'Competitive Intelligence:' Leveraging CI for Successful Business Development

Over the last decade, competitive intelligence has evolved from simply being the data we collect and analyze about our competitors. Today, considering competitive intelligence, I think more broadly about all of the data and information I have access to that helps to isolate and leverage my firm's competitive advantage and close the deal on business development opportunities.

Ultimately, the list of data points and resources are comprehensive. The more data available to analyze, the better informed your decisions and strategies will be going forward.

Where Do You Start?

I've read and heard experts ask the question: “What is the central challenge facing business leaders today?” The answer, almost invariably, points to addressing the need for change. It's been repeated so many times that it's become a truism. The problem with “the need for change” as an answer is that it strongly suggests that change is a one-time event — that a company need only go from point A to point B to succeed. This flawed thinking only takes us to a new place of stuck. Meanwhile, the rest of the market moves on and leaves others behind.

Regardless of how seriously law firms focus on strategic planning, for most of us in the legal marketing space, goals are tied most directly to driving incremental revenue. We saw this pattern emerge in Big Law, in particular, during the post-recession period where law firms took steps to protect profits, primarily by cost cutting — through expense reduction, staff adjustments (layoffs), etc.

Only recently have firms (however slowly) finally realized that cutting expenses is not the most direct path to protect profits as much as driving revenue, which has become the new [not really] hot trend. I defy anyone to point out a firm whose cost-cutting efforts actually led to improved profits.

Ask the Burning Questions

In crafting a marketing and business development strategy, for either an individual attorney or a practice group, until you engage in meaningful discussion that poses targeted questions focused on growing market share, strategy speculation is the likely outcome. However, the market doesn't speculate — it dictates. To develop a truly impactful path forward, below are four questions that will help drive strategy.

This is where the rubber meets the road in terms of actionable intelligence informing decisions, particularly about business development. There are data points and intelligence resources that CMOs can leverage to help answer all of these provocative questions.

1. What are we doing now? This may seem like a silly question, though surprisingly, attorneys likely have different perspectives. It is important to align everyone's viewpoint to one concept, at the outset. The important thing here is to be brutally honest and not project who/what you want to be onto your current reality.
2. Is what we're doing now effective? Sometimes, CMOs must take their attorneys' responses at face value and look elsewhere for real clues to adequately answer this question. Some pieces of the answer may be reflected in firm financial data. Some of it may be anecdotal evidence provided by end users. Ultimately, CMOs may need to go outside the firm to arrive at a definitive answer via client interviews, feedback surveys, etc. The conclusions drawn from a situation analysis will ultimately help create or illuminate a sense of urgency to effect change.
3. How can we do it differently? What are your lawyers' thoughts, especially the laterals who have had different experiences at other firms (this CI can be very useful). The answer may require some due diligence research on your competition to learn how other professional services are serving the same type of client. It is important to note that you cannot answer this question effectively until you have answered questions one and two. In some cases, the response to questions one and two may lead CMOs to conclude a different path is not necessary, though I would encourage you to challenge that conclusion as much as possible. Law firms that embrace change — even when it appears that nothing is broken — will make discoveries about their services that differentiate them that can add value to their clients.
4. What does success look like? This may be the hardest question of all. If you've been successful in collecting responses to the previous questions, seeing the light at the end of the tunnel can be still be challenging. Defining success must be tied back to stated goals (driving revenue, remember?), or whatever benchmark has been established to capture and drive revenue. What does the picture look like? This is the vision that the lawyers must articulate to drive the firm's business development strategy. The vision need not be exact, yet it must be clear. And, yes, there is a difference.

Where Is the Data? What are the Resources?

In the law firms in which I have worked, intelligence data points have taken many forms and have increasingly included a wider range of resources.

Below is a listing of my favorite data sources and how I've used them to either gain insight or identify business development targets and goals:

Financial data on client billings and revenue. On the surface, this one appears self-explanatory, yet it's not the first thing lawyers consider when developing a business-development strategy. This data can offer invaluable clues about your practice, including:

• Client base diversity, segmenting by industry, size, geography, etc.
• Which clients are driving revenue? How many are five-figure, six-figure — or whatever figure is important to you — revenue clients? I have used this information to help attorneys set business development goals that aren't specifically about revenue. For example: A practice currently has three clients driving six-figure annual fee revenue each, so we set goals to double that number in three years. It's tangible, measurable, and is sure to increase revenue, but because it's not specifically a revenue target, the attorney was receptive to the goal.

Legal Profiles Compiled from Docket Searches. Both Thompson Reuters and LexisNexis have products that pull docket information and aggregate it in such a way that data may be sorted and analyzed to glean insight.

Without advocating for one tool over another, they both have similarities in that they can provide a detailed overview of a prospect's litigation history, including how many litigation events there have been, in which jurisdictions, areas of law and which firm has represented them.

As these products have become more sophisticated, we can learn about the transactional work of our targets — how many IP filings they have had, who handled them, do they have securities filings, which firms handled their M&A deals and who financed those transactions. All of this information becomes extremely useful when targeting and building a list of business development leads. One of the challenges with these tools is they are not inexpensive, and, as far as I know, there isn't a “light” alternative with a more budget friendly price tag.

Local business publications. Most major metropolitan areas have a “Business Journal” or a similar publication that features news about the area's business community. These publications are gold mines of information, and most of them publish annual directories or “Books of Lists” that feature top organizations in virtually every corporate/commercial category. A word of advice: Spend the money for the digital file that includes all of the lists; it's a great investment in the firm's growth. And, by the way, no firm considering market expansion should ever do so without reviewing these lists.

Digital content aggregators. These are the tools such as Manzama, Newsdesk, Drudge and others that collect digital content from resources throughout the Web. They are invaluable to stay abreast of news and developments, especially once business development targets have been identified. Further, most of the services have capabilities to set specific alerts to focus on news about companies A, B, and C, rather than use them strictly as newsfeed sources. Legal-focused tools like JDSupra, Mondaq and National Law Review are also helpful products for disseminating your own content. It's astonishing how quickly lawyers become recognized as thought leaders when thousands of viewers read their content each day via these highly sophisticated aggregator tools. Even the smallest firms with the most meager budgets should use at least one of these tools.

Annual reports and SEC filings of publicly-traded companies. Financial information contained in these reports may be useful, depending on your intelligence needs. What I have found more useful is contact information for key executives and, more importantly, the SEC 10K filings that include the name of the lawyer and law firm that submitted the form on behalf of the company. The 10K filing also includes some other required information that may be useful in your research, including:

• Risk factors;
• Legal proceedings;
• Consolidated financial data;
• Management's discussion and analysis;
• Ownership changes of 5% or more; and
• Numerous other corporate-related reports.

These forms are all publicly available via the SEC's EDGAR tool (see, http://bit.ly/2MHdfTY), but some of the more sophisticated online financial tools like Yahoo! Finance and Google Finance do an excellent job of aggregating and presenting the filing information into a dashboard format that is easy to read, follow and simple to digest.

Client feedback surveys. Information gathered from client satisfaction surveys provide valuable insight to stay relevant and to understand client needs and wants. Successful firms recognize that it is more cost effective to retain existing clients than it is to attract a new ones (up to 15 times more, says Kathryn Whitaker in her article in the May issue of Marketing the Law Firm (see, “Focusing on Client Retention May Mean Restructuring the Firm”).

Of course, it makes sense to retain clients and build a loyal relationship with them not only to maintain working with the firm rather with a competitor, but that they become advocates of the firm's brand.

Client surveys can also confirm whether your services and delivery model meet the needs of the marketplace. While CMOs may think they have their finger on the pulse, don't be tempted by the confirmation bias. Do the research and analyze the feedback for yourself.

Results from directory or awards submissions. There is potential value in analyzing directory results because, as the ranking directories have become more sophisticated about their methodology, they have also become more transparent about the results.

Chambers & Partners, for example, openly welcomes a constant feedback loop. After the rankings are published, follow up with the researcher to ask “where is there room for improvement? What did our clients say or not say? Who didn't respond to requests for feedback?” The researcher's answers can be illuminating at best, and at worst, may confirm serious deficiencies and your team's ineffectiveness. Either way, you should want to know.

Digital Analytics. We live in a digital world and the data we collect from distribution, traffic access and clicks is incredibly valuable and insightful. The trick is understanding how to read the data and recognizing the imperfection of the collection process.

For example, many firms don't know to block their own IP address from being counted by their Google dashboard, so their analytics may be corrupted by their own internal traffic. I remember when we all had website counters on our home pages (remember the old geocities pages?). Today, everyone has access to basic Web traffic information via Google.

For a few bucks, you can dig deeply into the analytics and learn more about where the firm's website traffic originates, what visitors are searching for, and where they go next. Don't stop analyzing Web traffic. An experienced digital strategist can examine the content distribution data — who opens the emails, who clicks on the links, how long they are viewing those pages, what do they click on while there. Those click view rates are solid data points that can help identify potential business development leads. With a few qualifying follow ups, firm digital strategists may convert a lead into a solid target for new business. Firms that continuously send out random content and never do a deeper dive into the analytics are ignoring the point of this marketing tactic and are just adding noise to the Internet.

Conclusion

In an economy where the demand for legal services has been largely flat or declining over the last decade, the only way to gain market share is to take it from someone else. This is the basic tenet of business development, and the market leaders are the ones that leverage their intelligence for a competitive advantage. It's important to learn as much as you can about the market — the competitors, prospective clients, market forces, trends and news and barriers to entry. Many of these points are addressed by Michael Porter in his article on competitive forces in The Harvard Review (see, “The Five Competitive Forces That Shape Strategy”). This leads me back to the statement at the beginning of this article: The more data there is to analyze, the better informed strategic business development decisions and strategies will be going forward.

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Jim Jarrell, the Business Development Manager for Manhattan-based Davis & Gilbert, has more than 20 years of experience in marketing and business development for professional services firms. Connect with him on LinkedIn @jamesjarrell and on Twitter @jimjarrell.