Sign up for our free newsletter.
To truly succeed, a law practice can’t rely on growth that results only from isolated circumstances, seasonal trends or provisional impulses. Instead, you establish continuity and sustainability by developing a strategic growth plan, and by managing that plan with data.
But simply collecting data is not enough — it has to be the right data.
Unfortunately, many firms fall into the trap of collecting “vanity” statistics or one-dimensional measurements that don’t give meaningful business information. For example, data points such as number of cases, number of calls, or clicks, views and opens simply report measurement information. Very little valuable business information can be extracted from this type of data.
Vanity statistics can, however, be used in calculations and transformed into useful metrics for creating a data-driven growth strategy. Think of vanity stats as the “first column” values in an Excel table, upon which formulas, calculations and pivots can be applied to generate useful outcomes.
First, though, you must determine what you want to measure, and then calculate the best method to collect that data.
Here are some tips:
1. Establish a clear time frame for each data point. Start by establishing a scope and duration for data collection. Determine the best time frame for measuring and comparing your data. Some data points are more appropriate to measure quarterly, while others should be measured weekly. Choose a time frame based on how much an activity contributes to revenue. For example, the outputs from “industry involvement” might be best measured on a quarterly basis, compared with “online marketing,” which should be measured weekly.
2. Create categories for all cost activities. Establishing categories for all cost activities makes it easier to create a measurement schedule. For each category, break down the activities into progressive steps to isolate the data points that should be collected.
3. Choose the most appropriate type of measurement. Data can be measured in many different ways: efficiency, growth, contribution to revenue, return on investment, and market penetration to name just a few. Choose the type of measurement based on the activity’s impact on revenue or its priority for business development.
4. Use relationship data as often as possible. When possible, measure the relationship of two or more data points, or the relationship to the firm’s established goals. Knowing that the firm has completed seven speaking engagements in January is not nearly as valuable as knowing that the number of speaking engagements is at 2 percent of the firm’s annual goal for speaking engagements.
5. Segment growth plans based on sensitivity to revenue. As you plan for growth, it is important to prioritize the type of data you will measure based on the sensitivity to revenue or profit. A sample growth plan could include data specifications such as these:
Successful firms build growth around insightful data points — those tied to business objectives. Moving past vanity stats and tracking relationship-driven data points will help you isolate issues more efficiently and craft business strategies for continuous, sustainable growth.
Sign up for our free newsletter.
Few firms deal with non-performing partners proactively. Instead, most opt to "wait and see" — reducing the lawyer's compensation year after year while she flounders. In my opinion, this is the ...March 25, 2019 0 1 0