Many solicitors do not carefully analyse or set their marketing budgets. They might use the figure they spent on their marketing in the previous year, or simply estimate a figure for the coming year, without applying any science to the task in hand. What can be even worse during a recession is that many solicitors will automatically assume that the marketing budget is the first thing that should be cut. However, this action could be fatal for the future of their legal practice and I will explore why further in this article.
The Standard Marketing Budget Figure
A standard quoted figure for a marketing budget is 2 to 5% of a firm’s turnover, but a good marketing budget could be anything from 5% to 10% of turnover. The most important point is that a firm must understand where they are spending their money, but which aspect of their marketing is providing a return on investment.
Using a solicitors marketing example would not really highlight the point here, which is important to do before moving on. Imagine a day when you visit your Independent Financial Adviser and he guarantees that for every £100 you invest with him, thirty days later you will receive £160 in return. How much would you invest with him? The answer would be as much as you could lay your hands on at short notice, yes? Unfortunately, I have yet to find the financial adviser that can offer me these returns, but it does stress a point. When looking at your marketing budget, do not be limited by false budgets. If you can prove that by spending £100 on your marketing your legal services, you will generate £160 in legal fees, surely it is very similar to the above example and you will continue spending as many chunks of £100 as you can to gain a return of £160.
I appreciate that this is an over-simplified analysis, but it does highlight this point. Many solicitors struggle to know where to set the bar for their marketing budget, but my response is not to set the bar before you can truly analyse the return on your marketing investment.
In personal injury claims, many solicitors will pay 100’s of pounds for a new client because they know that they can double or triple their investment in legal fees. The problem in doing this is that they are building someone else’s pipeline, not their own marketing pipeline. Once that one client has passed through their system they are gone. If you use your marketing budget to generate clients through your own marketing initiatives then they are your client forever. You will act for them not only on a personal injury instruction, but because they are more likely to be local to you as they will have been generated through your own marketing initiatives, they will come back to you for all of their legal services. Now that £100 investment could lead to a £160 wills instruction initially, and then a £500 conveyancing instruction a year later and a £3,000 instruction some years later; one client producing nearly £4,000 of fees from an initial marketing investment of £100.
Record Your Results, Do Not Limit Your Marketing Budget
You can only ever know whether your marketing is successful by recording your results meticulously. If you do this, you can see which part of your marketing spend is working and which parts are producing no results and can therefore safely be dropped and reallocated elsewhere. This way, your marketing spend constantly evolves and always produces excellent results, just like your IFA giving you £160 for every £100 invested.