The economic climate since the financial meltdown has presented managing partners with a variety of challenges, including trying to maintain and, if possible, increase revenues through increasing practice and/or geographic scope, as well as keeping their cost bases under very tight control by managing staffing levels and carrying out matters more efficiently.
However, while controlling costs, especially in this climate, is undeniably important, the major challenge facing all firms is the ability to maintain and increase revenues. Consequently, it is hardly surprising that managing partners have placed business development at the top of their agendas.
Faced with the revenue challenge, the majority of law firms have responded in similar fashion, with three initiatives particularly at the fore:
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a greater focus on client relationships;
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the introduction of key account management programmes and the prioritisation of the client base into ‘accounts’ deemed to have greater importance/potential to the firm; and
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a professionalisation of the sales process, including the recruitment of business development managers (as distinct from heads of marketing) and, in some firms, sales directors, some of whom are expected to be out in the market developing leads and helping the partners to complete sales.
But, all of these initiatives have been
tried before – not by law firms, but by the
big-four accounting firms. These firms are at the forefront of attempts to increase revenues, market size and share and, critically, profitability.
The initiatives referred to above are but three in a long list of marketing and business development initiatives undertaken by the major accounting
firms since the 1990s (see Figure 1).
Each of the initiatives listed in this table was tried at least once. Some, having initially failed to become an integral
part of the way the firm does business,
have been dusted down and re-launched every couple of years.
Despite this comprehensive list of marketing and business development initiatives, most partners in the big-four accounting firms admit (usually privately) that their firms still do not have a self-sustaining sales culture. The key questions are:
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Why is this the case?
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What can law firms learn from this failure?
There are two fundamental reasons; understanding and responding to them will enable you to successfully introduce and sustain a sales culture that will make a competitive difference and, in doing so, lead to increases in both revenues and profitability.
The first reason is that, although many initiatives were valuable in their own right, they were seldom, if at all, actively linked together in a holistic manner that created an integrated and sustainable business development process.
The second is that, while many of the initiatives sought to support the firm’s fee-earning professionals in their efforts to develop new business, few were specifically aimed at equipping partners with the capabilities they needed to be effective at generating new business. Those that were similar to the three-day ‘sales’ programmes usually failed.
Integrated approach
Most marketing and business development initiatives, viewed as standalone activities, have a role to play within the business development process. For example, in certain markets, a cold-calling programme may be an appropriate way of generating leads, whereas a proposal support function has undoubted merits when a firm needs to respond promptly in a competitive pitch situation.
But, unless these initiatives are actively managed as part of a holistic business development process, their true benefits will never be realised.
There are a number of reasons why the big-four accounting firms failed to fully integrate the initiatives. One is that the initiatives were often generated by different functions within the firm.
It was not unusual, for example, for the marketing department, the sales function (or business development department) and the fee-earning business units to develop and launch their own initiatives.
A thought leadership white paper generated by the marketing department, for example, might be used to promote the firm’s reputation within a particular industry, whereas a targeting programme generated by the sales function could
be aimed at a different industry, and a fee-earning department could generate its own promotional activities targeted at yet another industry sector. Without the necessary firmwide leadership and coordination, it is no surprise that the different departments tended to pursue their own objectives without anyone taking an overview.
The fragmentation of the initiatives was often compounded by the fact that they were introduced over an extended period of time, often as a tactical response to the actions of one or all of the firm’s competitors. Each initiative had its own momentum and ‘moment of glory’, becoming the latest fad until both attention and resources were redirected to the next initiative to emerge.
As a result, the business development process typically emerged as a patchwork of tactical responses introduced over time rather than as a holistic whole.
The BD process
In order to build an effective and sustainable business development process, firms must look at their marketing and sales activities as key elements within an integrated process. The process illustrated in Figure 2 is based on eight interlinked stages, starting with the firm deciding how it wants to position itself in its markets (i.e. what the firm wants to be known for – its reputation – and how the firm’s offering is differentiated from its competitors). Positioning is the prerequisite to the targeting decisions relating to market segments and companies.
Having decided on which market segments and companies to target, and with which services, the third stage is promoting the firm in a way that positively predisposes the targeted companies towards the firm. The fourth and fifth stages are lead generation, and, once the key contacts have been established, relationship development. The sixth stage is actually asking for, and winning,
the work.
The final two stages of the process (which are often forgotten but are critical in that they confirm and validate the firm’s reputation) are delivering the work in line with expectations and realising the expected revenues and profits. Each of these stages is summarised in Figure 3.
Partner capabilities
Integrating the various initiatives to form a holistic business development process is critical but, unless the firm’s professionals, and, in particular, its partners, have the capabilities needed to target and win new business, the process will never yield the results it is capable
of achieving.
While, historically, some initiatives were introduced with the objective of developing professionals’ sales skills (for example, Huthwaite’s SPIN® or Miller Heiman’s Strategic Selling® programmes), they were initially deployed in isolation – and, critically, without sufficient account being taken of the particular characteristics of the client-serving professionals who were being asked to generate the business.
People who self-select into the professions, rather than join a company, do so in order to be at the forefront of their profession’s body of knowledge and to serve clients. Faced with this reality, but equally recognising that successful revenue generation requires the firm’s partners to front the process (clients expect to deal with the firm’s senior professionals), the big-four accounting firms attempted to build their partners’ skills and, at the same time, make them more comfortable within the process. This was done through things like productising services (particularly in tax) so that the partners were asked as infrequently as possible to sell intangible services.
However, as indicated earlier, most partners in the big four admit that their firms do not have a self-sustaining sales culture. It is this failure to respond to the make-up of people who self-select into the professions and, in particular, to their need to be at the forefront of whatever activity they are engaged in, which is at the heart of the problem.
Solutions ahead
The current economy makes sustaining and, whenever possible, increasing revenues and profitability a critical aspect of any firm’s strategy. However, success will only occur if the business development process is fully integrated.
The next article in this series will expands on the brief overview of the process described earlier and explain the stages, the content of each and the inter-relationship between them.
The third and final article in the series explains why the historical attempts to equip partners with the capabilities they need to be successful at generating business have failed to deliver a self-sustaining sales culture. It suggests what firms have to do to truly equip their partners with the capabilities they need to succeed on a sustained basis.
Derek Klyhn and Rob Lees are founding partners of Møller PSF Group and consultants to PSF leaders worldwide (www.mollerpsfgcambridge.com)
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