Exploring new industry potential

Seeking, analysing and targeting potential clients in new industries. By René Kraus.

As with any strategic planning, research and analysis is required to establish priorities as a basis for formulating a business-development plan. It is necessary to understand various marketing and competitor information, which is needed to track, analyse and evaluate in order to achieve specific business gains. As a firm, once the decision has been made to target additional clients and work, a series of defining questions can be asked:

Who are we currently working with (which clients)? Also, who are we not working with and why, both in terms of range of clients, and also within an industry or practice focus;
What work are we currently doing, and for which clients? What work are we not doing for these clients and why – whether because of conflicts, capacity, practice area limitations, lack of experience, or competition;
Where are we currently working (what regions)? Which markets or regions are we not currently working in, and why? Whether it is because of competition, a lack of specific expertise or limited resources,
for example.

Responses to these questions can form an initial basis for identifying new business opportunities. Once this stage has been completed, prioritisation within your identified prospects can be determined.

Analysing potential opportunities
Let’s say that out of your top-25 clients, you are doing work in your three primary-practice focuses for 80 per cent of those clients. This leaves 20 per cent of these top clients that you are not doing this work for, which is one potential area to target. It is further determined that out of this initial layer of prospective work, five per cent of these clients are in geographic regions where the firm does not currently have offices. Because there are no current plans to expand into these regions, potential work for those clients within the 20 per cent of prospects may possibly be eliminated from the target list. Unless, however, it is reasonable to assume that this new work could be managed out of one of the existing offices.

By analysing this one area of prospective work, you have taken the first few steps to identifying a strategic plan, solidly based on true potential. Similarly, you can preliminarily target additional potential by answering each of the questions above, then subsequently eliminating the work or clients that don’t make sense, as they directly relate to your firm’s operations.

Another key factor to evaluate is where your top revenues are being earned, by client and type of work.

This will clarify where the potential new work is, both in practice-area focus and geographically. It is this ‘gap analysis’ that will point the decision makers in the right strategic direction.

Prioritising opportunities
By identifying not only the current work being done for key clients, but also the value (in terms of revenues) of certain practice areas to them, you can further prioritise obvious areas of opportunity.

The outcome depends on what makes the most sense for your firm in terms of strategic planning, direction, resources, administration and competition. If the firm is interested in expanding geographically, for example, additional research and analysis will be necessary to gain a greater understanding of: what the competitive landscape is like in potential expansion areas; the prospective client base; and, many other unique factors.

There may be several potential strategic plans to consider, which in turn need to be prioritised and carefully evaluated within the key objectives of the firm or practice group.

The activity of competitive intelligence is vital to the determining exercises described above. A growing trend within law firms is its increasing recognition as a critical and deliberate activity. According to a recent survey conducted by competitive-intelligence guru Leonard Fuld, more than 75 per cent of firms engage in some type of activity in this area. Processes are centered on better understanding not only what new work, new client or new-industry potential exists within the firm, but also an external view of what the competition is doing within an industry, practice or market.

Structuring research and tracking activities will require a cross-functional approach. The marketing and business-development department is frequently the initiator of the request to build a team around this effort. The team can comprise of a variety of functional areas, most commonly including
finance, the library and firm management. It can be dedicated to a practice-group focus, thereby incorporating direction from the practice-group leaders. It may also be aligned at the top – reporting and taking direction from the firm’s management committee or, possibly, the chief-strategy officer or chief-financial officer.

Again, there are many possible reporting scenarios, depending on the individual structure of the firm and where the priorities are established. Consider the very basic cross-functional reporting structure shown in Table 1.

Information tracking
Do a thorough market analysis – where does it makes sense to be? This is a critical component of the strategic plan. Analyse your revenue potential.

First, examine the ‘low hanging fruit’ – how to cross-sell services to existing clients – before looking for potential new clients.

Finally, if you are targeting a new industry, determine geographically and for what client base this new focus is most appropriate. A comprehensive understanding of the competitive landscape within this industry is essential.

With this knowledge base, your strategic plan will be factually based, targeted and focused. Aligned with specific revenue goals, this will yield results that correspond to a long-term, strategic and firm-wide vision. So go ahead – plan for new work for new clients in new industries and new markets. You’ll be glad you did.

René Kraus is director of marketing and business development at US firm Fish & Richardson PC. She can be contacted at Kraus@fr.com