LexisNexis: Mature BD wins the day
Brendan Nelson, general manager at LexisNexis Business Solutions, details how a data-driven business development model has helped many law firms turn pandemic-induced disruption into opportunity
Back in March 2020, few would have believed that 18 months on – in late 2021 – Covid-19 would still be dominating headlines. As with other industries, the pandemic has challenged the legal sector. But it hasn’t been all doom and gloom – as the recently published LexisNexis InterAction 2021 marketing and business development (BD) report reveals. A sizeable proportion of law firms suffered, but many also emerged as winners.
From threat to opportunity
According to the report, over half (51%) of law firms faced considerable pandemic-related challenges. But those that were able to see Covid-19 as a potential opportunity – rather than a threat – turned disruption to their advantage. Through agile but rigorous execution, firms with mature BD functions were able to take advantage of a once-in-a-generation disruptive event to aggressively dislodge incumbent competitors and steal market share – even as various parts of the wider legal market were struggling.
Maturity fuels growth
The report confirms a strong correlation between a law firm’s maturity at BD and commercial performance. Firms that experienced no growth in 2020 were nearly twice as likely to have a low-maturity BD function relative to their better-performing peers.
High-growth firms also have different expectations and perceptions of the value of marketing, compared to no-growth firms. Given the challenges faced in 2020, it’s no surprise that close to 70% of firms reported a considerable change of strategy to win business last year.
But if change was the norm, making the right changes in a timely fashion – supported by effective execution – were steps that high-maturity firms were able to take much more successfully. A whopping 97.4% of the more mature firms found marketing to be effective in winning new business last year, whereas just 42.9% of low-maturity firms felt the same way.
A stronger BD culture and greater belief in the value of marketing also tends to lead to a significantly different approach to investment. While 28% of high-growth firms chose to recruit BD staff in 2020, not a single no-growth firm did so.
Moreover, variations in investment could further deepen the divide between firms with different degrees of BD maturity. Greater investment brings better and more quantifiable results – in turn enabling budget expansion for future projects involving both people and technology. This can unlock commercial opportunities, resulting in happier fee earners – and the virtuous flywheel that emerges can keep building momentum.
By contrast, firms that fail to recognise the potential of BD investments will experience the opposite – losing out on new business activity, with the added insult of finding themselves dislodged from client relationships they may have previously assumed they owned.
Evolving engagement strategies
In a year characterised by a deep recession and widespread remote working, client retention was a major challenge for all law firms. The BD report finds this was predominantly driven by two factors – increased competition (identified by 43% of respondents) and difficulty meaningfully communicating with clients (23%).
Firms at different maturities perceive these challenges differently. While 57% of no-growth firms viewed increased competition as a major problem, only 37% of high-growth firms have the same view. And while 27% of the former group saw lack of communication with clients as a major problem, only 14% of their higher-growth peers did so.
The report suggests that in a year when client engagement had to be driven almost entirely remotely, richer forms of interaction were significantly more effective – and high-growth firms were better able to deliver these experiences consistently and at scale.
For instance, 43% of high-growth firms created video content – compared with 16% of no-growth firms – and 31% of high-growth firms recorded podcasts, compared to 16% of no-growth firms. Almost half (49%) of high-growth firms held virtual events, against only 30% of no-growth firms.
Richer forms of engagement require more resource and preparation time than traditional communication. Firms that want to harness their potential by seeding better engagement at the core of their BD efforts need to know that they are placing the right bets (for instance, by systematically tracking and analysing the return on each type of event). They will also need infrastructure in place that enables them to create the required content as efficiently as possible (through better knowledge management and content-development capabilities). In other words, they need a holistic, mature BD ecosystem and culture – alongside sustained investment.
Beyond CRM
More mature, high-growth firms almost universally use client relationship management (CRM) technology to help them manage, track and adapt BD strategies. CRM functionality enables them to monitor key performance indicators, the health of their new business pipeline, relationship strengths and risks, website analytics, and more. But while the ability to capture relationship data and automate client interactions at scale is a critical growth factor, it isn’t enough to pull ahead – data also needs to enable timely decisions and effective execution.
The degree to which client relationship data is leveraged to improve both strategic and tactical BD decision-making is another notable differentiator. Mature firms are 44% more likely to use historical BD performance data for strategic goal-setting, and 77% more likely to identify patterns that lead to BD success and adjust programmes accordingly.
In other words, to really drive value today, the traditional CRM-focused approach must sit within a broader BD decision-making and execution ecosystem. This goes beyond technologies such as advanced analytics, data quality management, experience management and process automation – all capabilities supported by modern management platforms. These tools – and the information they promote – must now be embedded in a holistic BD culture (people, processes and governance), capable of turning information and insights into clear decisions and viable actions.
Mature BD functions are not easy to build out. It requires ongoing commitment from the whole organisation. But as indicated by the 38% increase in marketing spend high-growth firms anticipate for next year (a mere 10% at no-growth firms), the return on investment with mature BD models is inarguable.
