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Linked Databases: A Must For Modern Marketing
by Barbara Lewis MBA and Dan Otto MBA

We frequently receive calls from partners or administrators who have become overwhelmed with the number of databases that their law firms need to maintain. They are fed up with inputting data into three, four or sometimes even more databases. When changes occur in the information, every database needs to be updated – an inefficient method, which usually requires an excessive amount of time. And the chances for error increase substantially every time the same information is input into more than one database.

You may have a time and billing system, but your accounting is on a different system. You may have a contact management database that’s not tied to either. You may have a separate "mailing list" database or a client database that may be linked to one of the others, but not all of them.

Different departments may maintain the various systems. For example, accounting may be responsible for the time and billing system and marketing may handle the data in the contact management system. But neither system can "communicate" with each other or exchange data.

Oftentimes, critical changes are made in the time and billing system, which dictates the cash flow of the firm. However, those same changes may not be made if the database is perceived as less important to the firm, such as the contact management system. We see firms with several databases, each having some information that is the most current.

In addition to inaccuracy of data input in the various databases and the opportunity for mistakes, another drawback is that a firm with rich client information in various databases cannot take advantage of data mining, since there are no links and the manual linkage is excessively time-consuming.

Recognizing this problem, software companies have designed links between their systems and others. In addition, customized programs can be designed for linkage as well. "Bolt ons" add a feature, where information is input in one database and the data can be automatically distributed to the other databases.

Although the upkeep of several databases is an inefficient nuisance, there are other important reasons for linking the data together. With linked databases, data mining is easier and can have a substantial impact on revenues and profits. For example, an insurance company gathered data and found that Porsche owners had more accidents, so they raised the rates for owners with those cars. However, when they linked other information with the accident rates, the insurance company discovered that if the Porsche owner had another vehicle, s/he had less accidents. So the company reduced the rates and rolled out a policy for Porsche drivers who owned more than one vehicle. Many Porsche drivers switched insurance companies and the company made a hefty profit.

 

For law firms, tying revenue to client information is important. Marketing information, such as the client referral source and the client industry, linked to the clients with the largest revenues can be a blueprint for future marketing efforts.

Take for example a list by partner of top revenue generating clients in descending order for 2000. When connecting that information with data such as the referral source industry and the client industry, it’s crystal clear where the marketing should be targeted. A partner determines that half of his revenue is generated from referrals of CPAs. This partner should be marketing to CPAs. Through data mining, the partner analyzes the clients’ industries and sees that 25 percent of the revenue is generated by distribution companies. The attorney who is familiar with the nuances of a particular industry should find it easier to attract clients in that industry as opposed to one in which s/he knows nothing. And it’s more efficient to market by industry segment than it is to conduct general marketing to all industries.

Not only should annual data be analyzed, but data should be compared from year to year to determine trends. A growth in a particular industry could signal opportunities for a partner. For example, one year of revenues in a particular industry yielded a 25 percent growth. The next year the growth was 50 percent and the following year it was even more. The firm saw an opportunity that they wouldn’t have recognized if they weren’t mining data. They decided to focus on post-production work and today enjoy a thriving and profitable practice in that industry.

Your firm probably has a substantial amount of data that when linked together can provide you with historical information that can be crucial in making decisions about the future. It’s worth the time and effort to investigate and implement a real-time linkage system.

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