Briefing Magazine: A healthy relationship
Dave Harris, principal consultant at LexisNexis, says a CRM system can help firms to master the art of revenue predictability and still maintain strong relationships with clients.
In spite of the fact that law firms are driven by ‘revenue’, anecdotal evidence suggests that the discipline of predicting that revenue is seldom embraced with rigour. This is indeed surprising as commercial entities must be able to envision – with a reasonable degree of certainty – what the organisation’s future revenue stream looks like in the medium term.
This is underpinned by the idea that in a sector where ‘relationships’ rule the roost, the traditional approach of harnessing one-to-one relationships will continue to bring in the revenue. After all, this practice has worked well thus far – abetted by ‘rainmakers’ in law firms.
There is no doubt that relationships are a law firm’s number one asset. However, against a backdrop of Brexit and globalisation, alternative fee arrangements, expanding in-house legal teams and technology-driven approaches to business such as machine learning and artificial intelligence, it’s imperative that firms adopt a more commercial and targeted approach to building relationships.
In the current environment, the ability to predict revenue accurately is critical. Technology like customer relationship management can facilitate this – but it must be driven by leadership from senior partners and business executives. A change in partner mindset is needed. Revenue predictability is as much about acquiring new business as it is about protecting the existing income stream.
A common gripe of business development professionals in firms is that the discipline isn’t joined up. The strategy for revenue generation tends to be “get out there.” But, with disparate business development efforts and multiple data sources, it becomes impossible to achieve accurate visibility of the new business pipeline. This makes it difficult to track, manage and precisely report on revenue projections. Quantifying the return on investment is also unfeasible.