Yesterday, I talked about the need to establish a marketing budget for your practice. A reader emailed me a link to an article with a similar theme. The author was speaking about technology companies, not law firms, but makes a good point about the vital need to invest in marketing:
“You need to be the best marketer in your marketplace to succeed in today’s Internet world. You need to spend at least 15% of your revenues on marketing and sales, and preferably over 20% of revenues to really grow.
If you do not spend at least 15% of revenues on sales, and more on marketing, then your company will have a very difficult time not just growing, but even surviving.”
This doesn’t mean lawyers must follow the same guidelines. Tech companies and law firms are as different as night and day. While I can’t tell you what percentage of your revenue you should invest in marketing, at least not without knowing your current situation and goals, I can tell you some of the factors I would consider:
- Your current gross and net income. How much do you have available for marketing after overhead, debt service, and other fixed costs of doing business?
- Your practice areas, current marketing methods, and budget. What results are you getting? (i.e., traffic, leads, percentage of sign-ups, etc.)
- Your average fee per case or client. Are they typically one-time clients or clients with ongoing legal needs?
- The lifetime value of a client. How many times will he return, how much will he spend, how often will he refer?
- Your target markets. (Niche markets are usually easier and less expensive to reach.)
- Your ideal client and the costs to attract and court them. (Big companies, for example, might involve more expensive presentations, wining and dining, and a longer time frame. If you advertise, your cost per client is likely to be higher than other marketing methods.)
- Your competition. How many other lawyers or firms do what you do? What marketing methods do they use? How much do they spend?
- Your experience, reputation, and USP? How are you different or better? How easy is it to market you?
- Current marketing resources: in-house talent, size of your email list, websites/blogs, social media following, etc.
- Your credit worthiness. Can you finance your marketing with a line of credit at favorable rates? If you advertise, note that many publications offer generous credit terms.
- Your attitude towards marketing. Do you like it? Are you good at it? How aggressive are you?
- Other offices, practice areas, lawyers in your firm? Can you amortize or share marketing expenses?
- Your goals. How many? How fast? Do you want high volume or high quality? Where do you want to be in 5 or 10 years?
Lawyers tend to have big margins (i.e., the size of the average fee vs. the cost to deliver the service), which means you can probably justify a bigger investment in marketing than you currently spend. Don’t forget to include the lifetime value of a client in making that calculation.
Depending on your practice areas and primary marketing methods, you might find that you can do just fine with a modest marketing budget. If you get most of your business through referrals, for example, you don’t need to spend 15 or 20% of your gross on marketing. If you want to grow bigger and faster, however, or you’re in an especially competitive market, you just might.
Whatever other marketing you do, you should focus on referrals