**Important Numbers**

In determining your law firm’s marketing effectiveness, you need to know what I call the three big numbers.

- Your Average Fee
- Your Average Cost Per Lead
- Your Average Cost Per Case

**Average Fee**

In order to figure the return on my investment, I need to know my average fee. For instance, if I am a lawyer whose average fee is $5,000, then I know that I can probably spend $800 to get a case. I really don’t want to, but I know that I can. I’d prefer to spend $300 per case.

**Average Cost Per Lead**

But how do I know how much I can spend to get a case if I don’t know my cost per lead or my conversion rate? Let’s start with cost per lead.

If I get 100 leads, and I know that those hundred leads cost me $3,000, then that’s $30 per lead. What if my cost were $30,000 for 100 leads? Then my cost per lead would be $300.00.

**Average Cost Per Case**

Cost per case is found by combining your cost per lead with your conversion percentage. Perosnally, I know that I convert 10% of my leads to clients. Continuing the previous example, if I spend $3,000 for 100 leads and covert 10% of those leads, I’m getting 10 cases. That means my cost per case is $300.

With my fee of $5,000 per case, I make $50,000 off of my initial $3,000 spend. That’s a 16-to-1 ROI. Once I know that, I can make adjustments and tweak my costs.

But what if I had to spend $30,000 for those 100 leads instead of $3,000? Then my cost per case is $3,000. I’m only getting an ROI of 1.6, which is bad – very bad.

When I started doing TV in 1998, my cost per case was about $300 to $400. Now it’s $1,200.

I also use the Internet. I’m getting cases from the Internet at less than $200 per case. How do I know this? I track it. You must know your numbers and measure everything. That is part of your marketing sales machine.

**Ken Hardison’s Easy ROI Calculator**

Here’s an easy ROI calculator you can use to monitor the effectiveness of your marketing campaigns. You need to know four things about a campaign to use this calculator:

- Average Fee
- Total Campaign Cost
- Number of Leads Gained
- Number of Cases Gained

You should be able to obtain all of those without much difficulty. You know your average fee, you had better know the cost of the campaign, and you easily track the number of leads and cases gained.

After we go through the calculator step-by-step, I will plug the examples we just used into it so you can see the calculator in action.

STEP 1

____________________ (Total Campaign Cost)

÷ ____________________ (Number of Leads Gained)

= ____________________ (Average Cost Per Lead)

STEP 2

___________________ (Number of Cases Gained)

÷ ___________________ (Number of Leads Gained)

= ___________________ (Lead Conversion Percentage)

STEP 3

____________________ (Lead Conversion Percentage)

÷ ____________________ (Average Cost Per Lead)

= ____________________ (Average Cost Per Case)

STEP 4

___________________ (Number of Cases Gained)

÷ ___________________ (Average Fee)

= ___________________ (Total Fees)

STEP 5

___________________ (Number of Cases Gained)

÷ ___________________ (Average Cost Per Case)

= ___________________ (Total Costs)

STEP 6

___________________ (Total Fees)

÷ ___________________ (Total Costs)

= ___________________ (Return on Investment)

Not too complicated, is it? Let’s try it with the two earlier examples.

**Example 1**

- Average Fee = $5,000
- Total Campaign Cost = $3,000
- Number of Leads Gained = 100
- Number of Cases Gained = 10

STEP 1

________3,000___________ (Total Campaign Cost)

÷ _________100____________ (Number of Leads Gained)

= __________30____________ (Average Cost Per Lead)

STEP 2

__________10___________ (Number of Cases Gained)

÷ _____________100___________ (Number of Leads Gained)

= __________10___________ (Lead Conversion Percentage)

STEP 3

__________10____________ (Lead Conversion Percentage)

÷ __________30____________ (Average Cost Per Lead)

= _________300____________ (Average Cost Per Case)

STEP 4

__________10___________ (Number of Cases Gained)

÷ _______5,000___________ (Average Fee)

= _______50,000__________ (Total Fees)

STEP 5

_________10____________ (Number of Cases Gained)

÷ ________300____________ (Average Cost Per Case)

= _______3,000___________ (Total Costs)

STEP 6

______50,000___________ (Total Fees)

÷ _______3,000___________ (Total Costs)

= _______16.7____________ (Return on Investment)

So this campaign produced a 16.7 ROI. The lawyer received $16.70 in return for every $1.00 spent! That’s a successful campaign by any lawyer’s standard.

**Example 2**

Notice that only the Total Campaign Cost changes. But when it does, the ROI is dramatically affected!

- Average Fee = $5,000
- Total Campaign Cost = $30,000
- Number of Leads Gained = 100
- Number of Cases Gained = 10

STEP 1

________30,000__________ (Total Campaign Cost)

÷ _________100____________ (Number of Leads Gained)

= __________300___________ (Average Cost Per Lead)

STEP 2

__________10___________ (Number of Cases Gained)

÷ _____________100___________ (Number of Leads Gained)

= __________10___________ (Lead Conversion Percentage)

STEP 3

__________10____________ (Lead Conversion Percentage)

÷ __________300___________ (Average Cost Per Lead)

= _________3,000__________ (Average Cost Per Case)

STEP 4

__________10___________ (Number of Cases Gained)

÷ _______5,000___________ (Average Fee)

= _______50,000__________ (Total Fees)

STEP 5

_________10____________ (Number of Cases Gained)

÷ ________3,000__________ (Average Cost Per Case)

= _______30,000__________ (Total Costs)

STEP 6

______50,000___________ (Total Fees)

÷ _______30,000__________ (Total Costs)

= _______16.7____________ (Return on Investment)

This campaign was totally unsuccessful. The ROI was 1.67, which means that the lawyer only got $1.67 for every $1.00 spent.

I have a rule of thumb for my return on investment: If I can’t get six times my money back in a particular campaign, I either have to tweak my marketing or get out of it. I want 10 to 15 times my money back, but six is my threshold. I’ll tweak it for about 90 days. After that, if I can’t get my ROI up to six times or better, then I’m dumping the campaign and putting my money somewhere else.

You have to determine your personal ROI threshold, whether that be three to six or ten times your investment. My ROI calculator will help you to do just that.