Those experienced in utilizing a defined marketing strategy effectively understand that there is a way to track and quantify the dollars earmarked for law firm marketing, while others still view any monies allocated to these non-billable efforts as a “black hole.”
Overall, it is safe to say that law firms as a whole have taken a hard look at all operating expenditures over the past several years in order to keep pace with the changing economy. Yet, according to a study produced in the January 6, 2011 edition of the Law Society Gazette, 42% of law firms were planning on increasing the amount of spending on marketing in the coming year.
It is also true that for most professional services firms, marketing and business development allocations do not produce immediate recognizable results. So how does a lawyer or law firm track any return on investment (ROI) for its marketing efforts? The answer is having a plan in place prior to engaging in these efforts and preparing for a longer period of examination.
Define Your Goals
Lawyers are no strangers to having a plan in place for helping their clients evaluate the safest, most cost-effective course of action to resolving their problems. It is this same approach that should be taken to any marketing and business development effort so that upon reflection and analysis, a measurable return on investment can be determined.
Before embarking on any marketing and business development effort, it is critical that the lawyer and law firm first define the goals of these efforts. Knowing what you want to achieve from the sponsorship of a particular conference, developing an advertising campaign for a particular practice or clarifying your overall efforts with the firm’s strategic plan is critical. This requires time, effort and input from multiple areas of a law firm including the marketing department, accounting, practice group leaders and individual attorneys. Taking the time on the front end will allow you to calculate your return on investment.
Efforts Across the Board
Marketing is not placing a one-time advertisement in a legal publication because you have been recognized by the latest “outstanding lawyers” list. Likewise, being the “title sponsor” of one event in a particular practice area will not lead to recognizable or quantifiable ROI.
An effective marketing and business development program is one that works across platforms to target your client audience. A workable plan should accommodate multiple opportunities including, but not limited to, advertising, sponsorships, interviews and third-party commentary, and other brand placement events that increase name recognition and association with a targeted industry or economic segment.
Marketing efforts include both an investment of time and monetary resources. On average, a law firm should project spending approximately 2.5% to 5% of revenues on its marketing and business development efforts. The marketing plan will detail how this allocation is to be divided up. From an ROI perspective, it is best to project marketing expenditures in budget categories for specific areas (e.g. advertising, events, print materials, etc.). Creating these budgetary categories will allow you to produce a year-to-date spreadsheet allowing for both projections and review of actual expenditures.
Advertising is typically the largest budget expense and does not produce direct, quantifiable results for most professional services firms. However, from a branding perspective, it is important to consider how you want to be perceived in the marketplace or a particular industry segment. Before entering into such a major expense, there are several items to consider including target audience, geography, niche markets, frequency and rotation. Most publications can produce audited readership statistics. Online publications or your own website can provide readership statistics with the use of an analytics program to track click-throughs to your site.
Track What You Do
With any marketing program, the most effective method to determine your ROI for marketing and business development is to track your efforts and quantify your results. For example, if your firm sponsors a particular program, track how many of your attorneys attend the event. More importantly, take the time to evaluate all aspects of the program in relation to your plan. If the program takes two hours of an attorney’s time to participate, determine how many contacts and referrals were generated from the program. After conducting specific follow-up, determine what business (either new or recurring) was generated from that sponsorship.
If the referrals are promising or actually lead to new business, then you can weigh the cost of the sponsorship against the hourly rate charged by the attorneys and determine your ROI. This method can be utilized in a number of instances such as client meetings, lunches, dinners and other firm sponsored activities. Track how many of your attorneys participate (as ultimately, in a law firm, the money allocated is “their” money) balanced against the overall success in generating business from that program. This will not only allow you to determine whether or not your dollars are being spent effectively, but also help in the budgetary planning going forward.
All professional services firms need to implement effective marketing and business development ROI tools. With the advent of technology, these efforts have become somewhat easier. However, whether in boom or tough economic times, by knowing your target audience, understanding effective marketing practices, and devising the tracking programs for implementing your plan, you can show quantifiable results for your marketing and business development activities.