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A Blueprint to Brace for a Recession

It appears that a recession is coming. Even if the Federal Reserve manages to engineer a “soft landing” to reduce inflation without causing a recession in the near future, these periods of prolonged significant economic decline over months or even years are an inevitable part of the business timeline. They will continue to happen from time to time. Even if we manage to escape it now, economies run on cycles — sooner or later that cycle will return to recession. It seems prudent to prepare for it.

DAVID JACOBS
Senior Client Advisor 
 
KELLY WAFFLE
Managing Director, Hinge Research Institute

The latest Marketing & Business Development Report for law firms and legal practices from LexisNexis® InterAction® and the Hinge Research Institute (HRI) showed that, of the functions surveyed, business development and sales were hit hardest during the COVID-19 downturn. So when the next recession comes, what can a firm do to protect ― and even grow — its business development and sales pipelines in a slowing economy? Learn from the firms that have been surviving and growing during the recent pandemic-driven turmoil.

The High Growth Study 2022: Law Firm and Legal Services Edition examines the most important challenges facing law firms today and examines the steps that high-growth firms have taken to address them. The strategies that have made them successful during the economic uncertainty of the last few years can provide a roadmap for any practice to maintain and grow in economic downturns.

In a recession, the key to survival is to continue getting new clients in the front door, while keeping existing clients from slipping out the back door. That’s not significantly different from the everyday challenges of client management, but the stakes get higher as clients and potential clients are under greater pressure to reduce amounts spent on professional services. One of the most important tools to meet this challenge is a client relationship management (CRM) system. 

MEETING THE CHALLENGE — CLIENT RELATIONSHIP MANAGEMENT 

In fact, the aforementioned study showed that effective use of CRM is a key differentiator between high-growth and low-growth firms: High-growth firms have a 100% greater reliance on CRM systems compared to their no-growth counterparts.

While effective CRM strategy is supported by information technology, it’s not enough just to buy CRM software and roll it out. Rather, CRM is a client-centric business strategy that combines internal processes and external networks to create and deliver value, resulting in more business opportunities with new and existing clients. It relies on high-quality, prioritized data, and it’s enabled by information technology.

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ALA Job Bank
 

Firms that successfully implement CRM integrate and align it with their strategic goals and business plan. They use a documented CRM strategy that’s tied to the business plan by supporting the firm’s marketing and business development initiatives, and they regularly review results and update the strategy. The change management process for CRM should focus on three areas:

  • Communication: Everyone expected to use the CRM system should understand how the system benefits themselves and the firm. Most importantly, the firm should answer the following two questions for each user: “What does this change (CRM) mean to me?” and “What’s in it for me?” Use a variety of communication mediums that provide a feedback loop. Email is the least preferred as most professionals receive 50 to 60 emails every day.
  • Training: All participants need the opportunity to develop their skills, behavior and attitude to achieve maximum benefit from the system. CRM by itself does not create new business processes, but rather is integrated into existing business processes to make tasks easier and more effective.
  • Motivation: Those implementing the system need to provide users with incentives to learn and improve their skills within the CRM system. Motivate users by communicating success stories. For example, if a lawyer successfully cross-marketed a client by using CRM relationship intelligence, describe how she achieved that so other users can replicate her success.

Another area where high-growth firms show a significant difference from their no-growth counterparts is the use of outside experts and automation platforms to make sure that billable professionals can focus on client service. The same survey showed the high-growth group was 43% more likely to rely on marketing automation platforms; they also showed a significantly greater reliance on email marketing platforms and experience platforms to do some of the most important marketing tasks more efficiently. Platforms like these also provide more effective data on how the clients respond to the campaigns.

“With so many indicators pointing toward a recession, it’s a critical time for all firms to look at the factors that have helped high-growth firms outperform their competition in recent years.” 

With so many indicators pointing toward a recession, it’s a critical time for all firms to look at the factors that have helped high-growth firms outperform their competition in recent years. The results show clearly that this group has:

  • Doubled down on strategic investments in marketing and business development technologies like CRM.
  • Relied on third-party expertise for valuable outside opinions in specialized areas.
  • Followed the advice of those consultants to deliver clear messages to the market about brand differentiation.
  • Listened to their clients through the use of marketing analytics.

If the economy does slow down, it’s likely that these practices will further distance the leading firms from those that are reluctant to adopt them. 

 

About the Authors

David Jacobs is the Senior Client Advisor, and Kelly Waffle is the Managing Director at Hinge Research Institute. 

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