A recently released report analyzing a survey of 400+ U.S. legal marketers and business development professionals – and first reported on LawMarketing.com – by LexisNexis identified what metrics firms are tracking as shown in the chart nearby:
Most law firm marketing leaders have identified a set of metrics that they use to track the performance of their marketing initiatives. They understand how critical it is to quantify outcomes from their marketing efforts in order to identify the motions that are most impactful, justify future spending, and preserve headcount. The survey showed that firms often track lead source, number of leads, and ROI of lead source as marketing metrics.
Having a rigorous and effective set of business development metrics, however, is less common at law firms. Other industries have evolved established sales metrics that have been adopted broadly. For law firms, however, business development metrics are often poorly defined, misleading, or simply missing.
The following five tips can help you improve the business development metric tracking that you do at your firm:
- Define your metrics. Often firms will declare a metric, but not create a standard definition that is followed across the firm. A common example of this is win/loss data. The survey showed that 78% of firms track win/loss as a metric, but in my experience firms often do not have a clear definition for this metric. Or it is only tracked by marketing when the firm has responded to an RFP or some other formal pitch process. When you are pursuing a company over a long period of time with the hopes of winning work across multiple practice areas, what would you consider a loss? It’s obviously a loss when a prospect chooses to give a particular matter to a competitor firm, but what about when they choose to do nothing now? At what point should stale opportunities be considered a loss? The exact answers to these questions are not as important as agreeing to a single definition that is applied to the whole firm.
- Identify how the data will be collected. It’s easy to be overly ambitious and create a host of metrics that could potentially give you valuable insights. If you don’t have a plan in place to easily and consistently collect the data, however, the metrics will be unreliable. Look to see what information can be collected automatically through normal business operations. Financial data is often collected as part of new business intake processes. CRM technologies provide passive data collection features that capture lawyer activity and relationship information without requiring the lawyers to do any data entry. If an important piece of data can only be collected manually, be sure to define the process for entering the data including clear ownership of who is responsible for doing it
- Include leading indicators. Metrics can be either lagging indicators or leading indicators. Lagging indicators track the final outcomes you want to measure. These are the outputs of your full business development process. Common examples include revenue and win/loss percentage. Leading indicators measure the activities, profiles, and data points that determine whether or not the desired outcomes will be achieved. Tracking leading indicators gives you a warning that you are at risk for hitting your financial objectives before it is too late to do something about it. Although lagging indicators are important in that they measure the bottom line results, they are hard to improve upon unless you have a handle on your leading indicators. The following are examples of leading indicators for law firm business development:
- # of client or prospect touch points
- # of relationships held with a prospect/client
- Strength of relationships held
- Engagement scoring
- # of new opportunities added
- # of opportunities in each deal stage
- Opportunities that have spent over a certain amount of time in a particular stage
- Client satisfaction
- Identify how the metrics will be monitored. Metrics on their own are not valuable; the value comes from using the metrics to make decisions, drive change, or prioritize areas of focus, for example. Consider who should be looking at metrics and with what frequency. What dashboards should firm leaders look at regularly? Is there data that would be useful for the lawyers to review? Client and industry teams should have defined metrics that ensure that the goals of the teams are on track. Create reports and dashboards to support these initiatives.
- Use metrics as checkpoints. If you are tracking good business development metrics over a period of time, you can learn the impact on your business that particular indicators have. If a series of data points falls out of a normal historical range, this can be a trigger to investigate. Viewing the data regularly in a control chart can help with this. Similarly, you can create gates between each sales stage. Leading indicators can be checked at each transition to determine whether an opportunity is qualified, which can help you decide when to move forward and when to stop a pursuit.
Sure, establishing standardized metrics and applying rigorous process to law firm business development can be a challenge at first. However, the insight such metrics convey will provide data both law firm marketers and partners can use to drive better decision making.