When it comes to law firm marketing, it takes 7 to 10 meaningful “touches” to move someone through the sales process to get them to the point where they are ready to hire you. (A “touch” is an interaction between you and your prospect — an email, a phone call, a social media exchange, etc.)
This means that implementing an under-funded law firm marketing plan is just as bad as not using any marketing plan at all. If your marketing plan only has enough money behind it to produce a couple of meaningful touches, it will be almost as if you never tried to reach prospects at all because it won’t break through all the other marketing efforts made by other attorneys vying for that person’s time and money, including your biggest competitors.
So how much do you need to spend for law firm marketing?
There are 10 things you need to consider when determining what to spend on law firm marketing:
- Your practice area.Some practice areas require significantly more time and money to market, like litigation and personal injury.
- Your profit margins.The larger your margins, the more you can invest on marketing and new business development. Some practice areas have bigger profit margins (litigation) while others have notoriously low profits (insurance coverage and residential real estate).
- Your annual revenues. It is not unusual for successful law firms to spend between 15% and 40% of their annual revenues on marketing and business development.
- Your target market.Any time you are marketing directly to consumers, your marketing budget must be bigger because of the intense competition for consumers’ attention.
- Your market area. For many professional service firms, like doctors, lawyers and accountants, it is usually limited to up to 25 square miles.
- Your competition.Analyze your competition—are there lots of you vying for the same business or just a few? What kind of marketing strategies are they using? How are they positioning their firm? If you have to compete with lots of other firms for the same target market, you will need a bigger budget.
- Your systems. In general, the better systems you have in place for implementing the plan, the less money you have to use. For example, if you use direct email marketing as part of your plan, you can reach potential clients with greater frequency at a low cost.
- The typical marketing cycle.How long does someone take to make a decision after they have gathered all the information they need? Is it measured in minutes, days, weeks, or months? The longer the marketing cycle, the more money you need to spend on marketing because after you have given them the information they need, you still need to stay in touch with them.
- Your average sale. How much does your average client spend with you? $500? $5,000? $500K? $5 Million? Typically, the higher the price tag, the more you need to educate your client as to the benefits of your services and provide more evidence of your credibility.
- The lifetime value of your average client. How much does your average client spend with you over a given timeframe? If they spend $1,000 a month with you annually, and the average client stays with you for three years, then the average customer is worth around $36,000 to you. If you know that, you know how much you can afford to spend on landing each client before it starts to negatively impact your profit margins. If your average client only makes one “purchase” from you and never comes back, then you will need to use lower cost marketing strategies to reach them.
Once you have figured all this out, you’ll have a good idea of what you need to adequately fund a marketing plan for your law firm.