Data in the driving seat
Tracking business development data is essential for firm growth, explains Fiona Jackson
Historically, the legal sector has demonstrated resilience and navigated its way through economic turbulence relatively better than many other sectors.
Covid-19, however, appears to have posed the biggest challenge yet – not for private practice alone, but also for the courts as they deal with case backlogs and, controversially, suspended jury trials.
As firms rethink and adjust to new working practices due to the overnight switch to home working, business development (BD) teams are feeling the impact strongly.
A recent marketing report by The Lawyer and LexisNexis InterAction finds that 77 per cent of BD executives believe that the response to the coronavirus will have a long-term effect on the way their firm approaches BD activity.
This reaction is not surprising. For a business function that relies on personal relationships and face-to-face interactions, covid-19 has upset many BD programmes.
The effect is likely felt even more by firms that do not have defined BD processes.
The research mentioned above highlights that smaller firms are less likely to have a defined business development planning process, with all respondents without one falling outside the UK top 20.
In an almost wholly virtual and digital environment, many teams confess that accessing data for BD planning processes is challenging and frustrating on account of inconsistent and even outdated systems, alongside a lack of data accuracy and reliability.
Hybrid working is the future
In the imminent future at least, it is unlikely that businesses will return to the pre-lockdown status quo of office-based working.
Realistically, there will be a hybrid office based and working from home model in varying degrees based on the approaches that individual firms take.
There are some firms that are looking to revert as closely as possible to an office-based environment, while others are actively closing down offices and moving to wholesale remote working, embracing an entirely new work culture.
When covid-19 struck, most firms instantly went into protection mode, retracting budgets and furloughing staff, and perhaps even planning for potential redundancies.
The question is, was this a kneejerk reaction or truly warranted, based on hard facts and data?
Data driven BD
Nevertheless, with firms now having pivoted to working from home, they now need to devise new, effective and efficient working practices for BD.
Law firms’ offering can no longer be just about providing legal advice. In fact, Kennedys IQ is a case in point.
Even before covid-19 struck, the firm set up this technology-driven company underpinned by the idea of ‘Kennedys, without lawyers’ to help clients manage claims in less time and at lower cost.
Immediately, firms need to enable clients to steer their businesses through the current uncertainties, including Brexit and rapidly evolving challenges; but also help them to identify and pre-empt future business problems.
The pre-covid-19 approach to BD is not entirely suitable for supporting the current legal service requirements of clients.
Data-based insight and foresight are required, and so law firm growth is no longer reliant purely on internal operational efficiencies and the new services and programmes they want to push forward.
Internal tracking mechanism
With communications and interaction between fee-earners and clients taking place primarily through Zoom, Teams and the like, firms need to embed a reliable, enterprise-grade, internal tracking mechanism to capture BD data, given that partners, lawyers and BD teams/executives will – to an extent – potentially be working within their silos.
But despite a dispersed workforce, it is imperative that firms are seen by clients to be working as one organisation.
So, how can firms achieve this?
Foremost, they need to establish a strong foundation for a data-driven BD culture and discipline for activity management.
A logical place to start is by instituting a standard methodology for the function that is consistent across the firm.
It will enable the firm to move away from the ‘spray and pray’ approach to BD.
Clearly, document what the business objectives and strategy are; what qualifies as new business; what is the activity recording process; what templates must be used; who is responsible for tracking and managing the BD processes; how should cross-selling be recorded; what is the referral management mechanism; what kind of reports are to be generated and at what frequency; and so on.
Technology can then be introduced to support these processes to make the approach routine.
For instance, machine learning techniques can be applied to passively capture data from fee-earners’ inboxes to ensure that the information available on clients and prospects is always up to date in the client relationship management (CRM) system.
Analytics software can be used for standard reporting, and also to track the progress of business goals combining CRM, BD and financial data.
This will help identify key business trends and enable key performance indicator (KPI) monitoring.
Firms that are mature in their BD function can even use predictive analytics to determine revenue, referral rates or client lifetime value.
Relationship management can no longer be intuitive.
Anecdotally, firms fear that new work will likely be granted to incumbents by default, on account of already happening in person interactions and active prospecting of existing clients.
It is a logical point of view.
A proactive strategy for managing relationships is essential to grow existing accounts, but also to win new business.
Firms need to think innovatively about relationship management in a covid-19 world – how can they nurture existing connections, demonstrate expertise to prospects and stand out from the crowd?
Some creative BD teams have set up regular interactions remotely, such as coffee mornings, online wine tasting and wooden spoon carving sessions, to keep the informal channels of communication open.
Of course, events have morphed into webinar programmes.
But are these activities enabling firms to solidify and develop existing relationships and convert interactions into revenue?
Again, tracking the related data is imperative – which clients are regularly engaging; sessions that garnered the most engagement; who are the new joiners; who initially participated; who asked the questions; who didn’t engage at all; and so on.
With this kind of data, firms can adapt future sessions to meet the requirements of the attendees as well as put strategies in place to improve engagement.
They can also quantifiably determine the strength of relationships with key clients and prospects, and provide direction and focus for BD efforts at a fee-earner/partner and firm-wide level.
To illustrate, a lower relationship strength score awarded to a fee-earner against a key account will clearly signal a need for specific action.
Actionable data will assist with pipeline management.
An analysis of how many opportunities are at the various stages of the sales cycle will enable BD teams and fee-earners alike to focus efforts on accounts and prospects at the right time to take them to fruition.
Simplistically, if the majority of the opportunities are at the end of the sales cycle, clearly the firm needs to bolster the pipeline to keep it healthy.
Or if the data shows that the new business pipeline is relatively balanced and no major dips in revenue are forecast, cost cutting, redundancies, termination of office leases – potentially instigated by wider industry noise and fear – may be unwarranted.
Firms could genuinely stay true to their strategy, despite the disruption covid-19 has caused.
Making collaboration a reality
Typically, BD leaders collaborate with firm leadership, but that collaborative streak does not always filter down to the fee-earner level.
In the current business scenario, BD teams have an opportunity to engage fee-earners by delivering coaching on relationship management ‘at the point of need’.
Here is a scenario.
The BD team presents a report on a fee-earner’s engagement level with a general counsel (GC) at a key account.
It shows interaction has significantly reduced on a personal level, with a corresponding drop in engagement of GC with other firmwide activities such as newsletter and webinars.
The fee-earner puts it down to them not having regularly inputted client-related activities in the CRM system.
A BD team member overlays revenue figures for that key account in the report, which also shows a drop.
Gathering information from external sources to which the CRM system is linked, reveals that the client has recently engaged another firm on a new matter.
The alarm bells then ring louder when records show that the panel review for the account in question is in six months.
With this level of detail to hand, in the real world the BD team and the fee-earner would put in place a tactical plan proactively to derisk the key account in question.
In the pre-covid-19 world, lawyers may not have had the discipline or even seen the importance or relevance of adding their BD-related data in their CRM system – whether that’s a spreadsheet or some kind of a piece of technology.
But in a digital world, the case for data is easily made if supported by facts.
Another activity that merits a collaborative approach is events. Many BD teams will confess that events are partners’ cherished activities.
Telling a partner to reduce the number of events organised in a year has often been met with disregard, mainly because the activity is habitual for them.
With no return on investment (ROI) analysis undertaken on events, which historically have run into the 100s annually, and their success measured on subjective assessments of the participating fee-earners and partners, BD teams have gone with the flow for this activity.
Now, with data available on every webinar, BD can work with fee-earners to determine the optimal focus and frequency of this activity.
BD teams genuinely have an opportunity to do things differently.
A survey of global law firms in 2019 highlighted that only 25 per cent of those surveyed in Europe and Asia-Pacific cited that their BD activities were successful.
More worryingly, only 9 per cent said they were using analytics to track business opportunities over their life cycle.
So how were firms measuring success? To quote a BD executive: “Sadly, the only measure is whether the partners are happy with the service they receive. Based on volume of requests handled.”
The same survey showed that while 56 per cent of marketing and BD leaders are responsible for firm growth planning and tracking, only 20 per cent are on their firm’s management committee.
Today, as fee-earners step out of their comfort zone and embrace new ways of working, BD has a great opportunity to guide their firms through these unprecedented times and be the catalyst of internal change to finally be recognised as ‘consultants’ in the organisation.
BD teams have been jostling for their seat at the board table for a long time.
In the post-covid-19 world, a digitised and innovative approach to BD, supported by irrefutable business data, might be just the thing that gets them into that hot seat.
This said, it is in the interest of firms to embrace a data-driven, results-orientated methodology that facilitates a cultural shift away from traditional practices, in order to thrive in the new world.
Fiona Jackson is client advisor for LexisNexis InterAction lexisnexisinteraction.co.uk