As your law firm grows, dealing with the increased number of clients can become complex. After all, you need to keep tabs on what the current situation is with each client, as well as any communications you need to make with such clients in the future.
Additionally, as you’re servicing existing clients, you’ll also have to manage inbound inquiries from potential clients who are interested in using your services. When dealing with these individuals you need a way to record details about their situation, so that you can effectively take them from being a prospective client to an actual client.
Most marketing-savvy professionals and businesses use a ‘Customer Relationship Management’ solution (CRM) to address the communication and organizational challenges.
In this article, we’re going to look at what CRM entails and how you can use a CRM tool to ensure the smooth operation and growth of your firm. We’ll go through the benefits of using a CRM tool, as well as how you can get the best results when using one.
What is a CRM solution and how does it differ from practice management?
Many lawyers confuse CRM solutions with practice management software.
Practice management software is typically designed to help you manage existing clients and the overall smooth operation of your firm. Using such a solution you’re able to monitor and manage the development of existing cases that your law firm is dealing with, including billing.
A CRM solution, however, is designed to help you effectively manage prospect information so that you can grow and market your law firm with greater ease. It does this by helping you to keep track of inbound inquiries, their status, and what should be done to move them towards signup as clients.
Using a CRM database, you can create a centralized source of information that all partners in your law firm can use. Having such a database helps improve the efficiency of your firm, while also increasing the odds of discovering new revenue generating opportunities – all of which we will examine in further detail later in the article.
For now, remember that in most cases you’d be hard pressed to find practice management software that provides the same results as a dedicated CRM solution. And a good CRM solution like the one James provides can also automate many practice tasks, including form completion.
What are the benefits of using a CRM solution?
Estimates suggest that around 34% of law firms are currently using a CRM solution. When asked, 50% of respondents ‘agreed’ and ‘strongly agreed,’ that their CRM solution was providing measurable results, with over half also stating that a CRM solution allowed for ‘better client relationships.’
The same report listed the following benefits, as mentioned by law firms, when it comes to using a CRM solution.
- Increased collaboration between team members
- Improved ‘efficacy’ when serving clients
- Cost savings
- Increase in revenue and profitability
Many firms found that as relationships with clients improved (as a result of using a CRM tool), so did financial outcomes.
For instance, because of better client relationships, firms were now able to reduce attrition – meaning clients stayed with law firms for longer, thereby increasing the lifetime value of a client. Improving the relationships you have with your existing clients means that there will be less pressure for you to go out and win new business and spend money on marketing campaigns.
Keeping existing clients happy can be hugely profitable for your law firm, as in doing so you’re able to simultaneously cut costs and bring in new sources of revenue.
Varying studies have found that it is 5-25 times more expensive to obtain a new client, than it is to retain a client. Furthermore, 48% of law firms cited an ‘improved ability to cross-sell,’ when using a CRM solution – further improving the ability to generate revenue as a result of using a CRM.
If you can use a CRM solution to aid you with cross-selling your services, you’ll improve the chances of clients sticking around with your firm for a longer period time. All of which allows for you to benefit from the research mentioned above.
How a CRM solution can improve your marketing efforts
Knowing which marketing channels are providing the best results is valuable information. That’s because you can use such insights to educate where you should direct your marketing efforts in the future – as well as where you should stop spending money.
As you can see below, not many firms are tracking the ROI of their marketing and business development initiatives.
This second chart, further exemplifies the point that most firms only track the bare minimum, and don’t keep track of data that could help improve future firm growth.
Failing to track the right metrics will make it difficult to optimize your marketing. The problem, however, is that keeping track of metrics, which marketing channels are working and the ones that aren’t, can be a struggle – especially when you’re juggling everything else that comes with being a lawyer.
If you can track the right data, though, you’re provided with a competitive advantage – and with a CRM tool, you can make this possible. Let’s look at how this might work.
Suppose you have an inbound inquiry from a potential client. Upon receiving this inquiry, your CRM solution will create a contact file for the prospect.
When speaking to this potential client (and any other potential clients), you can ask them how they came to find you and what led to them calling you: organic search, pay-per-click ad, seminar, referral, review, etc.
After running your marketing campaigns for a month or so, you can then review all the information coming from your inbound inquiries, and judge how you should adjust your marketing budget and efforts to bring better results in the future.
You can also use your CRM solution to better manage the process of turning a prospect into a client.
It’s easy to forget that you need to follow up with a prospect with whom you were talking to just a couple of days ago. Yet by using a CRM solution, you can easily set up reminders that will help you keep track of what needs to be done in relation to specific clients. You’ll also be able to better track all the communications you’ve had with potential clients, and what steps you need to take next to turn them into paying clients.
Having such information can ensure that potential clients are dealt with efficiently, and that they aren’t experiencing any frustration due to you forgetting to act on something.
How a CRM provides a competitive edge that makes price less of an issue
Competing on price is hard. In fact, pricing is one of the top challenges law firms face when it comes to winning new business.
If your prospects and clients feel as though you’re thoroughly tapped into their needs, and that you understand who they are, they’ll most likely trust you more. This often leads to them being more willing to work with you now, and on any future cases that they might have to deal with.
When clients are working through the sensitive topics that often surround court cases, working with someone that they like and trust often beats working with someone who’s cheaper, but less in tune with their needs.
Using a CRM solution allows for you to build solid relationships with the clients and prospects engaging with your firm – providing you with an edge that’s hard to beat using price alone.
How to get the best results from a CRM solution
Just implementing a CRM solution won’t bring results in and of itself. You and your CRM provider need to make sure that the partners, associates, paralegals and staff are using the solution effectively. Lackluster employee buy-in will lead to a CRM solution delivering little to no results for your law firm.
In fact, 33% of firms have stated that ‘lack of employee buy-in,’ is one of the main reasons that a CRM solution did not work out for them.
Thankfully, there are some proven tactics that you can use to get members of your law firm to ‘buy-in’ and use a CRM solution.
First and foremost, make sure your CRM provider offers regular and adequate training on how the CRM solution can and should be used.
Second, the more that people use CRM tools and as more data is entered into them, the more helpful the CRM. You need to make sure, therefore, that everyone is using and entering information into the CRM system on a consistent basis.
There are a couple of ways in which you can encourage people to enter information into a CRM system consistently, over a long time horizon. The first is by your CRM provider explaining how a CRM tool can be beneficial for them, and the firm as a whole. You may also want to create certain rules, within your law firm, ensuring that the CRM is used during vital moments.
Growing a law firm is no easy task. With so many firms trying to compete for clients, setting yourself apart from the competition can be a challenge.
Building better relationships and providing a better client experience, however, is something that can help you stand out. Better relationships mean more trust. And increased levels of trust can lead to more business, as well as more repeat business and more referrals.
If you want to build better relationships, CRM tools can help.