denotes premium content | Nov 18 2008 
Feature
posted 1 May 2003 in Volume 6 Issue 1
Making sense of CRM:
Avoiding the perils and pitfalls to find the promised land
Client relationship management is an essential aspect of legal service delivery and the majority of firms have bought CRM software to maximise the operational efficiencies of their client accounts. John Gurnett, a partner at Deloitte and Touche, gives a run down on the applications and core processes involved in CRM but also explains why the technology is only half the story.
People interpret the three little letters CRM in many different ways. They are an acronym for client relationship management, but essentially they are used to describe the way in which an organisation represents itself to, and deals with, its clients or customers. Led by a clear business strategy, all aspects of the organisation – from the people who work there, through the processes they follow, to the technology they use – put the client or customer at the heart of the operation. The CRM concept, supported by today’s technology solutions, is enabling many businesses to make the most of a service to win, retain and maximise business.
Nice as that sounds, there is still much debate about the relevance of CRM in law firms, and many pitfalls to trap the unwary when embarking on a CRM initiative. Many firms often initiate CRM implementations as “IT only” projects that focus on the purchase of stand-alone software. In doing so, they miss out on involving fee earners and support staff in what can be quite expansive and fundamental change activity. CRM projects are anything but just technology implementations. They also miss the opportunity to connect CRM to HR, practice management and finance systems to gain even more benefits from their investment. This article aims to provide some background to CRM in law firms; some context for CRM within a typical law firm’s portfolio of back-office systems; and what to really focus on to avoid the pitfalls of implementing CRM.
The need for CRM in law firms
It is quite clear that clients expect firms to invest significant time in managing their relationships with them. In order to meet this expectation, it is necessary to orientate and focus your firm’s planning, policy and operational activity towards your clients. Understanding this expectation can bring with it substantial benefits.
Figure one is a means of setting the context for much of what follows. Profitability in firms is a function of the relevant focus on clients, work or matters, service excellence and the costs of providing the service. Management of all of these factors is an important driver of profitability.
Analysis shows that where a firm undertakes higher value legal work, that the majority of fees accrue from just a handful of clients, or key accounts. The majority of the remaining clients tend to generate only a small proportion of a firm’s fee income and more often than not, very little profit. Marketing good practice demands that the focus of most “sales” activity is on existing high-value client accounts. To do this successfully demands that relationships are well understood and closely managed. It is therefore critical to measure and report on profitability by client and periodically review relative priorities towards clients accordingly. To protect and grow your reputation and brand, it is essential to engender a consistent approach and set of behaviours when dealing with clients, across both practices and support functions. The benefits of an effective approach should be increased retention as well as higher fee rates and profitability from your key accounts. Key to engendering a key-account focus is the creation of the right internal environment. Sales planning – understanding a client’s total likely spend, and targeting the right individuals within the client company, should be used to shape fee budgets and investment cases. Firms also need to develop improved cross-practice and where appropriate cross-office cultures, sharing information about clients and relationships in a structured way.
It is this type of focus on proper marketing disciplines and on key-account management that creates the need for CRM application software that should support the greater attention paid to all stages of marketing to key accounts. CRM software is also needed to support the collaboration of partners, fee earners and support staff, across the firm as they focus their attention on their key accounts.
CRM in relation to a firm’s other “business” systems
Viewed from the highest level of operation (or process), most firms conduct their business in a very similar manner. It is systems that often support these processes, and although not exhaustive, figure two shows a representation of the activity conducted across CRM, practice management and finance along with the typical suite of applications that support the activity.
Expanding this view somewhat, figure three provides a representation of the types of application outside of Microsoft’s Word and email that are needed to support a typical law-firm and the types of data that are normally found within them.
In recent years, many law firms have begun to review their use of systems and have expanded their thinking to incorporate this more holistic systems view, which points to the need for integration across most systems. The winners in the race towards more relevant and cost-effective systems will be those firms that embrace this integrated view and make investment and implementation decisions accordingly.
Implementing CRM – common pitfalls and strategies for success
The latest buzzword in information technology is CRM, and if we are to believe many of the vendors, analysts and consultants, it is the holy-grail of business systems projects. “Install a CRM system,” we are told, “and you’ll know everything about your clients, as well as improving service and maximising profits.” Many businesses are still falling over themselves to seek out vendors of this universal panacea. Forgive the hint of sarcasm, but clearly such promises are too good to be true and regrettably, there are still many pitfalls to avoid when considering and then implementing CRM.
There is plenty of evidence from organisations that have successfully implemented CRM solutions and achieved just what was promised – increased profits, maximised service, streamlined operations and a significant return on investment. So the “promised land” of CRM is a reality, but it is the path that leads there that is filled with perils and pitfalls. Recent independent analyst reports predict CRM project failure rates of up to 70 per cent by 2005 and most interestingly, this failure is due to people and process issues rather than poor CRM technology. What does this statistic really mean? Well, consider again what CRM is actually about. CRM is more than just technology; it is a whole business and whole firm concept. CRM is about putting the client or customer at the heart of an organisation. It is about ensuring every touch-point with the client presents a consistent, unified corporate image that leaves the client not just satisfied, but delighted with the service they receive. CRM is, fundamentally, about delivering measurable business benefits against a clear business case.
There are five key elements to getting a CRM project right first time – strategy, people, process, technology and change management. Changing the image of your firm is a high-profile project, with high-profile risks. Success requires a clear business case, organisation mission and strategy.
In addition, it is a firm’s people who deliver the service and present its image to the outside world. People have the power to make or break the success of a CRM project. Implement without them and the technology goes unused, the processes worked around. Technology is, of course, still an important factor in project success, but without clear processes and a business strategy, a firm unfortunately stands little chance of choosing and implementing the right technology to fit its needs. Last, but by no means least, comes change management. CRM is likely to impact everyone, from the managing partner to the receptionist. It presents fundamental changes in the way people work and how they do their jobs. People are naturally resistant to change and they need to be supported through it.
For all the pitfalls, CRM has been shown to make huge improvements to business performance. The final message of this article is that CRM requires a great deal of thought and planning to back up the right choice of CRM technology. If you are contemplating a CRM project and you haven’t considered strategy, people, process and change alongside your system, then stop. Take a look at your project budget – then double it. Alternatively, invest some time and thought into getting it right first time.
John Gurnett is a partner in Deloitte & Touche. He can be contacted at: jgurnett@deloitte.co.uk .
