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Building a Better Business Development Strategy : Finding Your Sweet Spot through Business Analytics

Posted

TO Advisory Services ON

Sep 30 2015

By Russ Haskin, Director, Business of Law Consulting

I have written about defining who you are and have emphasized a strategic vision through numerous articles and blogs. The ability of your law firm to thrive is predicated on one key pillar of growth – you must develop both new and existing business. This pillar requires a focus on business development. In reviewing a decade plus of articles and blogs, I believe now is a good time to rehash this discussion and consider questions such as:

  • Is the growth of a law firm the result of its reputation and lawyers?
  • As long as your firm maintains quality, will business flourish?
  • Is the growth of a law firm the result of strategic vision and a plan that once executed, will result in additional business?

The answers to these questions are yes, yes, and yes. Firms that succeed in business development know that additional work comes from a combination of reputation, quality of work, and a properly structured, understood, and executed plan. The latter component is a struggle for many firms. Quite simply, many firms lack appropriate follow through. Proper incentives play a primary role in the struggle, a lack of resources plays another. But the largest barriers to a successfully deployed business development plan are culture and a lack of understanding about the identity of your firm and its targeted client base.

Are delusions of grandeur derailing business development?

Law  firms need an understanding of where they excel to properly position themselves within the legal marketplace. It’s a simple concept, but many firms lack this insight. You can probably think of some firms  with delusions of grandeur that feel their firm does only the most high-end, expert-driven type of work. In reality there are only a handful of firms that fall into this category.

It’s not surprising that this wayward self-diagnosis exists, whether that’s the mindset of the whole firm or just some individual attorneys within it. Think of the level of competition built into the structure, the culture of the majority of firms, and the industry as a whole. Most attorneys would like to be known as the pre-eminent expert in their field and get paid for that expertise accordingly. They also want it known that they are better than the attorney down the hall. With compensation as the most popular measuring stick, the need to be king or queen of the mountain only increases.

Time for a reality check

To understand if your firm’s culture is an asset or liability to success, first you need to check your emotions at the door. Next you need to take a realistic view of your firm’s and your attorneys’ reputations. Ask yourself, why do clients choose your firm over your competitors?

I posed this question recently to a managing partner at a well-known institution and received a refreshing response. He said, “Honestly, I don’t know.” At least he had the courage to admit that. Many firms establish a collective mindset conceived purely through anecdotal information.

To grow the business, law firms need to understand their niche in the legal marketplace. To understand your niche, every firm needs to perform this exercise of soul searching. It will help establish a culture focused on business development. Mentoring is frequently discussed, as it should be (a blog on this will be forthcoming). However, I’ve spoken to several senior partners who feel that the next wave of firm leaders are just waiting to inherit their clients. In many cases they’re right. But having a few rainmakers just doesn’t cut it anymore. Firms need to adopt a structured plan for coaching the attorneys on how to develop business. Just as attorneys gain skills and have checkpoints for their growth in legal expertise, they should have similar milestones in their growth as a firm representative and business leader.

Becoming better at business development

All of us know what we would like to sell, but how and to whom is more complicated. Don’t confuse work your firm can do with work that you should focus on. There is a lot of opportunity for business development, but the majority of your effort should focus on your sweet spot. What’s that? That’s the spot is where your firm has influence, current relationships, and expertise. Put simply it’s where you have a competitive advantage. There are plenty of resources and tools that can help you determine what those areas are. By using a combination of business and competitive intelligence a firm can identify where best to focus business development efforts.

It has been my experience that there is an inordinate amount of marketing effort put to bringing in brand new clients. Although new client generation is important, the majority of new work can be generated organically. Therefore any business development strategy needs to address both avenues of growth, new client generation and existing client expansion. Overall, the latter method of growth should be the most successful and least time consuming.

How business analytics can help

Most firms use some sort of business intelligence to report on the importing and exporting of work that takes place between areas of practice. But reporting is not enough. You must analyze the data to find existing clients that have additional needs. This analysis should help you home in on key targets to grow your business. Long-standing clients that are isolated in your firm yet need additional work should be priority one.

For example, if Apple is your client and you are only working on IP litigation, its common sense to think that a client of that magnitude has other legal needs and that some other firm is fulfilling them. Unfortunately, not enough firms provide proper coaching and incentive for their attorneys to act on this information. There is also an abundance of mistrust among attorneys who do not want to share clients. Some reasons for this lack of teamwork are selfish, while others exist because the attorneys are simply not informed of the potential for collaboration. It’s up to management to break down the walls and build a culture of collaboration instead of competition. Attorneys that cross sell should be recognized and encouraged to help other attorneys do the same.

Know your clients and your competition

With increased pressure on legal expenses lingering from a sluggish economy, purchasers of legal services have become more and more open to changing outside counsel. As a firm, you can look at this reality in a negative way by thinking that your clients may walk. On the other hand, you could see it as a great time to grow your business. We know from surveys and discussions with corporate counsels that they’ll look elsewhere if they think their law firm doesn’t understand their needs. This should not be surprising, but it begs the question – how well do you know your current client base and your prospective client base?

Competitive intelligence is often confused with benchmarking statistics. When I speak of competitive intelligence I am referring to enabling your firm with useful content such as client background information, needs, industry trends, competitor trends, and much more. Client meetings happen all the time, but how much better would the outcome be if an attorney walked into those meetings fully stocked with all there is to know about the client?

Be it an existing or new client, understanding who they are and communicating your knowledge of their business can make a tremendous difference in winning new business. By using intelligence, you can find interesting anecdotes on where you can expand your client relationship. It is a process of making the case that additional work should be sent your way because your firm above all others understands the client best.

Understanding your competitors is another key component of competitive intelligence. Looking at a client list for the firm across the street is essentially an exercise in prospecting, especially if that other firm’s makeup is similar to your own. What better way for firms to generate new clients than to steal them away from competitors? By understanding your competition and your client base you gain a competitive advantage. With clients desperately looking for new ideas, certainty, and comfort, the firms that take this initiative will get the spoils.

 Grab the keys to long-term sustainability

Getting ahead all comes back to building a culture around business development. You have to know who you are as a firm, have commitment from leadership, provide proper incentives, carry the right tools, and give your attorneys the resources they need to succeed. Law firms are big business and without clients there is no work; without work there is no firm.

Establishing a culture around business development and structuring a plan to grow your client base are keys to long-term sustainability. If you’d like to discuss how Wilson Allen can help you do this, please contact us for examples of some of our products and services.