Not Just the Next Abbreviation: With CRM, They Got it Right

Over the course of the past 20 years, professional services firms have jumped on the abbreviation bandwagon with a succession of emerging management trends, only to disembark once they discover that the latest three-letter trend doesn't deliver the results they were hoping for. What most firms don't realize is that these trendy MBA or “management by abbreviation” tools ' including total quality management (TQM), management by objectives (MBO), and now, client relationship management (CRM) ' are best viewed simply as ways to operationalize common sense. With no disrespect to the proponents of MBO, common sense applies; it is easier to manage when you have an objective in mind, than to manage for some random, ethereal goal. Similarly, TQM brought a concept to the management table that became our new common sense, though it should have been our common sense all along. In the aftermath of World War II and with the continued emergence of assembly-line production into the U.S. economy, manufacturers installed quality controls at the end of the assembly line to ensure that every product coming off the line was perfect. Faulty products were then put off to the side to be fixed later. W. Edwards Deming turned the quality paradigm on its head with the TQM model he devised. In a TQM system, each person on the assembly line thinks of the next person on the line as a “customer,” and makes certain that a perfect product is provided to that “customer” every time. Another important flaw with the conventional assembly line was that only the plant managers were empowered to “pull the cord” that would stop the line and allow problems to be resolved. In Deming's TQM model, every worker on the line is empowered to pull the cord and fix something so that the customer is better served. TQM became the new common sense, as it does away with the need for artificial quality control at the end of the line, and replaces it with a far more rational system.

Law firms, of course, are entities very different from auto plants with long assembly lines, but the TQM concept certainly has a place. For example, the lead partner on a matter may not want to admit that there is a problem with the client relationship, and senior management may not be close enough to see that a problem exists. Thus, it makes sense to empower anyone on the client team to “pull the cord” and to say, “I think we have a problem with this client. This client is not happy.”

The Cross-Selling Holy Grail: The Genesis of CRM

Beginning in the early 1980s, firms began to sense a shift in the legal services environment brought to bear by a force that the market had not yet encountered in significant ways: competition. Up until that point, clients generally stuck with a firm out of sheer loyalty and its resulting inertia. However, as buyers ' particularly in-house counsel – grew more sophisticated, they began to understand that they have a choice in legal service providers. Today, customer loyalty has diminished considerably, and clients who are dissatisfied with the level of service they are receiving won't hesitate to leave one firm for another. Of course, quality is important to all consumers of legal services, but for the most part they understand that, at a certain level, law firms are fungible.

Complicating the picture significantly was a similar diminution in partner loyalty. Clients who feel well served by an individual attorney have no qualms about departing a firm along with the attorney, particularly where the departing attorney ' and not the firm ' is viewed as the “owner” of the relationship.

As a result of this changing environment, law firms began to take a closer look at their markets, and discovered what has become an axiom in law firm marketing: efforts to develop new business are far more fruitful when directed toward existing clients than new clients. Thus, “cross-selling” soon became the holy grail of legal marketing. All efforts were supposed to be directed to selling existing clients services they were either buying from other law firms or were not using at all.

Unfortunately, most naked attempts at cross-selling failed miserably for one simple reason: efforts to sell a service are artificial if not included in the broader context of expanding the client relationship. CRM ' which places the focus on the client relationship ' can provide the results that firms were hoping for in their earlier attempts at cross-selling. In short, a CRM program should serve as a guide to how attorneys, and the firm, view clients. Many years ago, our firm was working with a financial services company. We encountered the president of the company in the newly-renovated lobby of its main branch, complaining bitterly about the way in which customer traffic was making a mess of the newly-constructed hardwood floors. Of course, our client had missed the point entirely: customers are the raison d'?tre of any service provider. Lawyers caught up in the press of everyday matters can easily forget the larger point as well. We occasionally encounter individuals who avoid contact with clients and even cringe when they are interrupted with a phone call. The far greater problem, naturally, is when the clients stop calling altogether.

It is unfortunate that when CRM found its way into the legal profession, it arrived under the guise of a new abbreviation, that appeared synonymous with new technology. Three years ago, it seemed that half of the exhibitors at the Legal Marketing Association expo were selling software related to CRM. However, the real benefits of a CRM program are not defined by the technology; rather, the true benefits are derived from a new, holistic way of looking at client relationships.

CRM is not merely a piece of software, a process, or just the latest management abbreviation. Rather, it is a mindset within an organization that determines whether you interact with clients on an ad hoc, as-needed, reactive manner, or whether your relationship is one that is proactive and collaborative and based on the client's business needs.

The Critical Step: Building Buy-In

A firm that attempts to implement a CRM program merely by installing software can only be disappointed. In short, CRM is about people and relationships. Software, while it can serve to facilitate the process, is incapable of addressing the human interface. Many of the available software solutions on the market provide a host of capabilities, far beyond what most firms will ever call upon. Nonetheless, when implementation of a CRM program fails, the software is most often cited as the culprit. The real failure, however, almost always lies in the inability to put human processes in place in a way that ensures that people can use the software.

Law firms, in particular, provide difficult hurdles to the successful implementation of a CRM program. First and foremost, it takes time ' and non-billable time at that ' to learn the system, maintain client information and participate on client teams. Lawyers who are busy with billable client matters often won't see the value in investing time in CRM. In addition, lawyers tend to jealously guard their clients, and can be loath to cede control of the client relationship in the fear that a colleague may cause a problem. Finally, a lawyer may resist sharing client information, knowing that clients who are more integrated into the firm's other practices are less easily mobilized should the lawyer jump to another firm.

The law firm structure itself provides other impediments. Unlike a bank or insurance company with a clear hierarchy of authority, law firms are amalgams of co-equals, making it difficult for anyone to issue marching orders. Successful implementation of a CRM program requires a conscious decision at the highest level of the organization, committing the firm to improving relationships with its existing clients.

A firm can win buy-in to its decision by making two arguments. The first is economic: it is easier and cheaper to nurture existing clients and grow their business than it is to establish a new client relationship. The second is professional: the client is better served when the ownership of the client relationship is institutional, and the client's needs are addressed in a holistic manner.

Winning buy-in from professionals may be difficult to achieve on a firm-wide basis. For that reason, a firm might find better results if it starts with one or two “preferred” clients, targeted for their existing relationship with the firm and the potential to grow additional business from them. Once the firm has real and measurable success with the selected clients, it may be easier to expand the program, using momentum to build on early success.

CRM Implementation: Planning to Build Business

Once a firm has established that it is ready to make a commitment to a CRM program, it should start by building client teams comprising those “stakeholders” at the firm for whom a given client's business is important.

The first task for the team is to assess the totality of the current client relationship. This step is often instructive, as not all attorneys who deal with a client are aware of work being done for the client in other practice areas. An assessment will enable individual members of the team to see everything that is going on with the client ' and to consider the client needs that may be missing from the equation.

The next phase of the team's activity is research; gathering internal and external information on both a primary and secondary level. On the internal side, the primary research should include information that does not yet exist, gleaned from interviews with the partners, associates and paralegals who work with the client, as well as by examining and quantifying the client's usage patterns. Secondary internal research capitalizes upon information that already exists ' such as billing reports ' and restructures that information into a form that is useful.

On the external focus, the primary information will include client interviews and research into the client's business to learn more about the client's industry. Secondary research should include gathering information ' often available on the Internet ' about the client's securities filings, annual reports, articles written about the firm, and other mentions of the firm in the media.

Once all the information has been gathered, it can be synthesized, allowing the team to make some basic assumptions and set some goals for what the firm can do for the client. It is important at this stage to develop some metrics that will provide a way to measure your success, such as an increase in revenues from the client or number of matters handled.

After the research and goal-setting phases are complete, the firm is ready to develop a plan for the client. The plan should lay out concrete steps for interacting with the client, and might involve sales training for the attorneys, legal training on specific matters, or even recruiting new specialists who are capable of meeting a specific client need.

Is the CRM process complete once the plan has been carried out? Not by a long shot. After executing the specific plan elements, it is important to monitor your success, re-evaluate your goals and refine your plan to adapt to changing circumstances. CRM, in this regard, should be considered a never-ending process.

Over the course of the past 20 years, professional services firms have jumped on the abbreviation bandwagon with a succession of emerging management trends, only to disembark once they discover that the latest three-letter trend doesn't deliver the results they were hoping for. What most firms don't realize is that these trendy MBA or “management by abbreviation” tools ' including total quality management (TQM), management by objectives (MBO), and now, client relationship management (CRM) ' are best viewed simply as ways to operationalize common sense. With no disrespect to the proponents of MBO, common sense applies; it is easier to manage when you have an objective in mind, than to manage for some random, ethereal goal. Similarly, TQM brought a concept to the management table that became our new common sense, though it should have been our common sense all along. In the aftermath of World War II and with the continued emergence of assembly-line production into the U.S. economy, manufacturers installed quality controls at the end of the assembly line to ensure that every product coming off the line was perfect. Faulty products were then put off to the side to be fixed later. W. Edwards Deming turned the quality paradigm on its head with the TQM model he devised. In a TQM system, each person on the assembly line thinks of the next person on the line as a “customer,” and makes certain that a perfect product is provided to that “customer” every time. Another important flaw with the conventional assembly line was that only the plant managers were empowered to “pull the cord” that would stop the line and allow problems to be resolved. In Deming's TQM model, every worker on the line is empowered to pull the cord and fix something so that the customer is better served. TQM became the new common sense, as it does away with the need for artificial quality control at the end of the line, and replaces it with a far more rational system.

Law firms, of course, are entities very different from auto plants with long assembly lines, but the TQM concept certainly has a place. For example, the lead partner on a matter may not want to admit that there is a problem with the client relationship, and senior management may not be close enough to see that a problem exists. Thus, it makes sense to empower anyone on the client team to “pull the cord” and to say, “I think we have a problem with this client. This client is not happy.”

The Cross-Selling Holy Grail: The Genesis of CRM

Beginning in the early 1980s, firms began to sense a shift in the legal services environment brought to bear by a force that the market had not yet encountered in significant ways: competition. Up until that point, clients generally stuck with a firm out of sheer loyalty and its resulting inertia. However, as buyers ' particularly in-house counsel – grew more sophisticated, they began to understand that they have a choice in legal service providers. Today, customer loyalty has diminished considerably, and clients who are dissatisfied with the level of service they are receiving won't hesitate to leave one firm for another. Of course, quality is important to all consumers of legal services, but for the most part they understand that, at a certain level, law firms are fungible.

Complicating the picture significantly was a similar diminution in partner loyalty. Clients who feel well served by an individual attorney have no qualms about departing a firm along with the attorney, particularly where the departing attorney ' and not the firm ' is viewed as the “owner” of the relationship.

As a result of this changing environment, law firms began to take a closer look at their markets, and discovered what has become an axiom in law firm marketing: efforts to develop new business are far more fruitful when directed toward existing clients than new clients. Thus, “cross-selling” soon became the holy grail of legal marketing. All efforts were supposed to be directed to selling existing clients services they were either buying from other law firms or were not using at all.

Unfortunately, most naked attempts at cross-selling failed miserably for one simple reason: efforts to sell a service are artificial if not included in the broader context of expanding the client relationship. CRM ' which places the focus on the client relationship ' can provide the results that firms were hoping for in their earlier attempts at cross-selling. In short, a CRM program should serve as a guide to how attorneys, and the firm, view clients. Many years ago, our firm was working with a financial services company. We encountered the president of the company in the newly-renovated lobby of its main branch, complaining bitterly about the way in which customer traffic was making a mess of the newly-constructed hardwood floors. Of course, our client had missed the point entirely: customers are the raison d'?tre of any service provider. Lawyers caught up in the press of everyday matters can easily forget the larger point as well. We occasionally encounter individuals who avoid contact with clients and even cringe when they are interrupted with a phone call. The far greater problem, naturally, is when the clients stop calling altogether.

It is unfortunate that when CRM found its way into the legal profession, it arrived under the guise of a new abbreviation, that appeared synonymous with new technology. Three years ago, it seemed that half of the exhibitors at the Legal Marketing Association expo were selling software related to CRM. However, the real benefits of a CRM program are not defined by the technology; rather, the true benefits are derived from a new, holistic way of looking at client relationships.

CRM is not merely a piece of software, a process, or just the latest management abbreviation. Rather, it is a mindset within an organization that determines whether you interact with clients on an ad hoc, as-needed, reactive manner, or whether your relationship is one that is proactive and collaborative and based on the client's business needs.

The Critical Step: Building Buy-In

A firm that attempts to implement a CRM program merely by installing software can only be disappointed. In short, CRM is about people and relationships. Software, while it can serve to facilitate the process, is incapable of addressing the human interface. Many of the available software solutions on the market provide a host of capabilities, far beyond what most firms will ever call upon. Nonetheless, when implementation of a CRM program fails, the software is most often cited as the culprit. The real failure, however, almost always lies in the inability to put human processes in place in a way that ensures that people can use the software.

Law firms, in particular, provide difficult hurdles to the successful implementation of a CRM program. First and foremost, it takes time ' and non-billable time at that ' to learn the system, maintain client information and participate on client teams. Lawyers who are busy with billable client matters often won't see the value in investing time in CRM. In addition, lawyers tend to jealously guard their clients, and can be loath to cede control of the client relationship in the fear that a colleague may cause a problem. Finally, a lawyer may resist sharing client information, knowing that clients who are more integrated into the firm's other practices are less easily mobilized should the lawyer jump to another firm.

The law firm structure itself provides other impediments. Unlike a bank or insurance company with a clear hierarchy of authority, law firms are amalgams of co-equals, making it difficult for anyone to issue marching orders. Successful implementation of a CRM program requires a conscious decision at the highest level of the organization, committing the firm to improving relationships with its existing clients.

A firm can win buy-in to its decision by making two arguments. The first is economic: it is easier and cheaper to nurture existing clients and grow their business than it is to establish a new client relationship. The second is professional: the client is better served when the ownership of the client relationship is institutional, and the client's needs are addressed in a holistic manner.

Winning buy-in from professionals may be difficult to achieve on a firm-wide basis. For that reason, a firm might find better results if it starts with one or two “preferred” clients, targeted for their existing relationship with the firm and the potential to grow additional business from them. Once the firm has real and measurable success with the selected clients, it may be easier to expand the program, using momentum to build on early success.

CRM Implementation: Planning to Build Business

Once a firm has established that it is ready to make a commitment to a CRM program, it should start by building client teams comprising those “stakeholders” at the firm for whom a given client's business is important.

The first task for the team is to assess the totality of the current client relationship. This step is often instructive, as not all attorneys who deal with a client are aware of work being done for the client in other practice areas. An assessment will enable individual members of the team to see everything that is going on with the client ' and to consider the client needs that may be missing from the equation.

The next phase of the team's activity is research; gathering internal and external information on both a primary and secondary level. On the internal side, the primary research should include information that does not yet exist, gleaned from interviews with the partners, associates and paralegals who work with the client, as well as by examining and quantifying the client's usage patterns. Secondary internal research capitalizes upon information that already exists ' such as billing reports ' and restructures that information into a form that is useful.

On the external focus, the primary information will include client interviews and research into the client's business to learn more about the client's industry. Secondary research should include gathering information ' often available on the Internet ' about the client's securities filings, annual reports, articles written about the firm, and other mentions of the firm in the media.

Once all the information has been gathered, it can be synthesized, allowing the team to make some basic assumptions and set some goals for what the firm can do for the client. It is important at this stage to develop some metrics that will provide a way to measure your success, such as an increase in revenues from the client or number of matters handled.

After the research and goal-setting phases are complete, the firm is ready to develop a plan for the client. The plan should lay out concrete steps for interacting with the client, and might involve sales training for the attorneys, legal training on specific matters, or even recruiting new specialists who are capable of meeting a specific client need.

Is the CRM process complete once the plan has been carried out? Not by a long shot. After executing the specific plan elements, it is important to monitor your success, re-evaluate your goals and refine your plan to adapt to changing circumstances. CRM, in this regard, should be considered a never-ending process.