At the end of the day, law is a business—regardless how many within the field feel about it. This means that law firms need to watch the numbers involved with running a business just like any other business owner does.
Here are four metrics that law firm marketers need to track to ensure that the practice grows.
A conversion rate is the rate at which law firms convert leads to clients. Conversation rates can be calculated by total clients retained divided by total leads generated. This is your conversion rate percentage. An important fact to remember is that you should measure conversion rates for each lead source/marketing channel separately.
Why is this important?
In an absolute sense, conversion rate is not very important, but in a relative sense, conversion rate calculations help you monitor your process and how your marketing methods are working. Furthermore, conversion rate is important to show the quality of the leads that your firm is generating and how effective your sales process is.
Tracking your firm’s total marketing spend is the most basic marketing metric law firms can track. Simply put, marketing spend is the amount of money spent each month on marketing. The appropriate way to track marketing is to note the amount spent in each marketing channel separately. This will allow you to generate precise reports on each strategy.
Why this is important?
If your expenses are higher than your revenues, then paying for marketing is a waste of money. Therefore, it’s important to keep track to see that your marketing scheme is working.
Revenue per client
This is the metric that even the least business-savvy lawyer can keep up with because it’s simply monitoring the basic revenues of whether the firm can pay its bills for the month. Revenue per client is calculated as total revenue earned divided by total clients retained.
Why this is important?
This metric shows your firm exactly how profitable your marketing scheme has been. Furthermore, as long as the average cost of client acquisition is less than revenue per client then the marketing channel is profitable.
Return on investment (ROI)
Marketing ROI is a measure of probability that is common among different aspects of business. It is the measure of the amount of capital that an investment has lost or gained as a percentage relative to the original investment. It is calculated as total revenue minus total expenses divided by total expenses.
Why this is important
ROI is important because many marketing revenues can’t be compared apples to apples. ROI is a common ground where you can compare all of the marketing channels you utilize side-by-side to determine which has the most profitability.
For more marketing insight, read our blog post about using marketing to beat the competition.