Good question. So good, in fact, that I get asked it repeatedly on a weekly basis. Truth is, there is no magic number. No magic formula for the right amount to spend when it comes to marketing and advertising a law firm. Some lawyers say they spend 7% of their gross revenues from the prior year while others say 15% works for them.
Which one is right? Neither. Not one attorney asking this question is going about it the right way. They are all wrong! They are all asking the wrong question. That’s right. You heard me. “What percentage of my gross revenues should I spend on marketing my law firm?” is the wrong question.
The right question to ask is “How many cases do I want to sign up?”
It’s not about how much you spend on your marketing. It’s about how well what you spend works. You see, the most important key to all this is learning how to track your marketing dollars. That’s one thing that PILMMA stresses and takes pride in teaching members. PILMMA Members are not only successful lawyers, but they are smart lawyers. And smart lawyers should know three things:
- Cost per lead,
- Conversion rate, and
- Cost per case.
Knowing your cost per lead and conversion rate, is necessary to finding out your cost per case. You need to know your cost per case in order to establish a successful, profitable marketing program. This figure is essential. When asking how many cases you want to sign up, you should also be asking how much am I spending. This will, in turn, tell you how much you need to spend to get the results you want.
For example, I know auto cases from my Pay Per Click (PPC) campaign cost me $500 per case. If I want 10 extra auto cases per month then I need to increase my PPC budget by $5,000 per month.
There were years when I wanted explosive growth so I would spend up to 30% of my gross revenues. However, I never set out to spend a certain percentage of my gross. It wasn’t an arbitrary percentage decided on what I thought I needed to do. It just happened to equal that in order for me to get the results I wanted. Other years I focused more on internal processes or launching new practice areas so my percentage spent was at times less than 15% of my previous year’s gross earnings.
What does all this mean for you? The take away from today’s blog is two-fold and knowing these two things is imperative for the success of your law firm:
- Ask the right questions, and
- Know your cost per case for each marketing tactic you use