By Mark Masson

Supercharging Client Retention with a Data-Driven Approach

This article currently appears in Strategies: The Journal of Legal Marketing.

As we eagerly await the reported revenue numbers from major law firms each year, there is a central question driving conversation in every marketing and business development group: How do we keep our clients from going elsewhere? It’s an important question, certainly, but perhaps the wrong one. If you want measurable organic growth over the next 12 to 18 months – and it can be done – then you want a client relationship-building, not client retention, initiative.

Firms have traditionally focused client retention efforts on keeping their biggest clients, or just keeping clients generally. However, client retention is not just about keeping clients. (You can quite easily spend significant resources trying to keep the wrong ones.) Rather, the focus of an organic client growth – and therefore client retention – effort is fundamentally a story about building deeper, broader and more mutually beneficial relationships where there is most opportunity.

This sounds simple in concept, but many firms start every year significantly behind due to loss of fees that they didn’t see coming. What’s more, these losses are around a blind curve: Some decline gradually, some all at once. Some leave altogether. Some decline due to the cycle of service needs, but many stem from discontent with how they have been served. Whatever the path of decline, most losses seem to be a surprise. With all the effort put forth, why is this the case?

The “Yes” Problem

The first, and most pervasive reason client retention efforts fail is marketing groups typically say “yes” to every partner, every request, all the time, and spread limited resources across the entire client portfolio. A lack of targeting and discipline will yield few lasting results in growing client relationships.

Marketing doesn’t say yes to everything because they want to do so or don’t see the value in focusing, but more because there is a lack of ammunition to support being more intentional. Managers and leaders could decline to serve the lower-opportunity requests, but which ones are they? The reality is, firms simply don’t know their clients well enough to choose. But consider this: Most retention programs begin and end with senior leaders putting in hours talking with general counsels of major clients every year. The “major client sit down” is important, but let’s be clear: It’s a business development discussion, rarely an insightful feedback session informing the growth path for broad groups of clients. Many firms also focus on retaining all clients. The depth of investigation and analytics conducted tends to be too shallow to produce the targeting insights necessary and ends with ineffective action plans.

The “Retention” Problem

Another reason these efforts fail is they focus on retention itself. Most sizable firms have hundreds or even thousands of clients they retain every year from whom they generate small amounts of revenue, are not engaged with the firm beyond a couple of attorneys, and might actually cost money to serve. If you’re going to focus on a client, the effort should be to broaden and deepen the overall relationship so they know more of the firm, work with more of your lawyers, understand more of what you can do for them and ultimately become an institutional client whose work does not rely on a singular point of contact. These are the clients worth retaining.

We’ve seen it time and time again: if you’re not building the relationship, you’re losing the relationship. Client relationships are not built on fees alone. Every interaction with an attorney, paralegal or administrator is part of the experience of your firm. Truly building a client relationship requires leveraging insight about the client’s busi­ness, how the relationship started and has progressed, the ways you’ve served them, and the administrative aspects of your interactions. Forming a more complete picture of the relationship and why it has evolved to its current state will help you understand how best to build on it.

The “Inaction” Problem

Marketing should be in the position of identifying issues and opportunities, helping to develop plans that grow clients in line with firm strategy, and enabling lawyers to take action. Lawyers must take the action and grow the client relationship. Most often, though, client retention initiatives don’t consider the effort and approach needed to change understanding and behavior among highly successful lawyers, many of whom have been practicing for decades. The world’s best plan will accomplish little unless people execute. This requires involving attorneys from the start, developing a compelling fact base and gaining traction through visible wins.

So, how should the next-generation approach to client retention look? If you are thinking “data,” you’re on the right track. But data is only the input. You must make use of the data to point the direction of client opportunities, warn when a client is becoming unhappy and create an understanding of what they care most about (even if they don’t explicitly say). Further, and most importantly, you actually need to impel action among those handling the relationship: the partners and others who build client awareness and staff teams, deliver work, and actually know the people behind “the client.”

Successful client retention efforts rely on a data-driven approach to:

  • Focus on growing the right clients
  • Build relationships (don’t just keep clients)
  • Drive change among those handling client relationships

It’s a daunting task, but there are purposeful steps any firm and marketing/business development leader can take to start the journey toward building more powerful relationships and retaining the right clients.

1.  Focus on the right clients

Several considerations are important to determine the proper targets:

  • How much fee impact could be had?
  • Would keeping the target clients advance your strategy?
  • Is the return worth the investment? Is the relationship profitable?

Building, rather than just retaining, requires a deeper knowledge of client needs than you can get from client feedback interviews.

It is important to keep big and marquee clients of course, but over-investing in clients who will stay regardless or who are already giving you as much work as they can will starve other relationships that need attention. Using Big Data and machine learning certainly is the platinum standard for identifying the clients you are at risk for losing or those with the most growth opportunity. But even before getting to that level of sophistication, you can identify opportunities and challenges by examining client journeys – both growth and decline. To begin, focus your efforts on two types of clients: those whose relationship with the firm mimics that of clients who have either grown or declined significantly in the past. Grouping the clients that grow and decline year-on-year into segments describing the significance of the change, screen the portfolio for client relationships that look similar to those with the largest fee changes but who haven’t had the same level of fee movement yet. For these high-potential targets, which would be most strategic to build? Would they shore up a strategic practice area? Build up a desired industry capability? Allow the firm to further demonstrate innovative approaches that may be a focus area? Potentially provide more profit­able work? Those for whom you can answer “yes” to these screens will comprise your starting list of high-potential target clients.

2.  Build relationships

At this point, what most firms do is create a set of client retention initiatives, such as partner conversations with the GC, feedback surveys or discounts on services. Building, rather than just retaining, requires a deeper knowledge of client needs than you can get from client feedback interviews. After all, clients are human and limited by the questions posed and top-of-mind answers. What’s more, the economic buyers may be approving the bills, but they may not always be the ones making the decisions about which counsel to use.

Better understanding your current rela­tionship and history will allow you to build upon it rather than focus on just keeping the client in the portfolio. And you have the data to do it – but what data? To determine what data to bring together, do a simple exercise. For clients who grow (or decline) most significantly, complete the following lists of characteristics that could be indicators or drivers of that growth/decline:

  • Characteristics of our current and past relationship: Have been our clients longer, have higher rev­enue per lawyer matters …
  • How we serve them: Engaged with more lawyers per matter, have a higher proportion of less experienced attorneys serving them …
  • How we market and sell to them: Have more/less experts on the pitch team, provide multi-service propos­als, have pitch teams that come from several specific practices …
  • Demographics of clients them­selves: Are in a particular industry, size range or have GCs from a par­ticular firm …

Testing each potential driver or indicator for correlation against the initial target client list indicates what might matter and which com­binations of factors might underpin various paths to growth or decline. How do growing clients look different from declining clients across these dimensions? How did clients who have grown or declined look five years ago, and which clients have the same profile now? The profiles (and there are likely several) then become your blueprints for where to focus and improve in an effort to tend and build the whole relationship.

Start simply with several categories and investigate typical metrics, then some more advanced.

You will need IT, analytics, client rela­tionship and business operations knowl­edge to bring the data together into an insightful narrative. And connecting years’ worth of necessary data can be difficult, especially for larger firms with a variety of new and legacy enterprise systems. However, the rewards are worth the costs and effort. If you’ve got the in-house talent, marshal the resources in a focused way. Otherwise, identify the gaps and leverage external help as needed to get over the hump. There’s considerable work in chang­ing behaviors and approach with partners and attorneys after the insights come, so moving with alacrity through the analytics can keep much-needed momentum and produce measurable results possibly even inside a year.

3. Drive the necessary change

Driving change requires convincing very successful people that they will be more successful by changing their approach. It may be impossible to do this without the analytics to support your recommendations. While firm leaders seem like a logical place to start (and their alignment with change will be important), it is the client-serving lawyers, particularly the client relationship partners, whom you must compel to change their behavior and take action.

  • Involve the lawyers: Rather, the whole process of targeting should start by involv­ing some influential and forward-thinking client relationship partners in developing a list of potential influencers for client growth and sorting out the stories of the targets as they come into focus. If they have played co-architect in the process, they are shapers of the recommendations and co-opted into the changes that will be necessary. Form a small working group at the outset of the initiative with the remit to develop the testing ground and translate the observations into action.
  • Think big, win small, scale fast: 10-20-30 percent growth and a revolution about how we consider client relationships may be the goal, but start small. Build meaningful and visible wins among a group of motivated partners. Senior stewards of the firm, stalled mid-career partners and new partners needing to grow into their roles are usually open-minded and willing participants. You may first want to focus on target relationships they manage as a testing ground for the recommended ac­tions and to build proof points. Ultimately, those who win personally by building their relationships will become evangelists who can scale the effort for you.
  • Institutionalize and decentralize: For the initiative to become more than a pilot and have higher impact, you’ll need to embed the behaviors in a larger audience and allow for flexibility down the road. To ensure the changes stick and practiced behaviors become habits, pair partners or small partner groups with a marketing business partner who is held accountable for impact (not activity). You’ll also eventu­ally want to develop agility at the front lines and provide lawyers access to the data. Leverage the numerous data visualization platforms available that allow end-users to view insights at different levels (cli­ent, practice group, firm). These tools are remarkably powerful in bringing insights to life, allowing you to control the data on which the visualizations are built, and they are flexible enough to meet the needs of various audiences.

It is the client-serving lawyers, particularly the client relationship partners, whom you must compel to change their behavior and take action.

If you want measurable growth inside a year, your client retention approach likely needs a makeover. Focus on clients with opportunity, leverage the vast amount of relationship data you have in order to better understand the relationship dynamics and opportunities, and drive action by involving the very people who will need to change. You’ll also need to continually evolve, as this is not a static game. Improve client approach, syndicate, learn and repeat. If you are always ready to learn something from the data and the people at the point of contact with clients, the insights will never go stale.

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