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CRM: When Choice Abounds, Choose Wisely

By Barry Solomon
September 02, 2004

Choosing the right CRM solution counts among the most important strategic decisions a law firm makes. And with more choices then ever, making the right decision couldn't be more confusing.

Best of breed CRM vendors market systems offering advanced applications that provide everything from centralized contact management to advanced relationship intelligence functionality. Low-end vendors hype simplicity and cheap licensing fees by limiting their offerings to the most basic contact management functionality.

Some vendors specializing in other back-office applications are taking a “business suite” approach, offering add-on “CRM modules” designed to extend the functionality of their primary product. And increasingly, large software providers that traditionally target Fortune 500 and midsize enterprises (but with no specific expertise in law) are hungry to tap new markets in this difficult economy and therefore are marketing their products to the legal space.

With so many CRM vendors vying for mind share, law firms are being bombarded with confusing messages. This article outlines some basic CRM principles that will help law firm marketers and other decision-makers better evaluate their choices in CRM technology.

Strategy, Not Software

The most common misconception about CRM is that it is a technology. In reality, CRM is a business strategy designed to support the firm's profitability and revenue goals. Prior to conducting your CRM software search it is important to understand exactly what you want to achieve. Whether your CRM strategy is ambitious or modest, knowing your goals and objectives is your first step. From there, it is critical to understand how that strategy fits into your current firm culture and business processes ' and what must be changed to support your strategy.

CRM software is just a tool, and it cannot create the firm culture and processes necessary to succeed in your strategy ' it can only support them and provide you with a technology infrastructure. Once you have a firm grasp of your goals and objectives ' then it becomes much easier to determine which CRM package can best support your needs.

Basic CRM: Centralized Contact Management

At the heart of any CRM strategy ' whether basic or ambitious ' is the notion of centralized contact management. Most firms are plagued with the frustration of managing multiple lists that must be kept up to date, assembling contacts from myriad databases and Personal Information Managers (PIMs), and managing duplicates and errors simply to execute a mailing or marketing campaign. The firm's reputation, image and bottom line are dependent upon your ability to work with a clean and updated contact list to effectively communicate with clients, prospects and colleagues.

Because lawyers are the firm's primary point of contact with the marketplace, the CRM system's ability to synchronize with lawyers' contact lists and maintain those contacts on an ongoing basis is critical. To accomplish this most vendors provide synchronization functionality with PIMS such as Microsoft Outlook, Lotus Notes and/or GroupWise, enabling the CRM system to assimilate the contacts from the dozens, hundreds or even thousands of individual address books and other data sources floating about the firm.

Bi-directional PIM synchronization alone, however, is not sufficient for effective centralized contact management. For instance, what if two conflicting records for the same contact are synchronized to the database ' which contact record takes precedence? What happens if a lawyer incorrectly enters client contact information into his PIM and inadvertently corrupts the firm's centralized information upon synchronization?

Garbage-in, garbage-out is a fundamental principle in CRM. Without a means to proactively monitor and manage data being synchronized, firms run the risk of populating the CRM system with conflicting or inaccurate data, which will erode lawyer confidence in the system and ultimately cause the implementation to fail.

Any effective CRM solution must therefore provide built-in data quality and data change management tools to enable data stewards ' those charged with maintaining CRM data ' to monitor the data being synchronized from external sources and clean that data on an ongoing basis. Without these built-in data quality tools, your implementation will be at risk.

Advanced CRM: Relationship Intelligence

Beyond centralized contact and list management, most firms want advanced applications built into the CRM system that are able to leverage the centrally managed repository. Referring back to the strategy section of this article, firms should inventory their strategic objectives and then use the software selection process to evaluate which tools provide the relationship intelligence needed to support those objectives. Examples include:

  • Client Management: Many firms want to give lawyers the tools needed to track and manage strategic clients. Functionality to look for might include access to 360-degree profiles of clients and prospects and their relationships with other firm members. Focus on how the CRM system facilitates and streamlines client service is essential.
  • Relationship Capital Management: Because lawyers leverage relationships to win new business, having visibility into the firm's collective network of relationships can often make the difference between winning and losing in a competitive situation. Relationship Capital Management functionality enables individuals and organizations to track, manage and extend their relationship networks, and leverage them to win more business. Examples include features that reveal who in the firm has a relationship with a selected contact, or that map out the myriad relationships that firm contacts have with one another.
  • Matter Management: Most lawyers view their work through a matter-centric lens. Therefore the ability to track and manage the contacts, relationships and activities associated with a particular matter might be on your priority list when evaluating CRM solutions. In this case you'll want to look for solutions that integrate with critical back office systems such as accounting, document management, human resources and other systems in order to create a central repository that provides visibility into matters and the people, companies and relationships associated with those matters.
  • Opportunity and Pipeline Management: Increasingly, law firms are looking for better tools to manage prospective business ' both new client acquisition and cross-selling opportunities. These firms require CRM functionality that can manage new opportunities through firm-defined sales stages to closure, estimate and forecast revenues, monitor the opportunity pipeline and produce meaningful management reports.
  • Expertise & Experience Management: Most firms recognize that their primary assets are the knowledge, skill and expertise of their lawyers. Developing new business successfully is dependent upon the firm's ability to track, manage and understand the collective know how of its professionals. Firms looking to leverage these assets need to identify CRM solutions that will allow them to build a searchable repository of intelligence on experience and expertise, assimilating data from a variety of sources including the time and billing, HR and document management systems and to present this information in a logical context for lawyers and marketing staff.
  • Marketing Automation: Law firms usually look to CRM solutions to help automate their marketing and client development functions. Types of functionality to look for here includes features for tracking and managing referrals, profiling clients and prospects, creating and managing lists, responding to requests for proposals (RFPs) and tenders, managing campaigns, communications and events, analyzing campaign effectiveness and tracking follow through.
  • Alumni Management: Many law firms derive significant revenues from former employees that have moved on to other career opportunities. Firms seeking to maximize the benefit they can derive from alumni referrals invest considerable resources tracking and managing former employees and ensuring ongoing communications with them. These firms should look for CRM functionality that keeps a historical audit trail of contacts' past employment. In so doing, the firm can track where former employees are now working and easily communicate with them for one-off needs or en masse as part of an alumni communication program.

Other examples of advanced CRM functionality abound. The key is for firms to understand their strategic business needs and to incorporate those needs into their CRM requirements. This ensures that they remain focused on the types of relationship intelligence their solution should ultimately deliver and prevents confusion when assessing the specific capabilities of the product.

Lawyer Buy In

For any CRM system to achieve the return on investment (ROI) envisioned, the lawyers must buy into the system and be willing to share their information with the centralized repository. Ensuring that the product's interface is easy to use and “lawyer friendly” should be only the beginning of your analysis.

The other issues that you should be aware of are control and security. The solution must provide adequate security to ensure that lawyers can keep certain contact records private. It must also allow them to keep certain information about individual contacts private, such as the home phone numbers of sensitive clients or notes from confidential conversations. Unless the product provides this granular level of “ethical wall” security, lawyers will not trust it.

Moreover, what happens if lawyer “A” knows a client as “John Smith” and lawyer “B” knows him as “Jack Smith?” In the real world, even correct contact information can have different variations. Each lawyer will want to maintain his own version of the contact, without the firm centrally overwriting that version. Accordingly, the CRM solution must be flexible enough to provide lawyers with that level of control over their own contacts without creating duplicates in the system. Cultural barriers to adoption such as control are issues few vendors are aware of, and accordingly, their products will not accommodate the reality of how lawyers think. Therefore, it's also critical to know your vendor.

The Vendor

Understanding the vendor standing behind the product is as important as the product itself. Does the provider have experience selling into the legal industry? Do they understand your business challenges? The legal industry is unique, and therefore so are law firms' CRM requirements. If a vendor you're considering does not specialize in CRM for law firms ' make sure they have significant experience successfully implementing solutions for law firms. You must do your due diligence and ask for references.

In addition to legal domain expertise, you should investigate the vendor's support and services capabilities. Many vendors have horrific reputations regarding the quality of their customer support and professional services ' while others have outstanding track records. The vendor's ability to support you during implementation and post-deployment can make the difference between success and failure.

Finally, what is the CRM vendor's track record for product quality, upgrades and enhancements? What is the vendor's financial condition? Do they run their business well so that they'll be around when you need them? Is CRM the only product the vendor develops or is it just one of many? The more you can ascertain about the company's financial strength, investment in research and development and reliability, the less risk you're taking on when you make your buying decision.

Price

And finally, some cautionary words about price. According to a recent Gartner Group study, over a 5-year period, CRM software licensing fees account for only 15% of the total cost of ownership of a CRM solution. (The Gartner Group, Research Note: Ten Tips for Lowering Your CRM Total Cost of Ownership, Beth Eisenfeld, May 2004.) This is a sobering statistic to many firms, especially those enticed by vendors offering CRM solutions for free or at suspiciously low prices. Even implementing a bare bones CRM package requires a commitment and investment in time and resources.

So, while price will always be an issue ' it should not supercede more important factors, such as whether the system you're considering provides the essential infrastructure necessary to succeed. The costs associated with a failed implementation and starting over from scratch can be numbing, not to mention career ending. Remember ' if it sounds too good to be true, it probably is.



Barry Solomon [email protected]

Choosing the right CRM solution counts among the most important strategic decisions a law firm makes. And with more choices then ever, making the right decision couldn't be more confusing.

Best of breed CRM vendors market systems offering advanced applications that provide everything from centralized contact management to advanced relationship intelligence functionality. Low-end vendors hype simplicity and cheap licensing fees by limiting their offerings to the most basic contact management functionality.

Some vendors specializing in other back-office applications are taking a “business suite” approach, offering add-on “CRM modules” designed to extend the functionality of their primary product. And increasingly, large software providers that traditionally target Fortune 500 and midsize enterprises (but with no specific expertise in law) are hungry to tap new markets in this difficult economy and therefore are marketing their products to the legal space.

With so many CRM vendors vying for mind share, law firms are being bombarded with confusing messages. This article outlines some basic CRM principles that will help law firm marketers and other decision-makers better evaluate their choices in CRM technology.

Strategy, Not Software

The most common misconception about CRM is that it is a technology. In reality, CRM is a business strategy designed to support the firm's profitability and revenue goals. Prior to conducting your CRM software search it is important to understand exactly what you want to achieve. Whether your CRM strategy is ambitious or modest, knowing your goals and objectives is your first step. From there, it is critical to understand how that strategy fits into your current firm culture and business processes ' and what must be changed to support your strategy.

CRM software is just a tool, and it cannot create the firm culture and processes necessary to succeed in your strategy ' it can only support them and provide you with a technology infrastructure. Once you have a firm grasp of your goals and objectives ' then it becomes much easier to determine which CRM package can best support your needs.

Basic CRM: Centralized Contact Management

At the heart of any CRM strategy ' whether basic or ambitious ' is the notion of centralized contact management. Most firms are plagued with the frustration of managing multiple lists that must be kept up to date, assembling contacts from myriad databases and Personal Information Managers (PIMs), and managing duplicates and errors simply to execute a mailing or marketing campaign. The firm's reputation, image and bottom line are dependent upon your ability to work with a clean and updated contact list to effectively communicate with clients, prospects and colleagues.

Because lawyers are the firm's primary point of contact with the marketplace, the CRM system's ability to synchronize with lawyers' contact lists and maintain those contacts on an ongoing basis is critical. To accomplish this most vendors provide synchronization functionality with PIMS such as Microsoft Outlook, Lotus Notes and/or GroupWise, enabling the CRM system to assimilate the contacts from the dozens, hundreds or even thousands of individual address books and other data sources floating about the firm.

Bi-directional PIM synchronization alone, however, is not sufficient for effective centralized contact management. For instance, what if two conflicting records for the same contact are synchronized to the database ' which contact record takes precedence? What happens if a lawyer incorrectly enters client contact information into his PIM and inadvertently corrupts the firm's centralized information upon synchronization?

Garbage-in, garbage-out is a fundamental principle in CRM. Without a means to proactively monitor and manage data being synchronized, firms run the risk of populating the CRM system with conflicting or inaccurate data, which will erode lawyer confidence in the system and ultimately cause the implementation to fail.

Any effective CRM solution must therefore provide built-in data quality and data change management tools to enable data stewards ' those charged with maintaining CRM data ' to monitor the data being synchronized from external sources and clean that data on an ongoing basis. Without these built-in data quality tools, your implementation will be at risk.

Advanced CRM: Relationship Intelligence

Beyond centralized contact and list management, most firms want advanced applications built into the CRM system that are able to leverage the centrally managed repository. Referring back to the strategy section of this article, firms should inventory their strategic objectives and then use the software selection process to evaluate which tools provide the relationship intelligence needed to support those objectives. Examples include:

  • Client Management: Many firms want to give lawyers the tools needed to track and manage strategic clients. Functionality to look for might include access to 360-degree profiles of clients and prospects and their relationships with other firm members. Focus on how the CRM system facilitates and streamlines client service is essential.
  • Relationship Capital Management: Because lawyers leverage relationships to win new business, having visibility into the firm's collective network of relationships can often make the difference between winning and losing in a competitive situation. Relationship Capital Management functionality enables individuals and organizations to track, manage and extend their relationship networks, and leverage them to win more business. Examples include features that reveal who in the firm has a relationship with a selected contact, or that map out the myriad relationships that firm contacts have with one another.
  • Matter Management: Most lawyers view their work through a matter-centric lens. Therefore the ability to track and manage the contacts, relationships and activities associated with a particular matter might be on your priority list when evaluating CRM solutions. In this case you'll want to look for solutions that integrate with critical back office systems such as accounting, document management, human resources and other systems in order to create a central repository that provides visibility into matters and the people, companies and relationships associated with those matters.
  • Opportunity and Pipeline Management: Increasingly, law firms are looking for better tools to manage prospective business ' both new client acquisition and cross-selling opportunities. These firms require CRM functionality that can manage new opportunities through firm-defined sales stages to closure, estimate and forecast revenues, monitor the opportunity pipeline and produce meaningful management reports.
  • Expertise & Experience Management: Most firms recognize that their primary assets are the knowledge, skill and expertise of their lawyers. Developing new business successfully is dependent upon the firm's ability to track, manage and understand the collective know how of its professionals. Firms looking to leverage these assets need to identify CRM solutions that will allow them to build a searchable repository of intelligence on experience and expertise, assimilating data from a variety of sources including the time and billing, HR and document management systems and to present this information in a logical context for lawyers and marketing staff.
  • Marketing Automation: Law firms usually look to CRM solutions to help automate their marketing and client development functions. Types of functionality to look for here includes features for tracking and managing referrals, profiling clients and prospects, creating and managing lists, responding to requests for proposals (RFPs) and tenders, managing campaigns, communications and events, analyzing campaign effectiveness and tracking follow through.
  • Alumni Management: Many law firms derive significant revenues from former employees that have moved on to other career opportunities. Firms seeking to maximize the benefit they can derive from alumni referrals invest considerable resources tracking and managing former employees and ensuring ongoing communications with them. These firms should look for CRM functionality that keeps a historical audit trail of contacts' past employment. In so doing, the firm can track where former employees are now working and easily communicate with them for one-off needs or en masse as part of an alumni communication program.

Other examples of advanced CRM functionality abound. The key is for firms to understand their strategic business needs and to incorporate those needs into their CRM requirements. This ensures that they remain focused on the types of relationship intelligence their solution should ultimately deliver and prevents confusion when assessing the specific capabilities of the product.

Lawyer Buy In

For any CRM system to achieve the return on investment (ROI) envisioned, the lawyers must buy into the system and be willing to share their information with the centralized repository. Ensuring that the product's interface is easy to use and “lawyer friendly” should be only the beginning of your analysis.

The other issues that you should be aware of are control and security. The solution must provide adequate security to ensure that lawyers can keep certain contact records private. It must also allow them to keep certain information about individual contacts private, such as the home phone numbers of sensitive clients or notes from confidential conversations. Unless the product provides this granular level of “ethical wall” security, lawyers will not trust it.

Moreover, what happens if lawyer “A” knows a client as “John Smith” and lawyer “B” knows him as “Jack Smith?” In the real world, even correct contact information can have different variations. Each lawyer will want to maintain his own version of the contact, without the firm centrally overwriting that version. Accordingly, the CRM solution must be flexible enough to provide lawyers with that level of control over their own contacts without creating duplicates in the system. Cultural barriers to adoption such as control are issues few vendors are aware of, and accordingly, their products will not accommodate the reality of how lawyers think. Therefore, it's also critical to know your vendor.

The Vendor

Understanding the vendor standing behind the product is as important as the product itself. Does the provider have experience selling into the legal industry? Do they understand your business challenges? The legal industry is unique, and therefore so are law firms' CRM requirements. If a vendor you're considering does not specialize in CRM for law firms ' make sure they have significant experience successfully implementing solutions for law firms. You must do your due diligence and ask for references.

In addition to legal domain expertise, you should investigate the vendor's support and services capabilities. Many vendors have horrific reputations regarding the quality of their customer support and professional services ' while others have outstanding track records. The vendor's ability to support you during implementation and post-deployment can make the difference between success and failure.

Finally, what is the CRM vendor's track record for product quality, upgrades and enhancements? What is the vendor's financial condition? Do they run their business well so that they'll be around when you need them? Is CRM the only product the vendor develops or is it just one of many? The more you can ascertain about the company's financial strength, investment in research and development and reliability, the less risk you're taking on when you make your buying decision.

Price

And finally, some cautionary words about price. According to a recent Gartner Group study, over a 5-year period, CRM software licensing fees account for only 15% of the total cost of ownership of a CRM solution. (The Gartner Group, Research Note: Ten Tips for Lowering Your CRM Total Cost of Ownership, Beth Eisenfeld, May 2004.) This is a sobering statistic to many firms, especially those enticed by vendors offering CRM solutions for free or at suspiciously low prices. Even implementing a bare bones CRM package requires a commitment and investment in time and resources.

So, while price will always be an issue ' it should not supercede more important factors, such as whether the system you're considering provides the essential infrastructure necessary to succeed. The costs associated with a failed implementation and starting over from scratch can be numbing, not to mention career ending. Remember ' if it sounds too good to be true, it probably is.



Barry Solomon [email protected]

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