The Commonly Followed 10% Budgeting Rule is Ruining Your Law Firm’s Marketing
As a law firm owner, business person, and entrepreneur, every business-related spend feels like it is coming out of your wallet. And in a way – it does. Spending thousands of dollars on marketing for your law firm can be painful, particularly if you are unsure about the results. So, many lawyers bank on the old saying “do good work, and clients will come” instead of investing in their practice.
Unfortunately, that isn’t how reality works. Time and time again, I talk with lawyers who are at their wit’s end because of that overused, and quite frankly wrong refrain taught to us since law school.
Relying on word-of-mouth referrals will not get you far, and you’ll quickly find yourself in a feast or famine situation, causing you an incredible amount of stress. Imagine the gut-wrenching, and unfair conversations with employees you need to let go – not because of poor performance, but because you don’t have enough money for staff.
Investment Mentality Demolishes the “10% Rule.”
You’ve probably heard about the 10% rule, that 10% of your entire law firm’s budget should go towards marketing your law firm. The 10% rule doesn’t make sense. What if for every dollar you put into marketing your law firm, you had 10 dollars return? Then why would you cut off your success just because you’ve spent 10% of the budget? You should continuously invest in effective law firm marketing.
A tough pill to swallow – you need to invest both time and money in a marketing plan for your law firm. Clients don’t just happen upon your legal services; they need to be marketing to and persuaded into the buying decision. Fortunately, you don’t have to spend $3,000/mo on a marketing service with no way to measure if they’re providing your law firm value or not; you can implement marketing plans and track the efficacy by yourself.
If you adopt an investment mentality, you’ll be able to invest money into marketing with ease because you understand and believe that every dollar spent brings in more profit to your firm and allows you to scale up and grow.
The Numbers You Need to Know with Simple Formulas to Follow (Even if You Hate Math!)
Before you decide how much money to spend on a marketing strategy, there are a few numbers you need to figure out first.
- Cost Per Lead – How much money you spend to obtain one lead. This number depends on your practice area and the type of case you are trying to attract. A high-volume practice who has a quantity over quality mindset will want to keep the cost per lead as low as possible. A low-volume practice that aims to work on a few, high-value cases should spend significantly more to refine their lead generation efforts on attracting the right leads.
The cost per lead formula: Advertising Cost/Number of Leads.
- Cost of Acquisition – How much money you spend to get one client. This is going past getting a lead and adding a potential client to your marketing funnel. It’s a client that has signed you and will pay you for your services. This cost could also range greatly depending on the practice area.
The cost of acquisition formula: Number of Clients/Advertising Costs.
- Return on Investment (ROI) – How much money you are making (or losing) from a marketing effort. Each advertisement or marketing campaign you run needs to have a way to track efficacy. An easy way to track results is to create custom tracking phone numbers and/or URLs and make it the call to action. From there, you can see how many people called the number and keep track of how many of those leads converted and became clients. If an advertisement results in a negative ROI (meaning that you lost money), then it has saved you money in the future by investing in a different and effective advertisement.
Return on investment formula: Net Profit/Investment x 100.
Instinct tells us that the goal is to keep the cost per lead and cost of acquisition as low as possible. However, this may not always be the best decision for your law firm. You’ll likely find that if you increase your cost per lead, you’ll attract better clients who may then lower your cost of acquisition. An ideal client will hire you quickly (and thereby not costing a lot in lead generation marketing), will not demand all of your time, and will have a profitable outcome for your law firm.
When Can I Afford to Hire a Marketing Director?
A marketing director should always be more valuable than what they are paid. If you wait to hire a marketing director, you may never feel that you have it in the budget to hire one. But proactively hiring a marketing director creates the space in the budget and extra revenue for the firm.
If you find yourself stretched too thin and working on low-level marketing strategies instead of high-value tasks, then it’s time to start thinking about hiring a marketing director. Remember, hire the right person, not just credentials.
BONUS: 3 Free Marketing Ideas That Work for People Who Still Don’t Believe That It’s Okay to Spend Money on Legal Marketing
Create Content: Website content is still a tried and true marketing tactic that works. Having a library of educational (and entertaining) articles will instantly increase your credibility and present yourself as an expert on the topic. It also gets you on potential clients’ radar before they even know that they are looking for a lawyer; they just one have a legal question that they need to be answered.
Ask for Reviews: Testimonials and reviews are social proof of your ability as a lawyer. Reading reviews are becoming an increasingly important step in a potential client’s purchasing decision. You can send out an email to past clients right now, asking for them to leave a review or testimonial. Reviews will immediately increase your credibility as a high-quality lawyer and create social proof for future clients.
Host or Speak at Seminars: Most libraries have conference rooms and will rent the space for free (or extremely cheap). You can host a free educational seminar for potential clients to educate them on your service and why they need it.
Most attorneys start their firms assuming that being a really, really good attorney should, in and of itself, be a marketing advantage. Those attorneys believe that joining a whole bunch of committees and putting their name in lawyer directories is “marketing,” and they never bother to ask if there is a better way.
Attorneys are catching on, however, and those who succeed learn to leverage their current resources to create effective (and ethical) marketing. What they discover isn’t a magic pill or silver bullet but a different approach to marketing that your competitors haven’t considered.
by Ben Glass
Ben is a nationally recognized expert in attorney marketing and the owner of Great Legal Marketing.