The easiest way to increase your income

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How much do you spend to acquire a new client?

If you don’t know, go through your paid bills for the last 12-18 months and tag everything marketing-related: advertising, direct mail, websites, networking groups, newsletters, software, outside services, signage, marketing assistants, and everything else.

Add it up. These are your hard costs.

Next, look at your calendar and figure out how much time you spent on marketing activities: networking, writing articles, blog posts, and emails, conducting interviews, creating and delivering presentations, meeting with referral sources, posting on social media, and so on.

Assign a dollar value to that time and add the result to your hard costs.

Take your total marketing expenses and divide by the number of new clients you brought in. The result is your average cost to acquire a new client. If a new client is worth $10,000 to you, you can make an intelligent decision about how much you’re willing to spend to acquire them.

Next, go back and look at the breakdown of your expenses. Assuming you track where new clients come from, (please say you do), you’ll be able to increase your profits by managing your marketing expenses.

If your ads are working, you might increase ad spending. If you’re wasting time with networking, you might cut down on the number of groups you belong to.

By far, the easiest way to increase your income is to focus less on acquiring new clients and more on retaining the clients you already have.

Repeat clients (and the referrals they provide) come to you at very little cost. You’ve already paid to acquire the client. From this point forward, what they pay you is nearly all profit.

Referrals are the quintessence of profitability. Here’s how to get more

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It’s cheaper to keep a client than to find a new one

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Before you invest another dollar or another minute looking for new clients, do yourself a favor and invest in retaining the ones you already have.

It’s cheaper.

They already know you and trust you. They already know what you do and they’ve seen you do it. You don’t have to go looking for them and woo them. You don’t have to do much to get them to hire you again.

Make sense?

So how do you retain clients? For starters, make sure you don’t chase them away.

A recent survey revealed that 23% of “customer complaints” are about rudeness or bad attitude. Hey, that’s an easy one to fix. Be nice, and if you’re already nice, find ways to be nicer.

Next on the list: don’t ignore them. Clients may run away from a rude lawyer, but most clients drift away from the lawyer who doesn’t pay attention to them.

If you ignore your clients, they may forget your name or the reasons they hired you and be easily seduced by the next lawyer who comes along.

That’s also easy to fix. Stay in touch with your clients.

What’s that? You’ve already done the work for them and they are unlikely to need your services again?

Silly boy. Have you forgotten about the referrals they could send you? Have you forgotten that those referrals are  easier to sign up than prospects who hear about you through an ad or online search?

Are you forgetting that if they refer you a client with a legal matter you don’t handle, you can refer them to another lawyer and earn their referrals in return?

Are you ignoring the other ways clients can help you like sending traffic to your website or telling their friends about your free report?

You worked hard to attract prospective clients. Once they hire you, you don’t have to do nearly as much (or spend nearly as much) to retain them.

Is there more to client retention than this? Sure. There are affirmative things you can do to strengthen your relationships and make your clients an advocate for your practice.

But let’s start with being nice and staying in touch.

Your clients want to send you referrals. Here’s how to help them do it

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The lifetime value of a client

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Most lawyers invest more time and money in acquiring new clients than in retaining existing ones. And yet the cost of retaining clients is a fraction of the cost of acquiring new ones.

If you want your clients to keep coming back to you, the first thing you need to do is to realize that it’s worth making them happy.

And it is.

Your average client is worth so much more to you than what they pay you for their initial engagement. Their value is an average of all of the fees they are likely to pay you in the future, over their lifetime as a client.

Some clients won’t come back because they don’t need you again, but others will hire you frequently. Some will have small cases, others will have big ones.

And every client can send you referrals, which also count towards their average lifetime value.

Once you understand that the client who pays you $5,000 this year might contribute an average of $150,000 to your bottom line over their lifetime, you will appreciate why it is worth investing in them.

If you only look at the $5,000, you might resist the idea of spending $50 per client per month to stay in touch with clients via a newsletter, birthday cards, and small gifts. If you look at their lifetime value, however, you might look for ways to invest even more.

Consider the cost of acquiring a new client. Take everything you spent last year on anything that could be considered marketing (and don’t forget the value of your time) and divide that number by the number of new clients you signed up.

If you spent $2,000 to bring in one new client who pays you $150,000 over their lifetime, you did well. So I’m not saying you shouldn’t try to bring in new clients. Just that it’s more profitable to keep your existing clients coming back.

It’s also much easier to get existing and former clients to hire you. They already know you and trust you. You don’t have to find them or convince them that you can do the job. If they need your services and you kept them happy in the past, you don’t have to do much to get them to hire you again.

The most effective marketing strategy for any professional is to make an ongoing effort to keep their clients happy. Find out what they want and give it to them. Encourage them to tell you how you are doing and what you could improve. Find out what they expect of you and do everything you can to give them more.

Because over their lifetime, they are worth a fortune to you.

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What do your clients really want?

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Your clients hire you to obtain results. They want a certain outcome, a verdict or settlement, a deliverable. This post points out that results usually come at the end of the engagement and says that, “. . .clients don’t care about results most of the time, they care about the experience they’re having with you right now.”

Clients obviously do care about how they are treated by you and your staff; their experience with you is important to them. But I don’t think you can say they don’t care about results most of the time. They certainly do.

But, next to getting those results, there’s something else they care about.

They want to see that you made the effort.

Clients want to see that you tried. You fought for them. You did the work. If the hoped for results don’t come, most clients will accept this, but only if they know you did your best.

Your clients expect you to treat them politely and keep them informed. They expect you to be fair in your billing. Being treated well is part of the deal, part of what they get when they hire you. But being treated well will never excuse a lack of effort.

There’s two parts to this:

  1. You have to make the effort, and
  2. Your clients need to know you did.

Make sure your clients see your work product and understand everything you do. Paper them, inform them, explain to them. Show them you did everything you could to obtain the results they want. That’s what they’re paying you for.

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