Better Marketing By Measurement

Predicting Revenue for Small Firms“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”  – H. James Harrington, author, engineer, performance improvement consultant.

How effective is your Firm’s marketing?

Ask that question to many lawyers and you’ll almost certainly get some sort of qualitative response ranging from “not at all” to “very”, followed by a quizzical “…I think?”  It’s usually not a very definitive response.

To be fair, the question might be bettered answered in true lawyerly fashion; that is, with another question.  “How effective is my Firm’s marketing?”, well, “How effective is my Firm’s marketing relative to what?

How are we measuring? What are we measuring?”

Measuring and evaluating are among the most critical aspects of any  marketing plan, yet they are tasks that are often overlooked by busy lawyers. Even lawyers who generate a large portion of their own revenue directly as a result of carefully measuring billable hours often bypass the opportunity to apply the same kind of careful tallying to their own marketing efforts.

Marketing is an increasingly popular topic among lawyers, and particular marketing tactics like social media are generating huge amounts of interest.  Yet, one of the most important marketing skills – setting goals and measuring results – doesn’t get as much ink.    If social media is today’s Super Bowl of legal marketing, then measuring is the flag football team sponsored by the local bar.  Measuring is nowhere near as glitzy, glamorous, or attention-getting, but in the end it’s the backbone upon which everything rests.

There are all kinds of ways to measure marketing effectiveness, and different situations call for different tactics. For businesses like Rocket Matter, we use metrics like “Customer Acquisition Cost”, “Retention Rates”, and “Lifetime Customer Value” to set help us set our goals and budgets.   These metrics, among others, help us to form some of our own guidelines for determining what we ought be achieving, how we’re actually performing, and where we ought be making adjustments. Marketing is certainly an art, but it’s an art that’s dramatically leveraged by the application of some scientific methods.

For lawyers, the precise measurement metrics may vary, depending on factors like the specific type of practice area involved and the billing methods at play, among others. For example, “client acquisition cost” may be an interesting marketing metric to measure for lawyers who are seeking “outsourced GC” type work that pays a regular, predictable monthly retainer. (A relationship that’s becoming more and more popular, especially in the technology space.) Consumer bankruptcy lawyers might instead want to track “case acquisition cost” if their revenue models are more tied to specific cases rather than specific clients.   Regardless of the actual metrics that you determine are ultimately best for you, the larger point is this: marketing needs to be a purposeful, goal-oriented, controlled process. It’s not enough to just “start marketing” and hope for the best.

Once you’ve decided to invest your time and resources into improving your marketing efforts, whether those efforts are through networking, speaking engagements, advertising, social media, or any combination of those things: make a commitment to identify important metrics and regularly surface them.    Line up your costs against those metrics, and adjust accordingly.  And when you’re tallying up the costs, it’s not just your out-of-pocket costs that count.

For instance, an honest look at your marketing costs doesn’t limit itself to, say, the $1,000 you spend on print ads in your local bar journal, or the $1,500 you put down registering for that conference (and the meals, room, and taxis that went with it), it’s also the time you personally invested in whatever activities you undertook. Your time has value, and that value is part of your marketing investment. Charge yourself – i.e. your marketing department – for the time you spend.

Once you’ve decided on some important metric(s) to use, pick some time frames that makes sense (e.g. a calendar quarter), and start asking:

1. How much did I invest, including my own time, on marketing efforts last quarter?

2. How did I do? Did I meet my expected “client acquisition cost”, “case acquisition cost”, or other metric that I set out to reach?  How do my metrics compare to those of my peers?

3. Which particular efforts yielded superior results? Inferior results?  Are there better ways for me to measure what I’m doing? (Sometimes measuring is easy and automatic, like in the case of measuring the performance of Web banner ads.   Other times, not so much.   Measuring the value received from your attendance at a networking event may be less defined, but that doesn’t mean you can’t come up with some kind of rational measurement proxy.)

4. What are my targets for next quarter? How much does my marketing budget need to be next quarter in order to meet those targets? One advantage of understanding your marketing metrics is that it can make a huge improvement in your ability to set your own internal financial forecasts.  If you “know” based on historical data that it takes $X worth of marketing efforts to generate Y new clients (and Y new clients, on average, bring $Z in new revenue), you enable yourself to start designing a financial budget that’s rooted in historical data and logic.

Measuring marketing efforts a whole, or individual marketing tactics in particular, can be a complex topic – though any number geeks out (present company included) can actually find to be a fun one.    The process of deriving meaningful metrics for your marketing efforts can take some time, as some relevant metrics may change while others are continually refined, but it’s worth it.

Also, for many lawyers, just making the commitment to start some type of formal measuring process for their marketing efforts can alone be a big, important step. Tracking and measuring results will result not only in a better understanding of your marketing effectiveness, but will also provide assistance in your overall financial planning, as a metric-driven marketing yields the foundation for fixed, predictable, overall budgeting.

Want something to improve? Start measuring it.

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