Commercial value of client research

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This article, discussing client research in law
firms, first appeared in The Law Society of
Scotland Journal. It is reproduced by kind
permission.
Mungo Dunnett Associates 11 Polstead Road, Oxford
OX2 6TW Tel [phone] Email
info_at_md-as.com Web www.md-as.com We operate
across a range of businesses, large and small.
Our focus is on ensuring that your activities
are geared towards the areas that are most
commercially valuable.
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The commercial value
October 2004
of client research
BY MUNGO DUNNETT
resolution ever being reached, and with a dreary
recurrence of oft-aired and still unpersuasive
views. Inconsistency and frustration   This
type of decision-making will have several effects
within the firm. There will be obvious
difficulty in establishing a definitive and
consistent view on key business issues and
frustration will be increasing, both among the
protagonists and those forced to participate in
the ongoing debate. But it will also impact on
the ability of the firm to operate profitably.
The ability and the desire to run the firm on
more rigorous business grounds is If you want to
know, and know with certainty, how you should
be operating in your local market, you must
understand your own client base becoming a key
differentiator between the mid-tier firm
struggling for scale, and the more focused firms
who are tightening up their operations. At the
heart of these changes is a desire to know to
know with real certainty, and beyond the murky
waters of subjective opinion how the firm is
perceived in its marketplace, what it needs to
improve, and where it ought to alter its
operations if it is to make the biggest
commercial impact. These are characteristics
that prevail in many types of firm, but
particularly in the collegiate/consensual culture
of professional service partnerships and more
specifically, particularly in the law
Law firms often have difficulty with their
decision-making process. The difficulty is in
establishing real clarity about how they should
be operating, where they should be focusing
and, in particular, how they should be handling
the client base. And yet it is relatively rare
for a law firm to make a dedicated effort to
understand that client base what clients think
of the firm what they like about the firm (and
dont like) and what they prefer about the
firms competitors. This is market research,
which is one of the most misunderstood and
under-rated of business tools at your disposal.
If you want to know, and know with certainty, how
you should be operating in your local market, you
must understand your own client base.
Practically irrespective of your firms size, you
cannot afford to operate without this
information.   A typical scenario   If you
honestly believe that your firm has all the
client insights at its disposal, and is therefore
able to make its strategic decisions with clarity
and confidence, take a moment to consider the
following scenario, which is all too typical.
Circular debate among the partners whether on
resourcing issues, areas of business focus, areas
for expansion, necessary improvement to service
levels or to back-office functions, and even on
the biggest issues what the firm stands for,
where they should take the firm in the next five
years, and what will be necessary for a
sustainable future? Very substantial amounts of
partner time being absorbed by these issues, but
without a proper
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sector. Law firms too often resort to making
strategic and investment decisions on grounds of
personal and unsubstantiated opinion. But they
simply cannot afford, in the current market, to
continue to make key business decisions on the
basis of gut feel and established practice. You
cant afford to carry on like this. Getting the
facts   Its a question of establishing facts.
From the facts will come clarity about the bigger
and more intractable issues. Of course, many
senior partners will swear that they have been in
the business long enough to Law firms simply
cannot afford, in the current market, to continue
to make key business decisions on the basis of
gut feel You cant afford to carry on like
this know exactly what their clients think and
want. After all, they are frequently exposed to
opinionated customers, and they meet their
counterparts regularly at industry events and
social occasions. The problem is that what
partners and senior management see and hear is
not representative. They will hear the good news
nearly all the time, but the bad news only some
of the time. Its also very unstructured what
opportunity have you to identify changing
patterns of behaviour from a 2-minute discussion
in the reception area? And, crucially, you wont
be getting the whole truth not from your
clients, not from the staff and certainly not
from your competitors. After all, would you tell
them? You dont need to install a rolling
programme of research. You arent IBM. But you
do need to know, every few years, whether what
you think is happening around you is the true
story. This applies in each of the
following areas, in each of which it is dangerous
to have only an anecdotal understanding of your
clients. A robust mechanism First, you need
to ensure that you have a robust mechanism in
place to allow you to keep tabs on your main
competitors. Customers generally have a much
better idea of how a firm stacks up against its
competitors than the firm itself does. And dont
forget that the customers perception of how you
stack up is much more important to your bottom
line than how you think you stack up. Finding out
who the competition really is, and how you
perform on the elements that customers are really
interested in, is vital. Firms are invariably
surprised to hear what the marketplace really
thinks of their own capability and reputation in
comparison to their competitors and yet it is
this perception that is the key driver of their
ability to drive revenues.   Secondly, you need
to establish a proper understanding of your own
customers satisfaction levels. This is one of
the most misunderstood concepts in modern
business. The Firms are invariably surprised to
hear what the marketplace really thinks of their
own capability and reputation in comparison to
their competitors and yet it is this
perception that is the key driver of their
ability to drive revenues concept of research is
very simple. It tells you what is really
happening in your customers world. The truth
seeing yourself as others see you.
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Then it steers your activity it tells you what
you need to improve on, how vital these changes
are, and (crucially) what is the commercial value
of your doing so. And this is at the heart of
good research it tells you how to operate more
profitably, by handling your customers in a way
that encourages them to buy more and stay longer,
and protects you from the usual demand of the
dissatisfied client cut your fees. Arriving at
informed decisions   The concepts themselves are
very simple once you know what customers like
about your firm and what annoys them this
will reveal the things you need to focus on,
Most importantly of all, it will lead you to
those improvements that may be practicable (and
cost-effective) if you are to choose to compete
more strongly either because they are real
strengths that you can make more of in your
marketing, or because they are weaknesses that
are obviously doing more harm than you imagined.
You also need to know about the customers you
dont have those who have recently stopped using
you, or those who you tried to win, but lost to a
competitor. What are the real reasons for their
decisions? This will tell you where your
competitors are operating more effectively, and
help you refine your own firms positioning.
Most importantly of all, it will lead you to
those improvements that may be practicable (and
cost-effective) if you are to choose to compete
more strongly. Face-to-face interviews are
revealing, simply because of the opportunity to
build a better rapport with customers and probe
more effectively for their real views and
motivations but these are expensive.
Questionnaires are cheap, but in research you
demonstrably get what you pay for Questionnaire
respondents will be a small proportion of the
whole, but more importantly they will not be
representative of the customer groups you need to
hear from. They are a quick fix, but to be used
with considerable caution. A much more
cost-effective form of research is usually
telephone interviews. Whichever method you
choose, dont do the research yourselves clients
will rarely tell you the full story (especially
if your firm is part of the problem), and a
skilled interviewer will uncover vital insights.
It may appear a simple process, but its a
professional skill. Establishing clarity   Once
a law firm has uncovered its actual positioning
vis-à-vis its competitors, and understood how
customers feel about the firm, it is positioned
to make informed decisions on both a strategic
and tactical level. And these are not minor
decisions either the purpose of
commercially Dont do the research yourselves
clients will rarely tell you the full story
(especially if your firm is part of the
problem), and a skilled interviewer will uncover
vital insights valuable research is to inform
the future investment decisions of the firm. The
research will tell you, with a significant degree
of detail, where the critical activities of the
firm should be focused. This must not become an
unwieldy wish list I worked recently with a firm
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how your firm is perceived by your current and
prospect customers. The feedback from a
representative, professionally handled The best
research produces uncomfortable findings, and
your firm needs to have the stomach for this.
The most common failing of research exercises
does not lie in the research itself it lies with
the firms failure to act on the findings sample
of customers will cut through potentially endless
management argument and indicate clearly what
needs to be done to improve the practices
fortunes. It will reveal insights that are
commercially valuable good research, properly
acted upon, invariably pays for itself. But
the whole exercise requires a new type of
business rigour first, to realise that a law
firm, just like any other type of business,
cannot afford to plans its activities and its
investments on the basis of unsubstantiated
opinion, and that its time to stop the circular
debate. Secondly, to undertake the research in
the knowledge that the findings will produce some
hard facts that will crystallise thought, but
will also challenge and contradict some past
thinking. And thirdly, to lock horns with the
results, accept the findings as being a
commercial gift, and act upon this with a degree
of common purpose and confidence that has been
lacking.
who had done the research, and uncovered 21 areas
of strength for their firm, and 33 weaknesses
and whose inclination was to establish 33 action
plans accordingly. It is vital that the
necessary changes and the lessons learned are
prioritised with real rigour. It is generally
impracticable for any business to take on more
than 3 major improvement initiatives, and this
should steer you towards activity plans that are
high-profile, manageable and trackable. Acting
on the findings In parallel, the process by
which the findings are absorbed, debated, and
then used to set up specific and delegated action
plans is central to a firms ability to
extract value from its research. The best
research produces uncomfortable findings, and
your firm needs to have the stomach for this.
The most common failing of research exercises
does not lie in the research itself it lies with
the firms failure to act on the findings.   A
focused customer research exercise will provide
you with hard facts about