Measuring What Matters In Your Law Firm Marketing Plan
Most lawyers hate math yet math is a critical part of any law firm marketing plan. There are three metrics in particular that are critical to the success of any law firm marketing plan.
These numbers help you not only in determining the success of your past marketing efforts, but they are also helpful in allocating funds for future marketing investment.
Below are the metrics, their historical value, and their value in your law firm marketing plan.
Client Lifetime Value
Client lifetime value is the profitability of your relationship with a client throughout the entire term of his work with you.
Measuring client lifetime value helps you understand the profit attributed to the average client relationship.
You can use client lifetime value to determine how much to invest in acquiring and deepening client relationships.
The best way to measure client lifetime value is to look at all your client relationships and determine how much money the client has invested in your firm, add up the amount of business the client has referred to you and divide that by the number of years you have had a relationship with that client.
Once you add up that number for all your clients and divide it by the total number of clients in your portfolio, you will have an average client lifetime value number for your law firm.
Client Acquisition Cost
Client acquisition cost is calculated by taking spending from a specific marketing campaign and dividing it by the number of clients that are sourced as a result.
For example: If you spend $1,000 on a direct mail campaign and you engage 10 new clients as a result, the client acquisition cost for that campaign is $100.
This is a valuable metric for measuring the success of individual marketing initiatives.
It is also valuable because it helps determine how you will allocate your marketing budget in the future.
Return on Investment
We use the return on investment calculation to determine the effectiveness of a marketing initiative.
Using the example above, if you invested that $1,000 in direct mail and the 10 clients you attracted provided you with $3,000 in new business, the return on investment from that campaign is 200%.
We use return on investment to determine the effectiveness of marketing initiatives.
These metrics are powerful when used as forecasting and decision-making tools. I’m guessing you currently do not track the data necessary to use these metrics in your law firm marketing plan. If this is the case, you can estimate them on a comparative basis and begin tracking them once you implement your law firm marketing plan.
Rest assured, these metrics will not just make you a better law firm manager and they will also make you more money.
Research Will Improve Your Legal Marketing
You must know who your client is and how he thinks. How does he make decisions? Who does he trust? How can you become his trusted advisor?
You must also be equally “in tune” with your referral sources. What do they want from you? How do they think when they refer you a case?
Understanding the way these people think is essential to great legal marketing.
How do you become familiar with the thinking of your clients and referral sources?
Do some research. Here are three ways to improve your knowledge of your target audience (clients and referral sources).
Ask Them Questions. This is the most obvious way to understand someone. Simply have a casual conversation with both clients and referral sources about how they make decisions, and about the things that are important to them.
Read The Things They Read. Identify a few specific niche markets that your clients belong to. Read the trade magazines for those industries. Trade magazines are excellent sources of information on people in specific industry groups. People are usually proud of achievements that are recognized in these trade publications. You can often interview the authors of articles and recipients of awards given by industry trade magazines. This will prove insightful.
Go Where They Go. Industry conventions and trade shows can also provide you with insight into the world of your clients’ lives and the lives of your referral sources. Once you have selected a market niche, look for trade shows and conventions that are popular among the members of these groups. Attend a few of them and mix with the people who are members.
Research is a great way to refine your legal marketing. The more tightly you target your potential clients and referral sources, the better you will be able to attract the right clients and referral sources.
Your Instant Law Firm Marketing Plan
Today I have something really special for you.
In this week’s Valtimax Podcast I outline the twelve most cost effective strategies for attracting and engaging new clients.
This is a law firm marketing plan delivered to you in a 42 minute podcast.
It’s everything you are looking for on a silver platter.
Don’t like law firm marketing? That’s fine.
Listen anyway and you’ll find some excellent relationship development strategies as well.
Here’s the link to the Valtimax Podcast that blows all the others away.
Listen and send me your feedback.
I bet you’ll love it.
You can put your law firm marketing plan together yourself or you can follow my lead.
Law Firm Marketing Predictions for 2012
This is a time of year when most people are preoccupied with New Year’s activities. Typically, readership of this website dips as many people are focused on other things.
Since it is just you and I paying attention, this is the perfect time for me to make some bold predictions for the next twelve months.
Prediction 1: Small and mid-size law firms will steal a record number of clients using value-based billing
On 2011 the most successful attorneys I know have literally stolen work from big firms because of the way they price their services.
Most clients view hourly billing as an immoral, unethical and inconvenient – if not a disgusting practice. If you offer a reasonable alternative to hourly billing, you will reap the rewards.
Prediction 2: Major search engines will change their algorithm significantly to force lawyers to abandon search engine optimization.
SEO has always been a black art practiced by college dropouts; nefarious outsourcing companies located a dozen time zones away, and a guy in his underwear at his kitchen table. 2012 will be the year Google finally slaps these folks silly.
Search engines can change their algorithm faster than anyone can adjust. Forget SEO and do some real marketing.
Prediction 3: Attorneys who focus on actual face-to-face networking will out earn attorneys who focus on social media.
This will be a bad year for socially awkward, homebound, agoraphobic lawyers.
Whether or not you realize it, you cannot Twitter and Facebook your way to a million dollar law practice.
Get off your ass and meet with people.
Prediction 4: A record number of recent law school grads will hang their own shingle.
This prediction was, by far, the easiest to make because it is already happening.
Big Law is not hiring. Kids in law school are sweating. There is no alternative. They are hanging their shingle and claiming to be fully minted lawyers. Scary but true.
Get ready for a low priced, newly licensed attorney to move in next door.
Prediction 5: Resentment, anger and frustration among Big Law Partners grows to an unprecedented level as they see the quality of life enjoyed by their solo counterparts.
Experienced attorneys (called Partner regardless of their equity stake in big law firms) will be overworked in 2012. This will occur because big law firms are not hiring inexperienced associates and because many “partners” do not know how to attract their own clients.
This overwork combined with the insatiable need to bill more hours will frustrate those “partners” who do not succumb to illness. This frustration will lead to great resentment for the solo practitioner who attracts clients on demand, offers alternative billing and sets his own hours.
Now you may not agree with any of these but it should be fun to see which of them actually come true.
The Economy Doesn’t Matter
I saw something the other day that is a great lesson on “How to make money in this economy”.
In a shopping center down the street from my home, there was a high end restaurant on one end. The place was given five star reviews by just about everyone. It had been around for 25 years. In the boom economy you could never get a table there. It was always packed and the prices were outrageous.
On the other end of the shopping center there was a Burger King. During the good times, the dollar menu was a favorite of the “mommy and me” crowd and the drive thru had a line of contractor’s trucks around the block. That place had also been there for over a decade.
Last week both places closed their doors for good. Bankrupt. Out of business.
Was it because of the economy?
Well, let’s see…in the same shopping center there is a casual Mexican joint that has a line out the door everyday for lunch. They open at 11AM and they close at 9PM. I drove by last week on three different nights and the parking lot was packed during dinnertime. It’s not fast food but it certainly is not gourmet.
Same shopping center. Same traffic. Same economy.
What is making the difference?
I can’t say for sure but here’s what I know:
I received a post card in the mail from the Mexican place when they first opened. It was a discount coupon and invitation to visit. When I went there for the first time they asked for my email address and every Monday I get their “special of the week”. They also gave me a “bring a friend for free” coupon during my first visit (so that I would return). And they asked me for my birth date (so they can invite me to celebrate it at their place with a free meal if I bring three or more people).
The gourmet place never sent me anything; never invited me to come over, and damn sure never cared about my birthday. And good old BK didn’t do anything locally to promote their business. They just relied on the scary bigheaded king character on television to drive traffic to them.
The key take away for you is this:
You have to take responsibility for your own success. Do not rely on the economy. Do not rely on the “brand” of your law firm. Do not rely on your reputation as an exceptional legal practitioner.
Make an effort to develop relationships with people who will become your clients and with the people who will refer clients to you. Invite them in. Get to know them. Show them you care.
You make your own economy. You can still do well. You just have to work a little harder and work a lot smarter than you did in the past.
Complaining about how tough things are will get you nowhere.
If you want to attract clients to your law firm you need to take action. If you are confused about what action to take, give me a call: 305.692.5531.