Effective CRM Requires Effective Leadership

A year prior to writing this, I was in Sydney talking to a law firm marketer. He asked if his firm's poor CRM usage was common elsewhere. I assured him it was. Law firm cultures that allow partners to "opt out" of policies, where hoarding clients is rewarded, where CRM is viewed as a tech cost rather than as a business process, means that for many firms CRM ends up as a fancy mailing list rather than as a lifeline to customers.

A month later, at the onset of the global COVID-19 pandemic, Managing Partners around the world were stunned to discover they couldn't quickly or easily send a simple "We're still open for business!" note to all of the firm’s clients. Some blamed Marketing. Or IT. Or secretaries. I hold the firm leaders accountable.

CRM is often perceived as a software package used primarily by the Marketing team. Purchases are often politically wrought: the CMO wants to “own” it because they have a need for certain features and functions; the CIO wants to “own” it because all technology falls under IT’s domain, and sometimes IT’s budget, and in any case, the CIO will have to allocate scarce resources to add it to the firm’s technology stack; and the CFO wants to “own” it because enterprise software requires executive approval, which comes only after assessing the budgetary impact so as to protect partners’ short-term profits. The partners and their assistants don’t necessarily want to “own” CRM, because they’ve got enough administrative burdens, but they certainly want to retain control over whether and how much time they’ll invest in using any new tools.

As a practical matter, there is no one owner. ALL stakeholders need to have a voice. But the primary sponsor of a CRM purchase or implementation should be the law firm’s executive committee, or the managing partner. Firm leaders have a fiduciary responsibility to the business. This means investing in people, processes, and tools, to ensure the firm has a steady stream of new clients and new engagements, delivered profitably, by productive and content lawyers and business professionals. There is literally nothing more important to the health of the business than to ensure the clients’ needs are being met. And ensuring client satisfaction and client loyalty means investing in a client-focused culture. This is impossible without investing in CRM processes and tools.

While I'm not (any longer) a CRM expert, I've worked with several law firms in the last year to help them understand the linkage between client service, business process, culture, partner compensation, and CRM. The common thread running among all of these is the necessity for leaders to have a grasp of how these are interrelated, and how the business succeeds or fails based on how well they manage these responsibilities. Leaders who allow partners to opt out of using CRM or other critical firm business processes, who fail to incentivize collaboration and cross-marketing, who avoid client feedback programs because occasional negative feedback will upset partners, aren’t running a law firm. They’re running a hotel for transient lawyers and they deserve the business uncertainty that accompanies such a model.

Creating and fostering a client-focused culture starts by reviewing business priorities and assessing whether current people, processes, and tools further or hinder these priorities. Where there’s a gap, there’s an opportunity. Is it important to know all of the firm’s clients? Is it important to know if the firm’s offerings are priced competitively? Is it important to know changing trends in client demands? Is it important to know which offerings are in high demand and which are declining in demand? Is it important to know whether there’s enough effort underway to generate the revenue and profits necessary to meet the firm’s budget? For each yes answer, the leaders need to understand how this information is gathered, by whom, how it’s currently being used, or not, at what cost, and what improvements the relevant stakeholders along the information supply chain need to be more effective.

The net result of an examination of these processes is a business requirement document — and this, and only this, should be the starting point to begin looking at CRM technology. The process of selecting a tool, or a set of tools, is simply connecting the dots between what the firm needs and how well various tools available in the market meet this objective. Vendor product demonstrations should focus on how the tool addresses the firm’s specific business process rather than provide an exhausting inventory of every bell and whistle.

The financial discussion should encompass the total cost of ownership rather than focus solely on the sticker price of software. What’s our internal cost of tackling this process today? What financial gains will we obtain by improving the process? What are the financial consequences of taking no action? What new costs will we incur addressing our problems? What old costs will go away? What new training will we need? How many people or how much time will we free up by ceasing any inefficient, manual current processes? The software license price and the services fees to implement the solution are just one component of the overall puzzle.

It’s important to note that many CRM implementations in law firms today are ineffective. This usually results from buying technology in the hopes that it will change behaviors. Or buying the very expensive tools because of the allure of vast capabilities but failing to offer incentives or failing to connect these tools to underlying business processes to drive usage or adoption. Or buying a cheap tool, possibly one bundled with other software, without any examination of how well or how poorly it meets the business needs. The better approach is to invest in tools that address certain specific, defined needs, rather than to buy aspirations.

I recently ran across an example of painful CRM usage at one law firm. The firm’s client and prospect database has 45,000 contacts, only some of which are “tagged” — identifying information such as title, organization type and size, geographic location, industry, legal needs, etc., that is critical for segmenting and precise targeting of relevant content. The firm’s internal code allows partners to make their own decisions about what to market, if at all, to whom, when, and how often. The firm’s marketing department is primarily reactive to these needs. As a consequence, when a partner drafts a new 72-page white paper on some new interstate trucking regulatory change, or a partner in the St. Louis office schedules a breakfast briefing on Missouri’s independent contractor guidelines, or the Franchise Law group publishes a new blog post about co-marketing subsidies, each partner decides for himself or herself which of the firm’s 45,000 contacts should receive an email alert about this exciting news.

In the table below, we see that of the 742 email alerts published and 5.8 million emails sent by the law firm in the last year, over 1 in 10 times a partner determined that every single one of the 45,000 contacts needed to hear their particular exciting news. We also see that each contact receives an average of 3 email alerts every workday all year long from someone in the law firm. Not surprisingly, we learn that only 9% of these emails are opened, and nearly 40% are not opened by a single recipient.

In this example, the CRM technology didn’t advance the firm’s interests. The sheer volume of noise generated by the law firm undoubtedly offended some recipients. For others, the critical content that might position the firm favorably was crowded out by an overwhelming volume of unnecessary and irrelevant nonsense. CRM is a business mindset. It's understanding clients, capturing & sharing insights, addressing targeted unmet needs through relevant content, and nurturing relationships. It's NOT for spamming clients & prospects whenever a lawyer sneezes.

Firm leaders who care about clients must care about CRM. Without good CRM policies and processes, presumably well-intentioned law firm partners may ignore CRM (hoard clients) or overuse CRM (annoy clients). Professional marketers must be empowered to devise & administer effective CRM policies. It’s time for some law firm leaders to step up.

Portions of the above were previously posted on LinkedIn (here and here) and generated a number of instructive comments.

Timothy B. Corcoran is principal of Corcoran Consulting Group, with offices in New York, Charlottesville, and Sydney, and a global client base. He’s a Trustee and Fellow of the College of Law Practice Management, an American Lawyer Research Fellow, a Teaching Fellow at the Australia College of Law, and past president and a member of the Hall of Fame of the Legal Marketing Association. A former CEO, Tim guides law firm and law department leaders through the profitable disruption of outdated business models. Tim can be reached at Tim@BringInTim.com and +1.609.557.7311.