Feature

posted 1 Apr 2003 in Volume 5 Issue 10

You have the technology, but what next?

CRM systems have proved hugely popular with law firms looking for ways to differentiate their client service. The success rate, however, is varied as firms implement those systems with differing results. Michael Warren, client services director at Shamrock Marketing, looks at CRM projects and the role of high-quality data in ensuring the expected return on the initial investment.

CRM technology is still relatively young but there are few bandwagons that have been leapt on so quickly or so blindly. The fact that firms have been so quick to adopt this emerging technology reflects the legal profession’s ability to be enthusiastic and innovative, but it’s important to make the most of that enthusiasm if CRM is going to succeed.

High quality data and an understanding of how it supports your business objectives is at the heart of every successful CRM initiative. If you’re going to turn data into real client intelligence there are some golden rules that you’ll need to follow:

Only hold data that adds real value to your critical business decision making;
Remember that quality of information is far more important that quantity, and lead from the front;
If you are a strong advocate of the benefits of knowledge sharing then it’s much more likely that your colleagues will follow suit.

With so many systems offering so much functionality it’s difficult to know where to start with CRM. Many firms that have invested in CRM technology are dissatisfied with the systems that they have implemented, which have not realised many of the expected benefits. This is largely because so many firms have taken a technology-driven approach to CRM without considering some of the other key factors that are vital for success.

But what is CRM, if it’s not about the software? According to Dick Lee in his book The Customer Relationship Management Survival Guide, it is:

“Implementing customer-centric business strategies,
which drives redesigning of functional activities,
which demands re-engineering of work processes,
which is supported, not driven, by CRM technology.”

Lee’s definition makes it clear that business strategies must drive business processes. Once a firm has agreed a strategy that will underpin the business process, it is possible to determine what your CRM system should be.

But what is the role of database marketing in all of this? A good database-marketing plan should deliver high-quality information that is relevant, accurate and timely. Many firms are drowning in data sources that make it extremely difficult to understand clearly what information they actually have, let alone whether it’s useful or useable. An excellent example of a firm that has put quality data at the heart of their CRM strategy is Davies Arnold Cooper.

Davies Arnold Cooper was typical of many firms. It had invested in InterAction from Interface Software but few fee earners were using the system. A brief review revealed that this was due to inaccurate and irrelevant data in the system. Rachel Penfound, the firm’s marketing director, saw this as a major issue: “The effective management of data has a significant impact on marketing, business development and client management effectiveness. Getting the data right is central to the effectiveness of any campaign or targeted client communication.”

“Our approach,” Penfound continues, “was to go back to basics, and with the full backing of the managing partner and executive committee, we undertook a project to review our billing and practice-management data to identify our current best and prospective clients. We then populated our database with more like them. Although the project is still in the early days, we’re already seeing an improvement in responses and a reduction in returns, a trend we feel confident will continue.”

This clearly shows that if marketing does not have the right data then partners cannot be expected to make the best use of CRM technology. As a partner you need the systems and processes to manage clients more effectively. We’ve interviewed several senior partners on a number of projects and have found that typically they need a lot of soft information, such as the nature of the client relationship, and the specialisms and interests of their key client contacts. This is not necessarily something that may occur naturally to your database team so it’s really important that you get involved to make sure that they know what you need.

If you are to repeat the success of Davies Arnold Cooper, and other firms like them, where do you start? This article is not going to be one of those that your marketing people insist you read explaining why you have to do this, or why you must have that. Instead, it will explain how to make the most of your CRM technology and provide you with the three golden rules of successful database marketing. And don’t worry, if you haven’t invested in CRM technology yet, there’s some tips on what you should be looking for in a system and how you might go about implementing it successfully.

Understanding the importance of getting the right data I’m sure you’ve all received something by post where your name or details were wrong. Your reaction was probably dismissive if not negative. We all receive junk mail and unwanted information but how would you feel if the information was from a business advisor with whom you work on a regular basis and who knows you and your business well?

Data management, however, isn’t just about inaccurate information; it’s also got to be about relevance. As a partner or fee earner, you need to be disciplined about what information is useful. Before adding information to the database or contact-management system, ask yourselves the following questions:

Is this a target client or target sector?
Can this client be used as a potential advocate or source of referral?
Are we realistically going to be able to keep all this information up to date?

One of the worst things about the invention of the PC is that it has effectively removed all sensible housekeeping controls. It’s easy to see when a filing cabinet has reached capacity when your secretary becomes buried under a mass of matter folders and legal documents. A computer hides the fact that you have mountains of unnecessary and irrelevant information.

We typically find that firms regularly communicate with less than one fifth of the contacts on their database. Does this mean that 80 per cent of the contacts on your database are of no value to you? Surely not. You need to identify your best/prospective clients and then find more like them.

Rule number one - be ruthless. Don’t keep information you don’t need.

Keep your data up to date

Keeping your data clean is good for business health, particularly at a time when there is a need for law firms to control and manage costs. Accurate information equals increased profitability. We regularly undertake an analysis of our clients’ billing data to get a clear understanding of who their clients are. We always find that there is a very long tail of unprofitable clients. Many firms could benefit from reviewing the 80 per cent of clients that only provide 20 per cent of their revenue, and considerably less of their profit.

Almost every data-cleaning exercise we have undertaken for a professional firm has shown that at least 25 per cent of every list is significantly out of date. Frequently using inaccurate information has an incredibly negative effect on the brand and in a market where differentiating yourself from your nearest competitors is so important, there is a real opportunity to steal a march by getting the data basics right.

There is of course a tangible cost to inaccurate information. The obvious issue here is wasted collateral and postage. Most firms’ marketing brochures are glossy and expensive, add first class postage, the cost of stuffing the envelopes as well as the costs for storing the data on expensive servers and it doesn’t take the removal of many inaccurate contacts to justify the cost of cleaning up your data.

Maintaining data quality is not just about telemarketing and research. You need to review all the mechanisms across the firm. Information can be provided from any number of sources and there is a data-capture opportunity at each one, if your processes are geared up to cope.

For example, what happens to client information captured on your website? Are there regular data capture and feedback questionnaires at the end of events or sent out with mailings? Do your new client-engagement letters provide the opportunity to get some valuable feedback from clients? And more importantly, do they contain data protection compliance clauses allowing you to store and use client information for marketing purposes?

Each firm should conduct an audit of their information sources and resources to identify where there are gaps and where there is duplication of effort. This is particularly true at a time when there is such pressure on headcount and profitability.

Many firms worry about the costs of using external resource, and of course this has to be closely examined. Any agency worth its salt should be able to work with you to provide a cost benefit case for outsourcing elements of the project and should clearly identify where your own resource is best suited for particular tasks.

One simple way to justify expenditure is to quantify the saving on fulfilment and postage by cleaning up the most frequently used mailing lists. The benefits of reduced wastage and improved brand image, brought about by removing vast swathes of duplicate and inaccurate information is a very good way to win support across the firm. It is essential therefore that your firm has a clearly defined data-maintenance plan that is realistic, effective and value for money.

Rule number two - remember it’s all about quality not quantity

Managing the people and the processes

We draw an analogy between implementing CRM and the military particularly when it comes to aligning people and processes. If CRM is to be successful within your firm, new processes have to become second nature as soon as possible and will have to be backed up by education. For example:

Is there a clearly defined process for setting up new clients? If so, who owns this process? Fee earners? Finance? Marketing?
Do your engagement letters for clients contain specific data-protection clauses that enable you to share information about that client with other parts of the practice?

The best time to work out how your bayonet fixes to your rifle is on the parade ground, not while charging towards the enemy, so process definition should take place at an early stage, not once the new database is already up and running.

It’s also extremely important that existing processes be used wherever possible to minimise change and confusion. They must also be able to pass a simple “Some test”:

If a process does not pass each of these tests then, in reality, it’s not going to happen, however important it might be.

It’s not possible to change a firm’s culture completely in a short space of time. It is possible, however, to make an existing culture for sharing information more effective by ensuring you have accurate information, well-defined processes, leading-edge technology, and by following a few simple rules.

Change management is one of the most difficult things that an organisation has to do, and in law firms this is particularly true as you have to manage the expectations and behaviours of your most important asset: your people. In all change-management programmes there is an initial flurry of enthusiasm and interest, but equally there is always the valley of despair. Everyone that is involved in CRM projects needs to remember that the despair is a temporary experience that will pass to reveal the very significant benefits of CRM.

Successful project implementation also depends on the will of the people. There is a great deal of cynicism within firms regarding the value that a centrally managed database is going to provide. While it is essential to the success of any project to have the commitment from the managing partner, over-communication at an early stage may either generate a groundswell of over-expectation or a brick wall of resistance.

Denton Wilde Sapte set realistic expectations of what the CRM system could achieve and what was expected of the system’s users. “It’s essential to the success of the project to set expectations from the outset,” says Mattie Grinder, Denton Wilde Sapte’s marketing director. “A clear distinction needs to be made early on that fee earners own relationships with clients, but marketing own data. So much resistance to CRM projects is based on a fear that relationships will be compromised or inappropriate communications will be sent to clients. To make sure this didn’t happen we implemented our system using a controlled, phased approach, not a big bang, and communicated with the partnership on a regular basis.”

It is important that partners and fee earners understand that keeping information about clients secretly on a spreadsheet does not stop inappropriate communications being sent to these people, it actually makes it more likely. If marketing does not know about a special client relationship, it cannot suppress that client from a mailing.

Rule number three - get the troops marching in the same direction

If CRM is to be successful, it is important that support functions like marketing and IT understand that they are there to make partners’ lives easier but you need to get involved to make sure you get what you want. If you don’t get involved, marketing can’t be expected to read your mind and you may find when you switch on your contact- management system or marketing database that the information is not relevant or accurate.

CRM and database marketing don’t have to be hard but the benefits of getting them right in a highly competitive market can be enormous.

Michael Warren is client services director at Shamrock Marketing. He can be contacted at: michaelw@shamrock-marketing.co.uk.