By Mark Medici
The pandemic taught us the importance of data-driven decision-making for client development. Firms can and must do more with data to serve clients. And the best time to introduce these ideas is now, during some economic stress and still some uncertainty.
Why would that be?
- Client connectedness. We need to connect with our clients during times of economic stress,
- Change enablement. We learned how quickly we are able to change and did over the last year,
- Data guidance is critical for speed. Data was critically important before the pandemic and is more so now, helping firms’ teams to make better decisions faster,
- Technology tools are empowering us. Better tools are available, creating greater organizational agility and providing power platforms to tell compelling stories and offer strategic insights. And, the good news…armies of people are not necessary to deploy modern client metrics and reports.
In short, great tools and data are available today, and now we have a ready audience to receive them.
Changes Which May Results from the Pandemic and Beyond
What have we learned from recent recessions regarding industry change? The following things come to mind related to client development: (1) resources become scarce, (2) clients become empowered, (3) new roles emerge within law firms and clients, and (4) new competitors become motivated to enter the market.
These trends and others will increase the need for an enhanced client data framework, introduced below.
Client Data-Driven Insights Action Loops
The CLIENT DATA -> INSIGHT -> ACTION workflow illustrated below plots the three steps most firms use to manipulate data to support client decision-making: (i) data aggregation, (ii) insight generation, and (iii) resulting actions taken. In the next wave, data quantities will be exponentially larger, decision models will become more sophisticated, and the importance of follow-on action will be paramount.
Imagine, for example, a client alerting system that signals a significant issue or change with a client and provides a playbook and set of recommendations about what you should do to mitigate this issue.
Performance Data Operating System – Key Client Applications
Key uses will evolve out of current firm activities, while new ones may emerge, examples including:
- smart pricing and more rapid fee arrangement deployment, based on knowing with precision, the firm’s underlying costs,
- client and matter portfolio risk profiling,
- predictions on matter outcomes, matter profitability, client attrition, client needs, talent success rates, etc.,
- client listening and needs analysis triage systems,
- software-guided client compliance and OCG systems,
- digital client firm "situation" rooms (think smart Zoom rooms blended with Slack, and relevant client metrics),
- use of industry matter standards and new client metrics,
- outcome scenarios for budgeting and setting client expectations.
Data Design Must Drive Action: Living Analytics
Today, most data experts classify data insights into four groupings: descriptive, diagnostic, predictive, and prescriptive, as illustrated in the chart below published by Gartner.
Applying the above framework to client metrics, you can think about how metric design, their intended purposes, and anticipated uses may change as you push further into decision automation. In the table below, I list client development categories and how you might think of them by the phases in the continuum.
Living Profit Analytics for Law Firms
The above are only a few examples of client-oriented issues where data can support your thinking, decision-making and actions. Even as budgets likely remain tight for the remainder of 2020 into 2021, it is imperative to plan and begin your steps for your accelerated data strategy.
In Summary
Law firms continue to learn from the economic shifts we’ve seen in the last two decades including the recent pandemic. Each of these cycles provided lessons about client strategy. As described above, this structure for data can provide context, help set priorities, and be a guidepost for planning and successful forward-looking strategic execution.
1 Recent surveys indicate that marketing and business development budgets were cut by upwards of 20% year-over-year in the first half of 2020.
About the Author:
Mark Medice is a Principal at LawVision and leads the Financial Performance and Data Science Practice. He has over 20 years of leadership experience providing and applying data solutions to the most pressing challenges facing law firm leaders.
