Using Sales Analysis To Chart Your Firm’s Future

Without planning, your firm’s decisions tend to be based on reactions to events and erroneous assumptions. Without planning, you cannot hope to run your firm like a business, prepared for the future as well as reaping the benefits of the present good economy.

A sales analysis can be an effective tool in your firm’s long-range planning. Based on the past performance of its major clients, partners and practice areas, your firm can project what it expects to do in the future.

Structure the sales analysis report so that it provides the following information:

• Client,
• Practice area,
• Responsible attorney,
• Originating attorney,
• Referral source,
• Current year’s billings, and
• Prior year’s billings.

Try to maintain the analysis on a monthly basis so that it can be used for a 12-month projection of revenue. Review and update the report each month.

It’s best to prepare the schedule on a spreadsheet package. This generally means information must be extracted from the manual or computerized time and billing system and input into the electronic spreadsheet. You may consider using a report writer to generate this type of information, but using the spreadsheet software is generally more effective.

You may also benefit from developing a grid of services for your clients. This report can help you spot potential services for current clients and cross-selling opportunities between different practice areas of the firm. This type of analysis should be maintained by each responsible attorney and reviewed by the managing partner on a regular basis.

Strategic Plan

The sales analysis can be put to a number of specific uses that can help in planning the firm’s future growth. Sales analysis is a crucial element of overall strategic planning. Strategic planning should include annual and three- to five-year projections based on:

• Practice area,
• Responsible partner, and
• Major clients.

To help alleviate the stress that attorneys feel over wondering where future business will come from, firm revenue should be segmented by various groupings. Segmenting the firm’s revenue by area of law is especially important in changing economic times because it might be necessary to shift the type of law the firm practices in order to remain profitable. For instance, a firm that handles corporation, litigation, real estate and tax work may find it necessary during an economic turndown to shift from real estate to other more recession-proof areas such as ERISA law or estate planning.

To visualize this shift, it is necessary to break down the expected revenue by these various categories. Once an annual revenue goal is determined for each category, develop a marketing plan for each practice area. Partners must share the marketing plan with other staff members who will be involved in the particular practice area.

One objective of the strategic plan should be to increase services to particular clients that are listed on the sales analysis and to target potential new clients. The major points to keep in mind here should be (1) how well you’re servicing existing clients and (2) what you’re doing to increase business.

It is also important to project annual revenue by responsible partners. An effective plan clarifies what is expected of each professional in the firm. This projection should not be that difficult because you can usually identify responsible partners in a particular practice area within the firm.

Cross-Selling

The sales analysis is also useful in the cross-selling process. Attorneys should know what services are provided to the various clients and whether there are any “crossovers” between practice areas. Involve the managing partner or other designated partner in this process and constantly follow up with various attorneys to make sure that they are thinking of new cross-selling opportunities.

To aid in this cross-selling approach, develop an inventory of lawyers’ skills and distribute it to all attorneys and support staff. The managing or designated partner should meet with the various responsible partners to review the sales analysis; these partners can then be assigned specific clients to whom they can cross-sell other departments within the firm.

One truth is important to remember: It is often easier to sell another attorney’s skills to a client than it is to sell your own. Therefore, cross-selling represents a tremendous opportunity to increase services to your existing client base.

Marketing Plan

Finally, the sales analysis can be used to refine or define the firm’s marketing plan. As discussed, the marketing plan should be developed by practice area. Also, the sales analysis will provide information on the sources of new business, whether from existing clients, accountants, insurance professionals, bankers, speaking engagements, newsletter leads, proposals or others. Information on referral sources can be used to target marketing dollars to the right area.

Use Analysis To Your Advantage

A sales analysis will help to focus the partners’ collective attention on the key ingredients of operating a profitable law firm. The analysis is a catalyst to help generate the actions necessary for the firm to achieve its goals.

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