Deciding how much to spend on marketing and outreach is a tough decision. In difficult economic times, getting a law firm to loosen the purse strings might be a challenge. There are a number of factors that go into determining the most appropriate legal marketing budget.
For example, a firm located in a major metro area will have to outspend a large number of competitors. Everything from radio spots to billboards to pay-per-click advertising is impacted by the heightened competition in these geographic areas. However, being in a rural area doesn’t necessarily make it easy. Your ad spend has to cast a wider net to make up for the lower population concentration.
The practice area(s) your firm focuses on will have a significant impact on your ad spend. A personal injury law firm will have to put substantial dollars into basic brand awareness, so the firm’s name is top of mind for anyone who’s recovering from a car accident and looking to recoup their financial losses. The firm that does securities law for corporations has an entirely different marketing focus.
It’s also imperative that, before marketing, your firm has a clear understanding of its goals. An ambitious firm anxious to see a big increase in profits will have to put up the money to get there. But is your firm’s infrastructure (e.g., staffing) ready to handle the influx of new clients? If not, your clients will leave unhappy—and an unhappy client is sure to tell others about their experience.
But let’s say that your firm knows its goals and they’re prepared to handle success. How much does the budget need to be?
A Bloomberg study showed the average law firm spending nearly 7 percent of their gross revenue on marketing. The average derives from firms who fall anywhere between 2 percent on the low end to 12 percent on the high end. That’s the window you should be aiming for.
Keep in mind that marketing operates on 2 different levels. You not only have to spend to get new clients, but it takes money to keep up with the clients you already have. A common rule of thumb is that for every $7 of spend on new acquisitions, you should spend $1 on retention. A good example might be an event that offers some free legal education for clients and a chance to network with each other.
The advertising outreach to new prospects must always keep in mind the classic “sales funnel.” There’s the marketing that focuses on basic brand awareness—the billboards, radio spots and anything else that just gets your name in front of people.
The goal is for those people to move further into the funnel and become qualified leads—maybe they called the office or filled out a form on the website. Put some time and money into nurturing those leads further—maybe with premium content (newsletters, case studies, etc.).
Once you’ve decided on your budget and strategy, make sure you know what metrics you’re measuring and what specific tactics they connect to. For example, phone calls and overall website traffic might be monitored in relation to brand awareness advertising. A networking event would be measured by whether you retain clients.
The need to spend money on advertising is a fact of life, even for established firms. It’s all about finding the sweet spot of the right amount, the right approach and the right measuring stick.