WELCOME

Building Reporting: Marketing and Business Development Metrics

Jim Stapleton,CMBDO, Littler Mendelson PC Steve Bell, Chief Client Development Officer Womble Carlyle Sandridge & Rice LLP Adam Severson, Chief Marketing & Business Development Officer, Baker Donelson Dr. Silvia Hodges, Principal at Silvia Hodges LLC and Adjunct Professor of Law at Fordham University School of Law l

January 18, 2012

3

3

Outline of Today’s Program

• Trends in law firm marketing and sales ROI

reporting

• Why metrics are important

• What can/should be measured?

• Real-world examples of measurement systems

• Tools that capture and report ROI

1980s 1990s

2000s

2010s

1980s 1990s

2000s

2010s

DuPont Legal Model

Convergence trend

Offshore services centers AFAs

ACC Value Challenge

Real Rate ReportTM

1980s 1990s

2000s

2010s

DuPont Legal Model

Convergence trend

Offshore services centers AFAs

ACC Value Challenge

Strategic Procurement

Reverse auctions

Chief Procurement Officers

Real Rate ReportTM

1980s 1990s

2000s

2010s

DuPont Legal Model

Convergence trend

Offshore services centers AFAs

ACC Value Challenge

Strategic Procurement

Reverse auctions

Chief Procurement Officers

Procuring of engineering &

architectural services

Procuring of

marketing services

Procuring of accounting services

Procuring of legal

services Real Rate ReportTM

1980s 1990s

2000s

2010s

DuPont Legal Model

Convergence trend

Offshore services centers AFAs

ACC Value Challenge

Strategic Procurement

Reverse auctions

Chief Procurement Officers

Procuring of engineering &

architectural services

Procuring of

marketing services

Procuring of accounting services

1995: “Marketing Models” (Lilien/Kotler)

1997: “Marketing Accountability” (Shaw)

Since early 2000s: explosion of books & articles on ROI marketing

Since 2008: significant uptick in ROI marketing discussion in legal industry

Real Rate ReportTM Procuring of legal

services

W h a t d o y o u m e a s u r e ?

Show me your numbers

1. Have your lawyers been briefed on your

marketing performance?

2. Does your finance department understand

the contribution of marketing?

3. Do you have specific plans to improve

marketing‟s ROI?

4. Is the marketing budget typically the most

likely/first to be cut?

5. Are partners critical of marketing‟s lack of

accountability?

12

The Desired State

• Expanding relationship

• World-class service

• Get first assignment

• Present solution

• Follow up

• Face-to-face meeting

• Get the meeting

• Research & prepare

• Target

• Know ourselves

13

A Sales Process

• Know ourselves

• Target

• Research & prepare

• Get the meeting

• Face-to-face meeting

• Follow up

• Present solution

• Get first assignment

• World-class service

• Expand relationship

Where do YOU fit in?

KNOW OURSELVES

TARGETS

RESEARCH & PREPARE

GET THE MEETING

FACE-TO-FACE MEETING

FOLLOW-UP

PRESENT SOLUTION

GET TO YES

WORLD

CLASS SERVICE

EXPAND RELATIONSHIP

Sales Target Form

Sales Pipeline Report Form

Affirming Staff Sales Success Claims

• E-mail to partner asking for affirmation and

commentary

• Link to survey site

• Level of contribution

– 1 = instrumental

– 3 = significant but backroom

– 2 = in-between

• Dialogue box for additional comments

Monthly compilation

Client/# Attorney Sales

Director

Le

ve

l

Comments

AAGenCo/125

8

Rutley Bell 1 “Bell is a sales genius.

Double his bonus.”

A Bank/248562 Benn Stogner 2 “Good face-to-face

support at critical sales

meetings.”

B Co/641832 Dunlevie Newman 3 “Excellent research

and preparation of

materials.”

Constro

Trucks/858431

2

Brunstett Bost 1 “Daryle stays in touch

with client and initiates

new meetings and

opportunities.”

Sales Annual Report - Qualitative

• Big picture editorial analagous to partner “one-

pager”

• State of the Client Development Department and

Committee

• Aggravating and mitigation marketplace factors

• Updates on assigned initiatives

• Updates on unexpected initiatives

Sales Annual Report - Quantitative

Measuring Success

• Indicators of success beyond hours and revenue:

– In-person meetings

– New introductions

– Post-matter reviews

– Client visits/CFIs/CLEs

– Speeches/articles/association activities

– Pitch opportunities

Documenting Sales Success

Sales Annual Report Quantitative

Measuring Success

• Indicators of success beyond hours and revenue:

– In-person meetings

– New introductions

– Post-matter reviews

– Client visits/CFIs/CLEs

– Speeches/articles/association activities

– Pitch opportunities

Business Development Hours

• Are all hours created equal?

• Face to Face versus other business development

hours. Which are more fruitful?

• Should you have a minimum?

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

0 50 100 150 200 250 300 350 400 450 500

Ori

gin

ati

on

s

Hours

Basic Originations and BizDev Hours

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

2008 O

rig

inati

on

s t

hru

Au

gu

st

% of hours spent on face to face BD

Face to Face and Originations

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

2008 O

rig

inati

on

s

Hourly BizDev Applied Score

AVBDF originations

Business Development

Pitches / RFPs

New Work, New Clients, Client Successes

Client Successes

New Clients

New Work

Awards & Rankings

Business Development – Client Specific Activity

Flint Hills

UHG

Wells Fargo

U.S. Bank

CoBank

Boston Scientific

Hormel

Target

Coloplast

Thomson Reuters

Donaldson

Sorin

3M

Seagate

Market Visibility

Internet Marketing

Public / Media Relations

Key Initiatives

Q3 PR highlights:

Practice / Industry Support

Key Initiatives

Materials and Collateral

Practice / Industry Support Cont.

Events

Regional Event Highlights

Practice / Industry Support Cont.

Industry and Association Involvement

Metrics or standards of measurement that link

marketing activities more objectively & closely to the

financial performance of the firm

Enhance the credibility of the marketing department

Improve the effectiveness & efficiency of marketing

activities

Guide continuous improvement over time

Enable marketing to move from discretionary

business expense to strategic investment

Key Performance Indicators (KPI) are metrics chosen

to give indication of performance and serve as drivers

of improvement.

Benchmarking is the process of comparing one‟s

metrics to industry best practices or best practices in

other industries.

10 Characteristics of an Ideal Metric

1. Relevant: addresses specific pending action

2. Predictive: accurately predicts outcome of pending action

3. Objective: not subject to personal interpretation

4. Calibrated: means the same across conditions & cultures

5. Reliable: dependable & stable over time

6. Sensitive: identifies meaningful differences in outcomes

7. Simple: uncomplicated meaning & implications clear

8. Causal: course of action leads to improvement

9. Transparent: subject to independent audit

10. Quality assured: formal/on-going process to assure 1-9

(from: Marketing Accountability Standards, Practices & Processes Underlying the Development & Management of an “Ideal Metric”, October 2010)

Establish Your KPI

1. Decide which metrics are useful for you based on critical processes/client requirements

2. Choose the appropriate tool (software)

3. Install and test (pilot the most important KPI first)

4. Establishing target which the results can be scored against

5. Analyze data to make decisions

Growth of Business KPI

• # new clients

• Market share

• # clients by target market segment

• Share of client‟s wallet

• Cost of new client acquisition

(This and the following slides are from: Mike Mabey and Stephen Mabey, “Law Firm Key Performance Indicators” and

Fred Quenzer, “How to „Intelligently‟ Run a Law Firm,” both in: Strategies Magazine, September 2011, V13.N06)

Results to efforts ratios

• Proposals won/total proposals

• Seminars-to-leads

• Networking-to-leads

• Revenue growth by service

• Revenue growth by practice area

• Profitability by client

Marketing activity measures

• Seminars presented

• Ads places

• Interviews conducted

• Articles written/published

• Press releases placed

• # partners/firm quoted or mentioned in press

• Trade shows attended

• Hits to landing page

• Referral links from other websites

Service level KPI

• Growth: # matters per client

• Cross-selling success: # practice areas serving client

• Breadth/depth of the relationship: # lawyers with time on

matter

• Client growth rate: First time clients/total number of

active clients (=handled matter in last 3-5 years)

• Dormant client percentage: Clients not handled matters

for in last 3-5 years/total number of clients

• Average fee per client: fee revenue/number of clients

billed

• Net Promoter Score (Do your clients recommend you?)

Financial KPI

• # unbilled days

• # uncollected days

• Realization rate

• Net income as a

percentage of revenue

• Average net overhead

• Revenue per square foot

• Revenue per fee earner

• Revenue per employee

• Revenue per matter

• Percentage at point of

billing

Operational KPI

• Billable hours per full-time equivalent timekeeper (FTE)

• Percentage of partner hours

• Billings per FTE

• Average bill rate

• Utilization

• Ratio of billed-to-work rate

• Number of matters opened

• Staffing ratio

• Number of billable hours per legal assistant FTE

• Cost recovery revenue per matter

W h a t i s i n y o u r s c o r e c a r d ?

“Whether or not business worsens, one

t h i n g i s n e a r - c e r t a i n , h o w e v e r :

Corporations are going to pay even closer

attention than before to the performance

of shared services, such as the legal

d e p a r t m e n t .

GCs everywhere will have to measure up

to the exacting standards set by the CEO.”

(from: Nigel Holloway, “Taking Your Measure - Why all the data?

To show how much the department is worth to the rest of the enterprise,”

Corporate Counsel, Dec. 1, 2011)

What your clients measure & you should, too

• Quality - whether good, poor, or acceptable results

are routinely achieved

• Cost - not just rates, but the overall price paid to

achieve results

• Service - the level of responsiveness and

compliance with required processes

• Speed - how quickly matters or tasks are resolved

• Innovation - the application of novel solutions to

issues or matters

Clients‟ KPI

• Legal spend month over month

• Matter spend by duration

• Legal spend breakdown by practice area

• Open to close ratio–month over month

• Monthly spend

• Top cases by spend

• Top vendors by spend

• Law department budget to actual

• Billed rate by role–year over year

• Practice area blended rate–year over year

• Total spend by vendor

• Rate review & comparison

• Top firms by evaluation

• Ratio of low to high severity cases

• % of matters with budget

• % of matters with assessment

• % of matters with status updates

• % of matters handled via AFAs

• Firm staffing profile

Strategy

Report

Analyze Visualize

Operationalize

Compare

Mine

Predict

Monitor

Monitor Systematically monitor for key

activities and events influencing

performance

Predict Predict potential performance

based on data correlations

and advanced modeling

Mine Mine internal and external

data for correlations to

outcomes, costs, and

other key performance

drivers

Compare Track performance

against strategic KPIs and

industry benchmarks

Operationalize Leverage data for strategic and tactical

decision-making by front-line teams

Visualize Develop graphs, charts and dashboards to

better understand, summarize and

communicate analysis to stakeholders

Analyze Isolate key data that identify both

positive and negative performance

Report Query historical data

to understand history

and present state

LEGAL PERFORMANCE MANAGEMENT CONTINUUM

©Copyright 2010, TyMetrix. All rights reserved.

www.cttymetrix.com

Survive

Succeed

Transform

A mat ur i t y model f or usi ng dat a dr i ven deci si on maki ng

• Better understanding of where rates fall in relation

to market standards

• Insight into what areas of expertise attract premium

rates

• Identify where and how to differentiate the firm‟s

value

• Create a more informed service delivery model that

meets clients‟ needs

How this can help

Industry Benchmarks Firm Baselines Score

Duration

Avg Legal

Expense

Avg

Resolutio

n

Whole

Case Cost

Avg Legal

Expense

Avg

Resolutio

n

Whole

Case Cost

<= 12

Months $3,307 $5,000 $8,307 $5,000 $2,500 $7,500

13-36

Months $10,677 $15,000 $25,677 $9,000 $14,500 $23,500

37-60

Months $56,691 $75,000 $131,691 $67,000 $85,000 $152,000

>60

Months $8,687 $150,000 $158,687 $90,000 $0 $90,000

ANALYSIS OF LITIGATION CONTRACTS

Base $179

Denver +$ 0

100-Lawyer Firm +$ 9

5 Years’ Experience $ 25

Associate + $ 0

Employment Practice Area + $ 0 TOTAL $213/hour

Base $179

New York +$131

1,000-Lawyer Firm +$ 90

2 Years’ Experience +$ 10

Associate +$ 0

Non-Key Practice +$ 0 Area (Employment)

TOTAL $410/hour

Base $179

Minneapolis +$ 0

300-Lawyer Firm +$ 27

20 Years’ Experience +$100

Partner +$ 98

Key Practice -$ 30 Area (Litigation)

TOTAL $374/hour

From the CT TyMetrix/Corporate Executive Board 2010 Real Rate Report©

Location

Size

Experience

THE REAL RATE REPORT LAWYER PRICING MODEL WHAT MAKES A 2ND-YEAR ASSOCIATE MORE EXPENSIVE THAN A 20-YEAR PARTNER?

• Rates have increased faster than any other key

measure of inflation in past 10 years

• Lawyers were billing at higher rates in 2009 than in

2007 or 2008

• Associates had the greatest increase in rates

• Volume discounts? Oh no: Spending more with a given

firm meant paying higher rates

• Similar types of matters – different billing rates for

different clients

• Expensive locations: NY, DC, LA, San Francisco add

$131 to a lawyer‟s hourly rate

Data mining results reveal