Thursday, February 20, 2014

Measuring Return on Legal Marketing Investment: Tracking Clients Through Multiple Exposures

As we have discussed, one of the biggest mistakes that law firms make is acting on the assumption that individuals or businesses become clients of a firm through a single exposure.

Is this true?
Sometimes.  But more often than not, prospects become clients through several exposures.
At our agency, we have found that some law practices are hesitant to invest in marketing or business development because their clients come through word-of-mouth.  The phenomena of “word-of-mouth” is wonderful when it happens and one which we will address in a later blog post. But it is foolish to think that even “word-of-mouth” exists in a vacuum. Even the individual who is referred to a law firm by a trusted friend, will in all likelihood still visit the firm’s website or look at the firm’s brochure. If the message conveyed in these vehicles is inconsistent with how the firm and its services was described by the friend, a disconnect is created that can limit the opportunity for a successful lead conversion. In this case, the potential client has been exposed to two “touchpoints,” neither of which is reinforcing or underscoring the other.  Similarly, when exposures reinforce one another, it stands to reason that the overall perception of the firm (and hence the likelihood of converting the prospect into a client) is enhanced. In many ways, this is the very essence of integrated marketing.
In tracking the ROI of an integrated legal marketing campaign, it is important to consider all of the ways in which each client was exposed to the firm. But taking such an approach also creates some logistical problems. For example, if one wished to ascertain the ROI of an advertising campaign, most would assume that the standard formula {(Revenue – Advertising Expenses)/Advertising Expenses} would suffice.  However, this would fail to account for all of the other ways in which new clients may have learned more about the firm. Were they aware of the recent new case the firm was handling? Did they visit the web site? Did someone refer the firm or justify the decision to contract with it? Were they introduced to one of the firm’s attorneys?
Another way to look at this is to question why millions of dollars are allocated every year for marketing materials and activities that unto themselves, may generate zero new revenue. A new firm logo is created, a strictly “image” advertising campaign is initiated, an expensive brochure is produced. Why? The answer lies in the fact that when executed well, they make other elements of the overall marketing program work that much more effectively.
The interesting thing is that if one could determine the relative contribution of each marketing “touchpoint” to the firm’s overall revenue growth, one would then be in a much better decision to determine the “value” of specific marketing elements. For example, today, creating a new web site can cost anywhere from a few hundred dollars to tens of thousands of dollars. How can the legal marketer know how much he or she should invest in that site?  How important is it that it “look right” and how much is lost if the decision is made to skimp on the expenditure?
Traditionally, there have been no ways of which we are aware, for tracking the business development process across multiple touchpoints and in such a holistic manner. Thus there is no real formula that truly captures the legal “purchasing” process. To do so would require determining how much of a new client’s revenue was due to exposure to an ad versus how much from the referral of a trusted friend.  And in more complex cases, it might require allocating new client revenue amongst a PR campaign, a firm brochure, a web site, a seminar, a referral from a trusted friend and still another referral from an already existing current client of the firm.
In the coming weeks, we will discuss more about how such a methodology might be put into place. 
Next Week:  Dissecting Direct Revenue, Aggregate Revenue and Revenue Generated Through Word-of-Mouth

Saturday, February 8, 2014

Measuring Return on Legal Marketing Investment: Tracing the History of Client Origin – Where Do Clients Come From?

Over the past few weeks, we have blogged about the problems law firms have in measuring the return on their marketing investments. As we have discussed, much of this is due to the lack of viable data to analyze, faulty assumptions that law firms make and some inherent problems with current ROI models.

Today however, I would like to discuss a methodology that, we believe offers real promise for providing law firms with the information they need to make good decisions. That methodology is called History of Client Origin (HCO).

HCO is a proprietary methodology through which the genesis of every new client is traced. In most cases, such new clients are the result of multiple exposures to a variety of marketing vehicles and/or individual interactions. Such individual interactions include those a client may have had with family, friends or colleagues; firm attorneys; and/or other past or current clients of the firm.

Utilization of such an approach allows one to ascertain marketing ROI and related metrics in a much more holistic manner, including for those types of scenarios where ROI is or has not been typically measured. Some examples of these include:
  • Results from non-direct activities (e.g., brochures, web sites, etc.
  • Situations in which clients have been exposed to the firm via more than one medium
  • Situations in which clients come to the firm through word-of-mouth

Further, the HCO methodology incorporates one of the major expenses usually not tracked by traditional ROI approaches -- time. For many law practices, the investment of attorney time represents one of, if not the single largest marketing-related expense. By capturing this data, legal marketers are able to ascertain the best use of the firm's human resources.

HCO also enables law firms to compare the effects of not just one marketing vehicle to another, but also of personal networking to traditional marketing.

Because HCO traces the origin of every firm client, the ROI metrics obtained are much richer. For example, a single exposure to an ad, an article or a firm attorney may have contributed in part to the obtaining of a particular client, who in turn contributed to the obtaining of additional clients and so forth -- sometimes through several generations. By measuring the marketing ROI through such a prism, law firms gain a clearer understanding of how the marketing and business development phenomena are exponential in nature, and thus which tools (or combinations thereof) work over the short and/or the long term.

Next week, we will discuss how various marketing and business development tools work together and how HCO accounts for this phenomenon. This is especially useful when new clients have been exposed to multiple media or individuals (i.e., touch points).

In the meantime, if you have some thoughts regarding the means by which law firms track their marketing ROI, please join the conversation right here.  We are eager to hear from you.

Next Week:  Tracking Clients through Multiple Exposures.