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

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