Efficiencies of future business development

Most law firms now consider it essential to invest in marketing/business-development activities. But expenditure is pointless unless balanced against growth in a firm's overall revenue and profit. The key, therefore, is business-development efficiency rather than increased spend. By James Stapleton

Efficient, cost-effective business development begins with your marketing strategy. Every firm has marketing headcount and financial resource limits. If I accepted every advertising or sponsorship ‘opportunity’, I would run out of my annual budget by March. No firm is able to take advantage of the myriad sponsorship opportunities, advertising spots or organisation memberships that present themselves over the course of the year, so we parsimoniously allocate resources to those few options that have the best chance of success. To calculate the effectiveness of individual marketing tactics, we use the following six rules:

1. The effectiveness of any individual strategy or tactic is inversely proportional to the extent to which the competition uses a similar strategy or tactic;
2. The people involved in the tactic must be true stakeholders – for example, if we choose to sponsor an event, it must include a significant proportion of attractive third-party referral sources, decision-making clients and potential clients, or numerous prospective clients;
3. Each tactic must appeal directly to a narrowly defined stakeholder group;
4. There must be a degree of emotion, interest or excitement surrounding an event. It should focus on reasonably cutting-edge topics;
5. Every tactic you choose must have a partner sponsor, whether it is involvement in an organisation, participation in a media-relations campaign or a firm-funded sponsorship. The partner must have a vested or strong interest in that particular tactic. If a partner driver cannot be found, the tactic will be
less effective;
6. We must be able to measure the impact of a given tactic on our
core stakeholders.

These six rules will help streamline your tactics and maximise your business-development results. Part of the difficulty of implementing the rules across your firm is that your business-development efforts clearly rely upon the adoption and success of a number of interdependent elements; including your partners and associates, your marketing and business-development employees, your vendors, contractors, assistants and interns, and key elements of your finance, document production, facilities, recruiting and human-resources departments,
among others.

It is difficult to achieve peak efficiency when relying upon so many groups, so it behooves you to objectively measure each part of your marketing ecosystem when evaluating the success of your business development. The best way to do this is to implement a set of easily understood and easily gathered metrics to benchmark your business-development performance against goals and industry norms.

Metrics
Having spent 18 years at accounting and consulting firms, it became very easy to translate an accountant’s predilection for numbers to satisfying the need for benchmarking our business-development performance. We set tangible goals for each element of our strategy, we report those metrics to our managing partner and group partners for use as evaluative tools, and we make ongoing refinements to our strategy based upon our findings.

We generate formal metrics on a quarterly basis, though we follow certain numbers on a monthly basis. We suggest the following metrics as worthy of your attention.

New business metrics overall
We watch new business metrics very closely. Not only do we pay attention to the raw new client and revenue numbers, we actively monitor trends and several rolling averages on a
month-by-month basis.

Gauging new client and new matter sources
The core of a business-development strategy is the ability to understand how a firm generates its clients. One of our ongoing efforts surrounds the sourcing of our new clients and matters. We understand that our business-development efforts are successful, but we wanted to tailor our understanding to those stakeholders responsible for generating that new revenue.

Gauging effectiveness of partner business development
The success of our business-development activities ultimately relies upon the effectiveness of our partners at building relationships, generating opportunities and closing clients. It is simple to track a firm’s relationships and the touch points from each side. The simplest example of this is a referral scorecard that tracks referrals we make to key third parties and those we receive from those same parties.

Technology metrics
We’re very much interested in the effectiveness of our various web, client portal and intranet platforms, and we measure them closely. Each month,
we examine:

Page views;
Length of time per site visit;
Original source of the web view (competitor, prospective client, executive recruiter, for example).

Client satisfaction metrics
Some firms, particularly very large firms, employ comprehensive, mechanical client-survey processes, using neatly defined ratings systems. They are particularly useful when management tends to be more remote from the firm’s clients. At our smaller, regional firm, we pay close attention to client wins, referrals between practice groups, and pitches won and lost.

Marketing metrics
Media relations
We review our media relationships on a regular basis. We want to know our media response percentage. What percentage of our opportunities do we fulfil? How many do we miss? Similarly, we want to know our partner response time – how long does it take them to respond to a reporter, or a speaking opportunity or an opportunity to share thought leadership? We also track our number
of published articles (against goals), and we have tracked media mentions since 1982.

Events
We use an event calendar not only to track the number and type of events that we host, but to track attorney speaking opportunities and event attendance. We also want to track relationships generated or furthered by attendance at individual events.

Sponsorships and organisations
We track the number and type of sponsorships in our programme, including organisations that are close to our firm or competitor firms, and new sponsorships that competitors
are adopting.

Budget metrics
Like any other firm, we track expenses against budget. We also track the budget against various firm benchmarks (PeerMonitor, Citibank and so on), and we track misallocated items. We want to make sure that each line item of our budget is in alignment, not just the overall budget.

We use various methods for information collection.

Information collection
Sunset reviews
Beyond the collection of metrics, this involves evaluating the success of individual tactics. As every marketing tactic represents an investment, we perform a ‘sunset review’. These concentrate on the following:

Audience review – number and type of attendees/viewers;
Firm participation – number and name of partners and associates;
Relationships generated or furthered in the event;
Impact on our brand;
Competitors involved;
Cost;
Potential opportunities generated;
Short analysis of tactic and recommendation as to whether to continue with it, and to what extent.

Results are presented separately as part of the metrics package to the managing partner, then used in subsequent planning and budgeting processes.

Post-mortems
Many years ago, a visibly disconsolate partner walked into my office and slumped into a chair. She sighed and stared at the ceiling.
“Something wrong, Roberta?”
“We didn’t get Silicon Valley Manufacturing.” She was clearly disappointed. Had we signed SVM, a large machine shop that created prototypes for some of the largest companies in Silicon Valley, we would have added a healthy six-figure fee to the firm. It would have been Roberta’s second largest client, and would have capped off a solid string of business-development successes.

Roberta was utterly mystified. She had researched the client and the industry, and we had been referred to the client by one of our clients.
Though five other firms were competing for the work, the client should have been ours to lose. She asked the client the obvious question: ‘What happened?’ The client responded.

“Well Roberta, you know it was a very difficult decision. We were very careful about which firms we invited to pitch; our specifications were quite exact. All the firms were very well qualified, and we were very much impressed with your firm and with your qualifications in particular. However, while we all agreed that the firms compared closely with each other, we’ve decided to choose one of the other firms.”

Does that sound familiar? Of course it does. The client provided our partner with an easily digestible response that allowed both Roberta and the client to come away from the pitch with their emotions and egos intact. What it brings in ease of use, it lacks in candour.

Of course, Roberta suspected that the client had other, more serious reasons for selecting another firm. She asked me to perform a post-mortem, meaning an in-depth, no-holds-barred interview with the client. She e-mailed the client to solicit his cooperation, to which he enthusiastically agreed.

In the first ten minutes of a half-hour conversation, the client repeated back to me the same things that he told Roberta. After having established a comfort level, his caution level dropped and his candour grew. Among other things, he said:

He wanted to deal with a firm that had machine-shop expertise. Roberta told him that she had no such expertise personally, though the firm had over 60 machine-shop clients;
He wanted a firm that had business relationships with a large bank in the area. Because Roberta did not question him sufficiently as to his business strategy, she did not learn that they were seeking financing, nor could she reference the half-dozen close relationships that her firm had with that bank;
He wanted a close personal relationship with the partner and was concerned that our firm could not produce that relationship. He chose a firm about one-third our size, although it had a much higher staff/partner ratio than our firm, about 4:1 versus 2:1; a fact that Roberta failed to point out;
Our firm had six offices and Roberta was headquartered in an office that was about 15 miles and two cities away. He said he liked to deal with local service providers, and I told him that if he turned around, he could probably see me waving at him. Our headquarter office was just a block from his company.

A client’s perspectives are generally quite different from that of their attorney’s perspective. While an attorney may sell or service to perceived needs from their own perspective, the client is gathering information on a full-time basis that may lead to the opposite conclusion.

Client transition
We have all seen studies that prove that general counsels and other legal-service buyers have less than ideal satisfaction with their current law firms. The transition cost of switching firms is high; in emotional terms, in start-up costs for the new firm and in terms of uncertainty on the part of the client. Every decision that a client or prospective client makes that involves the choice of whether or not to select or continue to use your firm is typically the result of a lengthy process, which involves a careful evaluation of your professional abilities, your approach to customer care, the quality of your work, your knowledge of business and of the client’s industry, and your cost structure. The decision is rarely ill-considered or easily made.

Clients, therefore, do not make the decision to switch firms lightly, yet the twin goals of our practice-development programme are to serve and protect our current clients, and to engage new clients. So, when a client or prospective client makes a transition decision, whether it is in your favour or not, an opportunity to learn about your firm and your competitors presents itself.

The post-mortem interview process
In my view, a post-mortem offers the single greatest opportunity you will have to aggregate candid information on your firm and your competitors, providing that you use a credible interviewer. This may take the form of another partner, a third-party surveying firm, a senior marketer or another trusted individual.

Professionals usually approach these interviews with a degree of trepidation, even when someone else performs the interview. Candour is not welcomed by everyone responsible for the pitch and successful professionals often would rather not hear constructive criticism, and yet, the information generated is so powerful and offers such strong insights into stakeholders who have decided either to hire or fire you.

The post-mortem process usually includes the following:

1. An interview with the partner to secure their opinion of the win or loss, including both acknowledged and theorised reasons for the decision;
2. A request from the partner to the client’s decision maker, to agree to a post-mortem interview;
3. The interviewer follows through with the client to arrange a convenient time;
4. The interviewer prepares a list of questions as follows:

The first set of questions is designed to build rapport
and to confirm the partner’s initial findings;
The second set of questions is gauged to confirm the partner’s theories as to why the decision was reached;
The third set of questions is designed to uncover ‘red flags’ that the partner never suspected.

5. The interviewer concludes the interview and thanks the interviewee. They should not ask for further assistance or opportunities, but should be prepared to follow up should an opportunity arise. In roughly one fourth of the post mortems I’ve performed, the client has brought another opportunity to our attention;
6. The interviewer summarises the findings in a no-holds-barred style solely for consumption by the responsible partner or others, who he or she so designates;
7. The interviewer prepares a separate quarterly ‘lessons learned’ review for broader consumption.

Interview whether you win or lose
I highly recommend a formal post-mortem whether the decision is in your favour or not. If the client
decision is in your favour, it means the client has turned down the chance to engage another firm. This decision process can lend you insight both into your competition and into the benefits that the client perceives you have to offer.

Remember…
The effectiveness of your business-development programme rests upon the efficiency of your plan, your ability to measure the outcome of your tactics, the information you generate at transition points and the early definition of your key stakeholders. Budgetary and other resource constraints will heavily influence those results, so your active management of your business development programme efficiency is key to your success.

James Stapleton is chief marketing officer at US firm, Fenwick & West. He can be contacted at jstapleton@fenwick.com