Sales may be a dirty word in law firms, but the notion of a sales pipeline is an essential element of business development.
A sales pipeline identifies the stages of buying and selling, and depicts the progress of a buyer’s journey. Law firms typically find there are between three and five defined stages in a pipeline, starting with prospecting to qualification to finally closing a deal and putting ink on an engagement letter.
Pipeline tracking is a staple of organizations that sell products, but it is less common in law firms. There are a number of essential techniques law firms can mold for their own processes.
The following are seven benefits that tracking a pipeline will provide lawyers and law firms:
1. Qualify deals before expending firm resources.
Defining the first stage of a sales cycle provides an opportunity to apply some rigor about which opportunities should go into the pipeline. For example, expending resources to responding to RFPs that you have no chance of winning wastes time and distracts you from working on the winnable opportunities.
2. Create a cadence for the next steps.
A pipeline approach that is aligned with how your clients procure legal services allows you to create a series of questions and checkpoints for each stage. Using the answers, you can identify the steps required to move an opportunity along to the next stage. Good business development follows a cadence of events, which prevents opportunities from stalling because you don’t have a next step in mind.
3. Dedicated weekly time for business development.
Setting aside non-billable time to work on business development can be a challenge. The discipline of managing a pipeline puts a regular focus on business development activities. It’s important to schedule time to review your pipeline on every week. This will ensure that you are identifying the next steps for your most important opportunities and calendaring time in the week to execute them.
4. Develop data to predict the future.
A pipeline will indicate the total value of all the open opportunities. As you collect data, you will be able to see the percentage of deals in a particular stage that will typically turn into new business. This allows you to predict how much potential revenue will be coming in and allows the firm to forecast upcoming work.
5. Develop data to establish benchmarks for hitting goals.
Once you have historical data, you can compare forecasted dollars to actual revenue received and calculate a range of what the dollars in each stage are really worth. With this insight, you can identify whether or not you have enough deals in each stage to meet your financial, practice or firm-wide goals. The pipeline will tell you whether you need to focus on adding more deals into the pipeline or to focus on progressing and closing deals that are already in the pipeline.
- Understand where you need support.
Some deals take more effort and resources to get done. These days, larger law firms often have business development (BD) personnel to support lawyers with the selling process. Each stage in the pipeline provides visibility to these BD teams, practice leaders and firm management as to which deals may require extra support.
- Develop a broader perspective.
A consistent approach to pipeline management lets a firm roll up information to see how goals are tracking on an individual, practice group, and firm level.
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Occasionally I hear from lawyers in firms who note they went to law school to practice law not to sell. Yes, business development feels like an overwhelming additional duty. The reality is the market dynamics have changed so that everyone in a law firm wears a sales hat. However, putting a little process and structure in place – like techniques for managing a sales pipeline – will ease the pressure. As the saying goes, the way to eat an elephant is one bite at time.