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Client Profiling and Segmentation

By Derek Schutz
August 25, 2010

Until recently, law firm management has been largely indifferent to focusing on business development as an area of scrutiny in which measurable success could be achieved. Instead, many law firms chose to rely on anecdotal and institutional knowledge of “what works” to drive their strategy of finding, retaining, and growing billable hours. While this approach may work well when times are good, it is somewhat contradictory when times are bad (i.e., “what works” is no longer working). Thus, as firms have experienced rather tumultuous fortunes in the last two years and a reduction in billable hours, more and more firm managers have taken a hard look at the business development function and allowed those within these departments to expand and adapt their focus. This has led to a greater need for information and a new outlook on how business development managers look at their law firms.

One of the biggest changes (and improvements) for business development departments and their firms is the increased focus on analysis to segment their clients into meaningful groups. This does not refer to simply generating lists of your current top-producing clients (although that is important), but rather driving deeper to profile clients and group them into segments based on similar behavioral patterns. By examining these similarities and the actions the law firm took in dealing with these clients, a manager can derive usable strategies to encourage similar outcomes from both new and existing clients who are not providing the same level of value to the firm. This practice enables law firms to concentrate their limited resources on tasks that have specific and immediate actions.

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