Business development: out with the old, in with the new
For forward-thinking law firms, business development is more important than ever before. Before the economic downturn, lawyers weren’t actively involved in creating business development strategies. They didn’t need to go out and find clients because clients typically came to them. The market was smaller and there wasn’t as much competition.
Lawyers focused their efforts on doing good work, and that was enough to feed a growing practice. But the modern legal market, post Great Recession, is another ballgame entirely.
Key challenges driving a change in approach
Several factors are contributing to the recent decrease in revenue.
For starters, there are more lawyers, so competition is rife. Changing market conditions also mean that there’s an increasing threat of substitutes. Alternative sources of legal advice are more readily available than ever before, making it tougher for lawyers to attract new clients. And new entrants to the legal landscape have also contributed to the erosion of market share. According to research, over 83% of law firm leaders believe that non-traditional competitors will be a permanent threat for years to come.
The rise of the internet and digitalization means that customers have access to more information. This information, combined with increased competition, has given clients greater power and more leverage than ever before.
And the result?
Clients are easily able to propose alternative fee arrangements and if law firms don’t meet these requirements, buyers will simply move on to firms that do.
The current state of the market suggests that firms must adapt and adjust or run the risk of being left behind with fewer clients, a smaller market, and continued slow growth.
Many law firms recognize these challenges and acknowledge that failure to adapt isn’t an option. In fact, the results of a survey of over 400 legal marketers and business development professionals revealed that 85% of respondents believed that strategies to win new business have shifted drastically.
Savvy business development necessitates a proactive approach to acquiring clients. There’s a need for law firms to better understand their clients’ needs and what value they offer clients. Firms must develop strategies to differentiate themselves from the competition. Modern approaches to business development place an emphasis on the tools, processes and systems that are put in place to attract new clients; something many law firms are incorporating into their business development strategies. For example, most firms are already using Client Relationship Management (CRM) platforms in an effort to drive business growth.
According to a study by Ackert Advisory on the state of CRM, of the 3000 firms featured in the study, 70% were using some form of CRM. And, in another study, CRM was one of the top five activities that law firms were investing in for growth, with 51% wanting to invest in CRM in the future.
But making a significant change in a firm’s operating basis requires more than just implementing new systems. To create business development strategies that work, firms must start with changing their culture.
Modulating firm culture
Change can be frightening in any business environment; especially because employees are used to doing things in a certain way. Firms that wish to change their culture need to overhaul traditional ways of thinking. This isn’t always an easy task.
It’s all very well for marketers to introduce new software and technologies as part of an evolving business development strategy, but if lawyers aren’t interested or held accountable, these efforts are often fruitless. Lawyers cannot be left to their own devices when it comes to “optional” activities like CRM use and business development - they need to be trained, monitored and asked for feedback so that engagement is at its highest.
Consider the study mentioned earlier. One of the key findings details that despite the majority of firms having a CRM system in place, utilization rates remain low. The primary reasons cited were problems with the culture of the firm - issues such as a lack of accountability and a lack of technological skill, were some of the stumbling blocks. This makes it ever more important for law firms to keep a close eye on progress long after implementation.
Given the challenges facing the industry - a shift in strategies toward new tools, systems, and resources, coupled with the need to address and transform firm culture - how should a firm craft a business development strategy that actually works?
Crafting a Business Development Strategy: A How-To Guide
There are a number of things law firms can do to get their business development strategy right. Here are a few of our top tips:
Align marketing and business development
While marketing and business development are different functions, they go hand-in-hand. And they should be aligned towards the common goal of generating new business. For example, while the end of a presentation may signal the end of the marketing process, it should kickstart the business development process, where lawyers exchange business cards and start a conversation.
Ultimately, it’s the responsibility of the marketing team to facilitate business development processes and provide the business development team with real leads. This is where a marketing system that populates leads into a CRM system becomes important. Firms can populate leads from online contact forms, email newsletters, and pop-ups.
Once leads have been identified, firms must single out those with the highest sales potential (the greatest opportunities). Once again, it’s critical to work with the marketing department to rank these leads correctly so that lawyers and business development executives know who to call first.
Track follow-ups with opportunities/prospects
Having identified a “short list” of key prospects to pursue, it’s crucial that lawyers maintain persistent follow-up with their relationships. While businesses in other industries usually track opportunities using CRM, this approach has proven ineffective in law firms. According to a 2015 study, CRM utilization rates by lawyers are often as low as 5%.
Why don’t lawyers use CRM? The most popular reasons were that lawyers aren’t held accountable, they aren’t technologically proficient, CRM requires too much data entry, and platform interfaces are too complicated.
While firms need CRM to perform a wide range of marketing activities, simpler business development platforms like like Practice Pipeline are more suited to lawyer business development. The data entry required is minimal, the interface is simple and user-friendly, and its utilization rate among lawyers is 75%.
Build prospect profiles and gain intelligence
Business developers should then start building prospect profiles by adding company names and indicating the course of action needed to land each client. CRM systems allow firms to generate reports in real-time, detailing how users interact with the system, and identifying the dollar value of the current prospect.
Find reasons to have a substantive dialogue with each prospect
Reaching out to prospects at the right time - i.e. when they’re in the market to buy - improves your chances of making a sale. But this is easier said than done. According to CSO Insights, about 45% of business originators need help identifying potential buying signals.
So what should firms do?
By collaborating with marketers, lawyers can identify a list of buyer activities that signal when is the best time to reach out. For example, if a law firm creates a white paper focused on addressing a client challenge, it’s advisable to set up a real-time alert that notifies the sales team when a potential client downloads the asset. Setting up business intelligence alerts through Manzama, Monitor Suite or other listening platforms can notify you of industry-specific news so that you can to remain in tune with potential industry trends and specific client needs.
Add value with communication
Business developers should view communication as a way to add value. Buyers are less interested in how many lawyers work for your firm. They want to know what’s in it for them. Why should they choose your firm over another? Supplying potential clients with reams and reams of standardized marketing material is just a waste of time. Client pitches need to be targeted.
One way to add value is to highlight lawyers’ competencies. This entails explaining how their skills can benefit different clients and highlighting their credentials to prove what the firm can deliver. Law firms should also showcase how they’ve helped similar clients in the past.
When engaging with a contact for the first time, it’s important to follow-up at a later date. This is particularly important if the potential client doesn't respond after the initial contact. The reality is that people are busy and sometimes they forget to reply. Often a gentle reminder is all that’s needed to get the ball rolling again. When following up with someone, make sure you always emphasize how your firm can add value.
Keep an eye on things
While any business development strategy should ideally include some type of technology system - a CRM system, for example - the success of the strategy depends on utilization rates. It doesn’t matter how clever the strategy is or how good the system may be, if lawyers don’t use it, it's rather pointless.
If you’re considering a CRM system for the first time or you already have a system in place, here are a few things recommendations you should consider doing to increase utilization rates.
- Inform everyone in the organization of the plan to install a CRM system and explain the benefits. This is extremely important. Most lawyers aren’t interested in features - they just want to know how the system will make their lives easier.
- Provide initial training so everyone understands how things work.
- Additional training should be offered regularly to gauge user proficiency. Firms can schedule this training based on current utilization rates - for example, if utilization rates are low among specific lawyers, targeted training can be provided to them.
- If your lawyers simply can’t or won’t make time for CRM, consider engaging a simpler platform like Practice Pipeline that has higher utilization rates and is more time-efficient and user-friendly than traditional CRM.
- Regular meetings between lawyers and the firm’s marketing or business development staff must be scheduled to assist with accountability. Ideally these occur on at least a monthly basis.
Increased competition, the threat of substitutes, new entrants to the legal landscape, and an increase in client power - all these factors make it essential for law firms to adopt a different approach to business development. This approach should incorporate the right tools, resources, and systems to help firms to actively seek out clients. Gone are the days when law firms would wait for clients to find them. The firms of today must communicate value at all times.
While many firms recognize the challenges and acknowledge the need to adapt and adjust, many stumble when it comes to implementation. This is particularly true when putting new technology systems in place.
Once new systems are up and running, law firms must keep an eye on things to ensure that everyone buys into these new processes and that everyone is using the system effectively. By embracing this approach, law firms will be able to outdo their competitors and weather the storm during periods of slow growth.
About the Author
Olivia C. Watson is the Marketing and Business Development Manager at Ackert Inc. She leads the marketing efforts at Ackert Inc. and contributes significantly to the company’s business development. She has experience in diverse industry settings including environmental non-profits, financial services, fashion and SaaS. She is a versatile, creative marketer and B2B business developer with a talent for developing original content and initiatives that drive business growth. Her written work has been featured in various publications including Strategies Magazine, JD Supra, PM Magazine, and the American Bar Association. She graduated Cum Laude from the University of Connecticut with a BS in Environmental Science. She also studied Advanced Spanish at Middlebury College and Graphic Design through California Institute of the Arts. She can be reached at Olivia@ackertinc.com.