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By Sally J. Schmidt
Your firm may or may not have a formal marketing budget, and it may or may not have a formal marketing plan. But if your firm is like most, it does spend money on marketing, whether on Web sites, e-newsletters, client entertainment or other activities. What’s the payoff?
Whenever money is being spent on marketing, the age-old question is bound to arise: Is it working? It is both logical and legitimate to wonder if the firm’s investment is producing a return. Yet few firms implement the activities that would allow them to measure their return on investment (ROI) for marketing. If you want to track success, you need some measuring sticks.
I have had the pleasure of working with two law firms that have implemented recent marketing initiatives that were not just innovative but also successful. The first firm hosted a series of networking events targeting prospects and referral sources. Very few existing clients were invited to the functions, at which the lawyer-to-guest ratio was 1 to 3. The events were not inexpensive, running about $25,000 each. But the return was remarkable—the firm opened more than $750,000 in new matters for these prospects and referral sources in the months following the events.
The second firm developed a comprehensive, integrated business development program. Working with selected partners, the initiative involved 18 months of focused assistance in the form of training, coaching, mentors, individual plans and peer groups. The cost of the program was about $150,000. At the end of the 18 months, fee receipts had collectively increased by $7.7 million, or 79 percent. Six participants reached $1 million in fee receipts for the first time.
Would those prospects and referral sources have sent business to the firm without the events? Perhaps. But I’m sure no one would have expected three-quarters of $1 million worth. Would those partners have increased their books of business without the training and coaching? Maybe. But it’s unlikely it would have been by nearly $8 million.
So what’s the proper way to measure the return on your marketing investment? It’s a complex answer. The measurement method will vary depending on the nature of the initiative. In some cases, new business is the logical result. In other cases, you might instead measure visibility, new contacts or inquiries.
To help guide you, the following are some examples of marketing initiatives, both strategic and tactical, along with possible ways to measure their success.
Marketing initiative: The firm launches a new "branding" campaign with a shortened firm name and positioning statement.
Factors in measuring ROI: An increase in awareness levels of the firm (measured through external research); desired changes in perceptions of the firm (measured through external research).
Marketing initiative: The firm develops a direct marketing campaign to CPAs about tax litigation services through a series of regular e-alerts.
Factors in measuring ROI: The number of referrals received from the targeted CPAs; the growth of the distribution list; the number of personal contacts made with the targeted CPAs; the number of inquiries from e-alert recipients; the traffic increase to the tax litigation page of the firm’s Web site.
Marketing initiative: The firm launches a new office location.
Factors in measuring ROI: The dollars generated by the office; new files generated by the office; the total number of clients using the office; the number of existing firm clients who begin using the office; the number of timekeepers in the office; the hours billed by the timekeepers in the office.
Marketing initiative: A lawyer attempts to reposition his practice from insurance defense to commercial litigation.
Factors in measuring ROI: The number of commercial litigation files; the number of commercial litigation clients; the dollars generated by commercial litigation files or clients; the percentage of the practice represented by commercial litigation versus insurance defense work; the hours billed in commercial litigation.
Marketing initiative: The firm runs an advertisement offering a free preview of its new online employment-training program.
Factors in measuring ROI: The number of inquiries to a toll-free number; the hits on the Web site page with the tutorial; the number of requests for more information; the number of companies that took the tutorial who convert into paying clients.
Marketing initiative: The firm launches a PR campaign around its nursing home practice.
Factors in measuring ROI: The number of feature articles written about the firm’s nursing home practice or lawyers; the number of times that firm lawyers are quoted in quality publications serving the industry; the comparable value of the space taken up by articles about the firm (using ad rates) in the targeted publications; the increase in the number of visits to the nursing home practice description on the Web site.
Marketing initiative: The firm hosts a series of seminars for the ethanol industry.
Factors in measuring ROI: The number of quality attendees (i.e., those identified as desirable clients); additional files received from clients who attended the seminar over a period of three months after the seminar; new files received from prospective clients who attended the seminar; the number of people requesting follow-up (and the contacts subsequently made).
As the preceding examples illustrate, there is no one-size-fits-all formula for gauging the success of your initiatives. You will need to choose your measuring sticks on a case-by-case basis.
While the factors for measuring ROI will vary, there are some actions you should undertake to gauge the payoff of any initiative. If you would like to do a better job of tracking your marketing success, here are some parting thoughts.
Benchmark. Benchmarks will give you the "before" measure against which you can compare your "after." If you haven’t benchmarked your firm’s level of name recognition, for example, you will never been able to measure the impact of an advertising campaign. Benchmarks can be internal (such as number of clients) or external (such as market awareness levels).
Track. To measure, you need to have a way to capture information. This could include any number of tools, from your file intake process that collects the sources of business, to toll-free numbers that track inquiries from different activities, to an accounting system that measures growths in practices, to a phone survey that measures name recognition levels.
Invest. You need a proper investment to see a return. Many firms see scant results from their marketing efforts because they are not investing enough to make them effective. In the United States, the average law firm marketing budget represents 2.4 percent of gross revenues. However, the longer firms are engaged in marketing, the more they tend to spend. And this doesn’t even measure the cost of the lawyer time to implement the activities.
Follow up. You need to sustain your programs and follow up with your targets in order to see results. As with so many things in life, full commitment to your marketing initiatives will bring you the fullest rewards.