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.
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