The executive director of commercial and strategy at LexisNexis Pacific has revealed how firms can implement a best practice approach to understand the value of their clients and how they can further contribute to profitability.
According to LexisNexis Pacific executive director of commercial and strategy Bree Moody (pictured), firms can utilise big data and analytics to strategically target clients across the breadth and depth of their portfolios.
“Even if you don't have the budget or tools to take on a significant system or consultant, there are three areas that I would still encourage you to look at,” Ms Moody said, speaking at Lawyers Weekly’s recent Future Forum.
“The first is a lifetime value assessment. Regardless of the size or focus of your firm, all firms should have a lifetime value assessment of [their] client portfolio.
“This is where you should examine your full client history over a long or longer stretch of time, let’s say five years, rather than merely on how much revenue a client has produced for you in a previous year.”
Ms Moody said this type of client profiling ensures firms can identify clients who have large capabilities but may have been left off current “top client lists” because they haven’t provided as much work in recent years, in comparison to newer clients.
“It's human nature to focus on the new and exciting clients, but you do have to be careful that you don't begin to neglect your older, more stable clients, and particularly if their billable hours have slightly reduced,” she said.
“Report on your activity overtime, compare results and metrics over years and quarters and try and have rolling periods in which you assess your customer trends.”
Secondly, Ms Moody advised firms to identify clients who have shown cross-selling tendencies.
“Which verticals did they come from? In addition, which practice area did they enter your firm through?” she said.
“This is going to help you develop an unbiased view about the practice areas and genuinely attract new clients to your firm who will do multiple areas of work across multiple practice areas.”
Lastly, Ms Moody said firms should perform a detailed segmentation analysis and consider separating customers into at least four buckets.
“Who are those customers that deliver the most amount of work most consistently? These are the customers most valuable to you,” she said.
“Who are the customers who deliver the largest amount of work but less consistently? Try and determine why that is and what conversations you can have to increase that consistency.
“Who are clients that deliver less work but on a consistent basis? These are the good ones to have a look at, specifically for profitability.
“And who are the clients that deliver less work on a less consistent basis? Is there an opportunity to move them up the value chain and really assess the value in continuing to work with that type of client group?”