clients?

Part of the answer, of course, is that a steady flow of new clients is important to any professional firm. New clients are needed to “reseed the gene pool,” by providing new environments for the professionals to work in, and thus build skills. New clients provide a “freshness,” a “reinvigoration” that can be motivating to professionals who might have become overly familiar with existing client situations. There exists somewhat of a link between the volume and variety of new clients, and the motivation, morale, dynamism, and enthusiasm of the professional staff.

If firms are active in nurturing existing client relations, existing clients can and do become “saturated,” creating the need for new clients. Even before this state is achieved some firms are more comfortable pursuing new clients for fear that if they target existing clients too vigorously, they may be perceived by existing clients as too “leech like,” putting the firm’s need for additional revenues ahead of the client’s interests.

Many firms give great priority to getting new clients on the grounds that new clients are worth more to the firm than the value of the initial engagement, because they offer the potential for additional future revenues. This simple insight leads to an important conclusion about the relationship between new client marketing efforts and marketing to existing clients. The weaker (or more neglectful) a firm is at developing new business from existing client relationships, the lower the value (and hence the “return on marketing investment”) of getting new clients. The better the firm is at marketing to existing clients, the higher will be the value of its new client marketing activities.

The issue then is not whether firms should pursue one or the other, but rather, what the appropriate balance should be in expending the marketing effort and budget. As noted above, my research suggests that the balance today is excessively tilted toward new clients and away from organized attention to generating new business from existing clients. We must now try to understand why this is so.

I have learned from numerous conversations on this topic with consultants, lawyers, accountants, actuaries, and other professionals that primary among all the reasons for the relative overemphasis on new clients is the simple fact that pursuing and getting a new client is more fun. New clients provide the “thrill of the chase” in a way that nurturing existing relationships does not. Pursuing a new client proposal opportunity usually has the characteristics of a well-defined, finite project with relatively clear tasks and specific deadlines. Nurturing an existing relationship often has few inherent deadlines, little obvious structure, and more ambiguous tasks. Consequently, it is reported to me, it is a less “satisfying” activity: It doesn’t provide the same “rush of adrenaline.”

If this is indeed a basic human proclivity (“We always give more love and attention to those we’re trying to seduce than those we’re married to”), then it is unfortunate that firm management practices reinforce rather than try to counteract this natural bias. In most firms, I have learned, there is a tendency to over-reward the bringing in of new clients, and under-reward bringing in new business from existing clients. As one consultant expressed it to me, “When a new client is brought in, rockets go off, bells sound, your name gets in the firm newsletter and you can bank on a good bonus. If you bring in an equivalent amount of business from existing clients, the management yawns and says ‘at last he’s doing his job’.”

In similar spirit, obtaining new business from existing clients is often taken for granted: “If we do good work, they’ll give us the new business, so we don’t need to spend non-billable time on it.” A related attitude is: “If it’s an existing client, everything we do is, or should be, billable. Our marketing takes place on billable time.” As might be expected, this posture frequently leads to the result that good marketing activities don’t get done.

Excerpted from ‘Managing the Professional Service Firm’ by David Maister, pages 99 to 101