This month’s guest post is by David Blumentals all the way from Sydney. David is focused on providing CRM software to the legal sector based on the Microsoft Dynamics platform. His firm has clients in Europe, the Asia Pacific rim and America and he is a recognised expert in his field.
If you want to know more about what David does please click here……
I talk to a lot of law firms who are considering the implementation of a CRM system for Client Relationship Management, and many of them still don’t have a firm grip on what CRM is, why they need it and what results it can bring to them. They aren’t sure what they should spend and they wonder, “How do I justify this system?” Many firms have also put their CRM projects on hold as a result of other IT projects, the economy, or because they think what they have now is OK. What priority should you give to CRM system?
Let’s clarify what you need to know, and if you need a CRM system.
It’s All About Acquire – Engage – Retain!
The goal of most law firms is to make a profit by acquiring, engaging and retaining clients. The truth is… that most law firms do a poor job of marketing, managing clients and growing business development.
So why do you need CRM? Because the problem is… you don’t know which clients you will lose, how many you have called on, or what the rest of your firm is doing that will affect your success or failure. Just knowing how many calls to clients or prospective clients have been made is often done by asking them!
For years, law firms relied on lawyers to maintain good relationships with clients. They kept their own client records in rolodexes, followed up on new opportunities with sticky notes and grew the client base and service reputation by doing great legal work. But when lawyers change firms, or the partners don’t know what the lawyers have promised (and vice-versa), this gets many firms in trouble.
Six Good Reasons You Need a CRM System
- Centralised Information – How many new client prospect telephone calls do your lawyers make each day? Does everyone who communicates with a client know what other practice groups said to them or did for them? Is all client information kept in one area or program for easy client service reference? Do you have several databases of information that you need access for a 360 degree client view?
- Quality Data – Are you able to identify (let alone manage) the top 10% of clients that give you 90% of your revenue? Do you know what is happening with each of these clients “real-time” – for example, leadership changes, new acquisitions, new product or service offerings?
- One View Of The Client – Are you able to access all the information you need from one screen? What is your revenue per lawyer, per BDM, per marketer? What are your win, loss and no-decision rates? What’s your matter turnaround time? How many business development calls are completed per lawyer? What’s the average amount of time required to complete each step in developing a new major client? Do you know how many client service issues each client has had and why? Do you know which clients consume most of your lawyers (billable vs unbillable) time?
- Ongoing Client Care – What is the workload by practice group or by lawyer? What are the numbers of existing client contacts and repeat business? What’s the average matter size, billing and payment frequency? How do you rate your marketing or lead generation program / marketing event effectiveness? What are the win-rate comparisons for different client types?
- Cloning Our Best Rain Makers – What are the success rates and profitability comparisons for individual partners and lawyers? Can you communicate quickly with message broadcasts to your client base?
- Risk Management (High Availability/Disaster Recovery) – what happens when a key rain maker leaves the firm? Do you have critical client data on PC’s that could be lost or taken and should be on one database?
If you don’t know the answers the questions above (or you have no idea where to get them), you should definitely consider a CRM system for your marketing, business development and client care.
Why Should CRM Be A Priority?
The simple answer is: because it can have such a profound effect on your firm! It greatly affects staff satisfaction and turnover, the ability to target and close new business, the management of client interactions and profitability. How much do you think these few functions alone can affect your law firm?
Sometimes firms lose deals because one hand doesn’t know what the other was doing. How much would actions like this affect your law firm? How many times does this happen at your firm? How do you know? And how do you know how many calls your lawyers make on clients? Or… how much time do the lawyers spend with that “one problem client?” And how could it be fixed?
Answers to these questions are what justify the need for CRM software! When firms start to probe, they find that many things are going wrong and being covered up and they’re costing the firm a bundle! And don’t say that your firm has everything working perfectly, because this happens at every law firm! Do an anonymous survey of the “worker bees” and you will find out.
Even If You Have Some Form Of CRM…
Even if you have a CRM system, things can go wrong, because more than a software system, CRM is a cultural change, and many firms don’t invest time and effort into the new culture. Many managers believe once the software is installed and integrated (or sometimes not integrated) that all of their problems will drift away. Not the case! Many staff don’t understand the system, don’t want to change, want to do things the old way, and then you still have no way of knowing what is going on. The cultural change cannot be a choice!
How Do You Estimate What Your ROI On CRM Will Be?
To determine the cost of not implementing CRM, put some numbers to the following:
- How many existing clients did your law firm lose in the past 12 months and what were the annual revenues?
- How many new business opportunities did you lose in the past 12 months and what were they worth?
- Estimate the value and gross margin of the business opportunities you missed for timing or lack of follow up?
Another way to look at it:
On average, a new client will use your firm for 5 years.
If the average client generates 10 matters/assignments per year at an average size of £2,000…
The lifetime Income from a new client would then be: 5 years x 10 matters/assignments per year x £2,000 value = £100,000.
Therefore, with an average gross margin of 30% each new client will generate a lifetime gross margin of £30,000.
If you have:
100 clients = £3,000,000
500 clients = £15,000,000
1,000 clients = £30,000,000
What Is CRM Worth? The Question Really Boils Down To:
- What are you not closing in business opportunities that you could with more efficient opportunity / deal flow management?
- What do you not know about your current clients and how many will go to the competition at what revenue loss to you?
- What level of client service are you providing now, and how do your inefficiencies translate into extra costs or lost revenue opportunities?
- What are the costs to the firm of not knowing and acting upon clients that cost more than they are worth?
- How effective are your lead generation efforts and how much could CRM save you?
Add up all of the lost opportunity costs and the real costs of inefficiency and you will easily prove to yourself that you are losing, spending and costing far more than you expected. And, in nearly all cases, your total will be more than the cost of the CRM implementation. Consider CRM on a par with a Total Quality Management (TQM) process. I seriously doubt you will find any firms that tried TQM and found they were more profitable when problems were swept under the carpet.
Take The Plunge!
Either jump on board with CRM and invest, knowing you need it, or get out the calculator and pencil and start adding up what you’re going to lose!
It is fairly easy to see where the benefits of CRM lie in most law firms. If you are close to the processes that turn a prospect into a client, and guarantee his or her satisfaction, you know what would help your law firm be more successful. The next step is to take action to document, justify and convince yourself that the investment in CRM will help guarantee your firm’s long term success.
Just in case you’ve never watched any of the Terminator films let me give you a quick rundown. Big computer (Skynet) goes mad, tries to kill off mankind but is thwarted by plucky Americans and/or killer robots sent back from the future. I bet if you haven’t watched the films you’ll be scheduling a trip to Blockbuster on your way home tonight. I certainly hope so.
So what’s the connection with sales? Well our heroes had worked out all they needed to do in order to save the day was destroy this big computer and everything would be all oojar cum spiff but sadly they had a nasty surprise coming their way in the final film of the trilogy: there was no super computer; Skynet was the Internet and was actually made up of millions of small computers dotted around the world. Major bummer when you only have a couple of sticks of dynamite in your pack.
So back to sales then. I find time and time again that leadership teams feel they can solve their business development woes by the equivalent of killing Skynet: strategic reviews and sweeping initiatives. The poor old client-facing types have a grand unveiling of yet another BD initiative followed by the usual dismal drift into obscurity: “one more BD white elephant”. The answer is not doing big things but the exact opposite: taking care of the ground level details.
So what should you do? Well here are the top three components that I believe will help to create a strong foundation on which you can construct your grand business development edifice: -
- Sales meetings: not talking shops and not informal gatherings but rather they are structured, highly controlled and very focused on inching individual prospects closer to a sale and making sure our clients are being cared for consistently.
- CRM: without a widely adopted CRM system you will not be able to manage large numbers of prospects efficiently and neither will you have the necessary management information to run the sales meetings. Oh, and “adopted” means utterly depended upon by the way.
- Pipeline: almost everybody in sales reckons they run a pipeline model but when you look at it the thing actually turns out to be list of companies they’ like to do business with. A real pipeline model is a finely tuned people-focused instrument that enables you to partition your prospects, monitor their conversion into clients and ensure that your time, money and resources are all focused on the targets where the best results are to be gained. A world apart from the traditional “pipeline”.
So the Big Sales Myth has been blown away: there is no BD equivalent of Skynet so best not go chasing around killing people and blowing things up looking for it. The answer to your problems is to spend some time (and NO money) getting some simple things in place.
Hasta lo vista baby!
When I talk about the virtues of CRM systems with people I get one particular response more than all the others added together “That’s Great Mike but I just don’t have the time”. Well I’ve got news for anybody who shares that view – you don’t have the time NOT to use CRM and here’s why.
Speaking as one of the world’s laziest sales people I depend upon a CRM system to manage my sales activities by using the “set and forget” method: I set a future action against a contact and then forget about them until the system reminds me it’s time to do something. And here’s the really great part – working in this way I spend less than 5 minutes a day using my CRM system!
Typical start to the day: -
- 8am every morning CRM reminds me to contact up to 5 people that day and tells me what I am supposed to do with them. Any more than that and I will probably reset the reminder dates for the next day. 5 sales activities a day really is my limit.
- Any telephone actions I will try and get in before 8:30am because I am 4 times more likely to actually speak to people then than later in the day. Why waste time leaving voicemails?
- After I have spoken to the person I will make a one-line note on CRM, set the next action and reminder date and forget about them.
- I will then deal with any email actions linking each email to the appropriate CRM record with the click of a button. Finally I will reset the next action and reminder date and they’re done.
During the day: -
- If I meet somebody I will either email or call my PA so that she can update their CRM record. Typically this will be their notes and next action, perhaps their pipeline and conversion stages (just a flag on the system) and sometimes to add an interest or preference. Brevity is all, dear reader.
- If I meet a new person I will pass my PA their business card, any notes, the next action and reminder date (if applicable) and she will add them to CRM for me.
Even if I didn’t have a PA I would only be adding an extra few minutes a day to my CRM commitment. CRM really is the lazy-persons dream tool!
People who complain that they don’t have the time for CRM probably: -
- Don’t understand how to use it properly as outlined above.
- Have too many actions cropping up each day and succumb to a sort of action paralysis.
- Keep way too many notes on there.
- Haven’t partitioned their pipeline so try and treat all their prospects and clients the same – shame on them!
So here’s the advice of the laziest sales person in the world: get organised and let CRM take the strain; you just concentrate on the clever stuff.
So if you wanted to implement a CRM System that turned into a powerful business development tool leading to more revenue being brought into the firm and you have read my blog post on the most common reasons for failure. What should you do?
I would suggest the following simple steps be included in your implementation plan. There will be other steps but these are specifically intended to deal with the major causes of implementation failure.
1. Draw up a requirement definition document. This will list out all the features, capabilities and outputs the new system will need in order to meet your business needs. It should embrace all the key stakeholders such as the IT department, finance, marketing, business development and the users allowing each party to include their thoughts. Warning: don’t let it turn into a wish list (or worse a “wouldn’t it be great” list) and don’t design anything by committee. When it is complete get each of the stakeholders to sign it off.
2. Train your users. How can you do this before you get the system I hear you cry. Well, this is the crucial step because what you are doing is training people how to win new clients and increase sustainable revenue streams. Actively encourage people to use Outlook, or similar, as a pseudo-CRM system where they can record their thin and fat CRM data (see my blog post for more on this) and build a proper pipeline This serves two purposes: firstly it proves what a great tool CRM is to save time and achieve more results with far less effort and secondly it should create a hunger for a better system before it is delivered.
3. Establish a steering committee. Make it delivery focused and not just a talking shop or naughty chair. The idea is to identify, install and use a powerful business development tool so this committee will need strong leadership to keep it on course. Include the key stakeholders and invite specialists as required.
4. Seek out your new system. This is too complicated for me to cover in its entirety but these points are worth noting. Produce a suitability tick-list from your requirements definition document to allow the software vendors to indicate which of your requirements their system meets. Make sure they all fill yours in and don’t use their own format. Comparing responses is much easier if they are all in the same familiar format. Ask your suppliers to suggest the strengths and weaknesses of their competitor’s products. They tend to be lighter on the strengths but much more detailed on the weaknesses, often telling you crucial things that you would not have ordinarily found out yourself. Do a detailed gap analysis for each package using a weighting system if necessary. Take the one that wins.
5. Install and train. Once the system has been successfully configured (which may include some customisation but only that which is allowed through the system – avoid bespoke work to the core system) and installed you can start and conduct the Interface training; that is showing people how to use the system. This is usually the only training given but it is much less effective without stage 2.
6. Load up key operational data. Extracting data from accounts systems is usually very easy, as is loading marketing lists. My advice is to create a flat file which can be cleansed (removed duplicates) and then imported onto the CRM database. Get it clean before you load it. As for the rest of the data either hire a couple of temps and get them to load it by hand or you can get the owners of the data themselves to do it. If you have followed step 2 above they will by now understand the importance of the data and be quite keen to get it into the new system as quickly as possible. When the data has been fully loaded run more duplicate detection routines based on compressed telephone numbers, email addresses and names to identify and resolve any other possible duplicates.
7. Go live. You may decide to stagger implementation by department or by selecting those that were most keen during stage 2 above, or of course, you may just go big-bang. There are pros and cons with all options and you must decide what is best for you. I favour the second option.
CRM systems are a crucial aspect of any business development capability. Without them people will be disorganised, wasteful and generally ineffective and sales management will be almost impossible. Those CRM solutions that are installed properly can expect to enable their users to deliver more sales in less time – a worthy and noble objective and one that you are quite capable of achieving.
One sure sign that a sales team cannot be serious about winning new business is their lack of commitment to a credible CRM system. In other words they do not depend on CRM in the same way that they depend upon email or Word.
The acid test is this “if you removed CRM from the firm would anybody be banging on your door demanding its reinstatement”. If the answer is ‘not really’ then it probably isn’t deployed properly and if that’s the case your new business capability is almost certainly under-performing.
Well if CRM is so important why do so many firms fail to implement it successfully? Good question I think and one that needs some answers so here are Mikey’s Magic Three:-
1. You train people how to use the system but not how to make use of the system. They understand how to add and access data but cannot easily graft this onto their real-life business development activities. In short they have a system but lack any credible BD processes to use it with so they can’t see the point of keeping it up to date and so they stop using it.
2. You choose the wrong system. Surely all CRM systems are pretty much the same aren’t they? No they’re not and here are the key issues:
a) You cannot change the system yourself, so you have to go back to the vendor to do it. They charge £400 an hour so you don’t bother even though there is a real business need to make the changes. After a time your system no longer supports the needs of its users so they find alternative ways to meet those needs usually involving Outlook or spreadsheets.
b) It does not interface with your existing equipment. If it doesn’t talk to Outlook or whatever enterprise software you use, forget it. Even if it does can you access it from your smart phone or Blackberry because if you can’t the data will not be updated or used enough and people will find other ways to do what they need to do.
c) It doesn’t actually do what you need because you didn’t write a detailed requirements document before you went to market. You took the one that was cheapest/dearest/flashiest/sold by the most attractive sales person and not the one that best suited your needs. Preparation prevents pi$$ poor performance and so does creating a requirements document.
3. The data take-on project is way too ambitious so never gets completed. People imagine that the system can’t go live until all relevant data is collected from Outlook, spreadsheets, old systems, marketing databases, the accounts package and people’s diaries and loaded onto the new system. I spent 10 years in IT and here’s the thing: this is an impossible dream and should absolutely, under no circumstances, be considered.
So there you have it. If you want a potent new business development capability in your firm implement a CRM system that works. If you want a CRM system that works focus more on making use of, and not just using, the system; choose a system that you can change, interfaces with Outlook (or similar) and specify your requirements before you buy and lastly be realistic with your data take-on expectations.
In fact having to keep it up to date is such a useless occupation you don’t really bother despite the haranguing you get from the IT or marketing department: it just isn’t worth the bother.
Quite frankly I don’t blame you but could you be missing a trick?
Most successful sales comes from a relationship: yours with the key decision makes and influencers. Like any relationship there must be an element of rapport and mutual liking but also you need to take an interest in the other person and vice versa. This is where Fat CRM Data comes in.
Let me explain; thin CRM data are things like contact details, meeting notes, activity history, planned future actions and so on. Fat CRM Data relate to the person themselves and typically would be the following: -
- Their interests inside and outside of work
- What food and drink they like
- When they prefer to be contacted during the day (usually early or late)
- If they prefer to see you for a coffee, breakfast, lunch, dinner or a “cheeky half” after work
- The name of their PA
- What their business and personal goals are
- What their business and personal challenges (problems in none-PC speak) are
Now this is the kind of information that makes a difference during the conversion phase of the sales journey and after they become a client to keep the relationship going.
Looking out for blog posts, interesting web sites, what their competitors are doing all based on Fat CRM Data will mean something to them and therefore will feed the relationship.
When you want to connect with them outside of work picking a time and location that they prefer will decrease the chance of it being cancelled.
Most importantly of all introducing them to other people who can help them to achieve their goals or ease their problems is a very powerful relationship builder.
I am all for CRM systems and I rely totally on mine for all my BD activities but of all the data I keep about my prospects and my clients it is the Fat CRM Data that is the most valuable.
Is it time to rethink your use of CRM and “Get Fatter”?