While the majority of the firms asked in a recent survey said that winning new business was the top growth priority for their firm, areas where that new business was coming from showed a strong reliance on existing customers rather than that coming from referrals or new client outreach.
Although firms identified cross-selling to existing clients and pursuing potential new clients as also providing growth opportunities, the survey showed that new business from old clients outpaced those other categories sevenfold.
The 2018 Law Firm Growth Enablement Survey was conducted in partnership with Intapp and Calibrate Legal. The survey polled marketing and business development professionals at firms ranging in size from less than 100 attorneys to more than 2,500 to learn more about the client lifecycle, the biggest barriers to growth, and the most widely used and effective marketing and business development strategies in today’s increasingly competitive legal market.
Click here to get more information about the Survey and an explanatory infographic.
Here’s what the survey found regarding growth:
- Existing clients are worth their weight in gold — More than 70% of new law firm business comes from additional business from existing clients, while 10% comes from referrals from existing clients.
- There’s room for improvement with everything else — Beyond existing clients, other sources of new business — such as referrals from business partners like accounting or venture capital firms, new business from new clients, leads generated from within the firm, and inquiries generated by outbound marketing — all scored less than 10% in terms of new business effectiveness, suggesting firms may want to think twice about where a majority of marketing and business development dollars are spent.
- A mismatch in accountability — More than half (51%) of chief marketing and business development officers are described as having the “top chair” for growth, but only 11% of those C-level executives actually oversee growth, shackling marketing and business development with power but no authority.
- Process problems — Firms are not consistently applying sales methodologies to business development, and 85% of firms do not track return on investment for pitches or request for proposal (RFP) responses, making it difficult to create momentum.
3 Critical Areas of Focus: People, Process & Data
The most critical areas where law firms must focus to drive new business can be described in terms of people, process, and data. Frequently cited issues include:
- People — This includes the ability of lawyers to collaborate (cited by more than 50%), coupled with the competing needs of business development professionals to support practice groups, industry/sector teams, and client teams (more than 50% of business development pros said they are spread thin supporting various cross-sections).
- Process —Almost 50% of firms don’t have a formal sales methodology, and more than 30% have difficulty identifying prospects or the right opportunities to pursue. Furthermore, pitches, proposals, and RFPs remain an arduous and reactive effort as firms capture data by shouting down the hall and sending mass “has anyone done…” emails practice-wide.
- Data —More than 30% of firms cite leveraging internal and external data to answer client and lawyer needs as a concern, and more than 25% do not use client feedback data in their client retention and business development efforts. There is a wealth of knowledge being left on the table!
The survey brought to light issues that are not new to anyone within the legal industry; indeed, many of these issues are related to the client-empowered era we are now in.
It is no secret that most firms are trying to drive profitability up and operational costs down by placing pressure on marketing and business development departments to drive those efforts with at least one hand tied behind their back.
But, as Winston Churchill once said, “The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty.” With demand for legal services picking up for all segments in Q2 and growing competition driving firms to become more client-centric, the optimism falls to those firms taking the opportunity and leveraging top talent and technology to organically capture market share.