Now that the holidays have passed, it’s time to tackle the inevitable task of determining how much should be allocated to this effort. Unfortunately, all too often, law firms make the decision to make no decision at all. While this can be a reasonable approach to a degree, it also runs the risk of missing some potential opportunities, or conversely, of overspending on initiatives that do not bear much fruit
The traditional approach has been to look at the industry benchmarks in which 2-5% of the firm’s revenue is allocated towards marketing and business development. However, much more effective is to take a task approach. Here, the firm’s marketing budget becomes a function of its objectives (i.e., the more ambitious its goals, the greater its budget).
In taking such an approach, it is important that several difficult questions be addressed, among these:
- Will marketing activities be designed to generate new clients over the short term only or should some of the funds be allocated towards the long haul. This will dictate the types of activities utilized and the relative costs involved. For example, a new firm brochure or web site may not get the phones to ring immediately, but can set the stage for significant success down the road.
- How are “resources” being defined? If it only includes dollar outlays, then certain marketing vehicles that are labor intensive, such as search engine optimization and social media may make good sense. If the term “resources” is broadened to include “time,” then the drain on manpower of some activities may make them cost-prohibitive. (Of course, such services can be contracted out, but this then turns the cost of time into hard, out of-pocket expenses).
- Is the concept of frequency being taken into account? Generating awareness and new business requires that prospects be continuously exposed to the firm, and often through a multiplicity of channels. In fact, it has been estimated that the average prospects must be exposed to a message between 7 to 10 times before being spurred to action.
- Will you consider a “better” year to be one that only involves obtaining new clients or must it also be a function of higher rates and/or the cross-promotion of firm services? Both initiatives may require investments of time and/or money.
Ultimately, once the determination is made as to a) the firm’s objectives and b) the strategies it will employ to reach these goals, only then can the specific dollar amount (and/or internal costs) required to achieving them be determined. The budget allocation of 2-5% of firm revenue is really only a guideline – and one that may or may not make sense for you (particularly as you navigate through the brave new worlds of SEO and social media). Actual budgets must look at a wide range of variables, including the current image of the firm and the level of awareness it enjoys among its target group.