Over the past several weeks, we have outlined what we feel to be a more holistic and thereby more accurate methodology for tracking the results of law firm marketing. At first blush, employment of the History of Client Origin methodology described in these postings might appear to be just another way of calculating, analyzing, predicting return on investment, and ultimately for making decisions pertaining to the marketing activities of the firm.
But this would not be true.
The data gained through the utilization of an approach that tracks client origin is both vast and rich in detail. Among the information to be gleaned are answers to questions such as:
Which marketing tools offer the greatest potential for short-term ROI? For long-term ROI?
Because the History of Client Origin Methodology can be traced over any period of time, firm decision makers can easily ascertain which activities are most likely to pay out over the short or the long haul.
What is the relative cost vs. benefit in having specific attorneys spend time on client work vs. on business development efforts?
Let’s face it. Some attorneys are better at drumming up new business and others are better at lawyering. This can be analyzed by taking the History of Client Origin model and applying it at the attorney level. This involves tracking the touchpoints to which the individual attorney allocated his or her time. The hours spent is then multiplied by the attorney’s rate of compensation to arrive at ROI and Aggregate ROI figures for his or her efforts. These numbers can then be compared to the revenue that might have been earned had the attorney spent this time on billable work. By doing so, it is easy to ascertain whether an individual attorney’s time is better spent on originating work versus on generating more billable hours.
Which practice areas offer the best potential for short or long term revenue growth?
As with individual attorneys, this requires applying the history of client origin methodology to the practice group level. From this analysis, marketing decision makers can determine to which practice groups firm resources are best allocated.
Should business development resources be spent on hard marketing costs (e.g., advertising) or on personalized prospecting/networking?
The History of client origin model provides a straight-forward methodology for comparing the ROI of the interpersonal efforts of firm attorneys (e.g. networking, prospecting, entertaining) to other touchpoints such as the firm website, advertising, collateral materials, PR, on-line media, etc.
Should marketing resources be spent on very direct marketing activities (e.g., direct mail, seminars, pay-per-click, etc.,) versus on “softer” image-oriented ones such as the firm’s web site, image advertising, brochures, etc?
Unlike other ROI methodologies, the history of client origin paradigm levels the playing field in terms of allowing marketing decision-makers to ascertain the relative contribution of these two different “types” of touchpoints. And it can do so, without the need for implementing testing scenarios.
What is the short and/or long term value of a specific client? What kind of exponential potential do they offer?
ROI and Aggregate ROI analyses can be run against different client segments as based upon revenue, industry, etc.
To what degree is word-of-mouth marketing working for the firm?
By considering “referrals” to be touchpoints, we can ascertain the percentage of revenue attributed to word-of-mouth versus revenue generated through other means. Because referrals are an indication of client satisfaction, it can be inferred that the greater the percentage of revenue attributed to referrals, the greater is the perceived quality of legal services that the firm is providing. This can have further implications as the greater the level of referral revenue, the less there is a need to invest firm dollars into traditional marketing channels. Of course, the converse of this is true as well.
Yet, despite the value in tracking client origin, to do so by hand would be inefficient at best and impossible at worst. Instead, the process must be automated, with reports and analyses available instantaneously. Next week, we will wrap up this series with some thoughts on how The History of Client Origin methodology can be applied… Yes, there’s an app. for that!
Next Week: The Practical Application of “The History of Client Origin.”