Client relationship management is an important tool in ensuring law firms retain and properly serve their clients. But not all practices are making the best of the systems they have in place, argues Chris Hinze


Since law firms first locked onto the idea of client relationship management (CRM), it has slowly become embedded in larger practices.



This drive was initially led by regional firms that grew and consolidated their position. But now most firms have invested in some form of CRM programme.



Such an approach makes sense. Research suggests that retaining existing clients as a strategy is eight times more profitable than any other type of marketing.



Firms and their marketing advisers need to look much harder at whether they are doing enough to ascertain what their clients want and whether their firm is delivering it. Otherwise marketing efforts become less like wooing and more like stalking.



So what exactly is CRM? Many firms have mistaken it as an IT-driven device. But CRM is much more than this. It is simply relationship-based marketing, something that many partners have naturally excelled at for years. The hard part has been making those skills institutional.



Where are we today?

Last year, the Professional Services Marketing Group carried out research among its members to identify trends in CRM and emerging best practice.



Some 75% of respondents had some form of CRM programme. This is reassuring - if somewhat suspiciously high. But let us assume that firms are capturing their client information in a single place and using it to drive some of their marketing activity. This requires some form of database.



Database disease

Nearly everyone said they had a database. Four out of five used databases to store data on who they know at the client, 78% to record newsletters sent and update people's interests, 70% to store information on who at the firm knows the client, and 60% on particular sector interests of the target client. These are useful but basic pieces of information.



If CRM is to add value in retaining customers and making them more profitable, then limiting a system's use to co-ordinating better targeted mailshots only marginally misses being a waste of time and effort. We need to start monitoring, on a client-by-client basis, their past purchases - the services bought, fees generated and their profitability. We also need to understand the individual relationships between the client's organisation and the firm.



Respondents fared less well here. Only 48% of respondents measured services sold and corresponding fee levels and only a third mapped multiple relationships between people. Furthermore, only 53% included financial data or a link to separate financial information.



Understanding who knows whom is vital when trying to break into new service areas because people tend to buy people. It is concerning to note how proportionally few organisations use this tool. This points to firms investing in systems but failing to use them strategically.



Lasting relationships

Relationship management is at the core of professional service marketing. Most firms accept the correlation between satisfied customers and success, so how many seek performance feedback from their clients? The answer is that two-thirds of firms conducted regular client satisfaction reviews.



However, only a small percentage of clients were surveyed. Although quantitative market research works on the principle of representative sample size, is it enough to measure quality standards for the firm as a whole based on feedback from no more than a handful of clients?



A qualitative approach may help identify indicative trends or tailor service on a client-by-client basis, but it is not a good basis for benchmarking or measuring performance across a large firm. Only 3% of respondents surveyed more than half of their clients. Is this an efficient use of resources or short sighted? Should there be a formal process of quality review and feedback after every job?



Key account management

Key account management is a common tool. Some 70% of respondents had a key account programme of some sort, particularly larger firms, unsurprisingly. The legal profession is particularly fond of this tool, with 64% of law firms employing it, compared with 50% of accountants and property firms.



But having a programme in itself does not deliver customer service. It is not the tool but how it is used that matters. Most firms seem to be using account management as an end in itself rather than a means to an end. At a basic level, 85% assigned an 'engagement' or 'client' partner to each client. But does the partner use this designation as 'gatekeeper' or 'relationship builder' to the client? Slightly more than half met the client at least once a year with a senior partner, and 65% at least once every two years.



What usefully is included in an account management programme? One basic component involves groups of fee-earners meeting to discuss the client and perhaps what other services they might be able to sell to them. But endless navel gazing without interaction with the client will not add much value.



Great intentions

Despite managing partners proclaiming CRM's importance, the survey showed it is relatively poorly resourced.



Thirty-five percent of respondents had no dedicated CRM staff and, not surprisingly, it is the larger firms that employ dedicated staff. Firms with limited resource need to ask where they will best derive return from their business development people. Brochure producers and event organisers might meet a need but what if this is at the expense of having people who can act as a 'second brain' for partners in developing relationships and revenue?



Overall, law firms have made great strides in CRM, but more work is needed to ensure these initiatives deliver their true potential.



Chris Hinze is joint chairman of the Professional Services Marketing Group