Thursday, November 18, 2010

Booz Allen: Analogies to Strategic Legal Marketing

Booz Allen Hamilton Holding Corp. (BAH) went public yesterday (see today’s Wall Street Journal). Law firm business development strategies come to mind in reading from the BAH prospectus. Chief Marketing Officers and Managing Partners might be interested in some of the benchmark data from the prospectus.

Key BAH business points include: $5.1 billion in revenue in FY 2010; 25,100 employees; 1,300 clients; and 4,900 contracts and task orders.

Of particular interest from a benchmarking perspective is that BAH enjoys an overall win rate of 57% on new contracts and task orders for which they compete, and an impressive win rate of more than 92% on re-competed contracts and task orders for existing or related business. Law firms can compare their performance on new business pitches and take action accordingly.

Translating some of the operating numbers into averages (admittedly an imperfect calculation), BAH has average revenue per client of almost $4 million. The average client engages the firm for 3.8 contracts, with average revenue per contract of $1 million. Each employee generates an average of $203,187 in annual revenue. Looks like BAH has perfected attempts at cross-selling and up-selling current clients.

Revenue has been strong in recent years (18% CAGR), which is a reflection of federal spending. The major weakness in this business model is complete dependence on one industry – the federal government. With budget deficit committee reports and DOD budget cuts in the news, the strategic focus on one market sector may backfire as government expense reduction moves to the forefront in 2011 and beyond.

Additional similarities between Booz Allen and the legal industry can be found in the BAH operating model, which the prospectus describes as being based on the following factors:

(1) Dedication to client service, which focuses on leveraging experience and knowledge to provide differentiated insights;

(2) Partnership-style culture and compensation system, which fosters collaboration and the efficient allocation of people across markets, clients and opportunities;

(3) Professional development and 360-degree assessment system, which ensures that people are aligned with the firm’s collaborative culture, core values and ethics; and

(4) Approach to the market, which leverages a matrix of deep domain expertise in the defense, intelligence and civil markets with strong capabilities in strategy and organization analytics, technology and operations.

Interesting reading! The full prospectus is available here via What is your 2011 legal marketing strategy? This @RainmakingLady, author of Courting Your Clients, is available for discussions. Contact her at 1-866-417-7025.

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