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Return on Investment (ROI): Measuring Marketing Effectiveness

Do you know how effective this marketing tactic is? How much profit (or loss) is attributed to a specific marketing expense – what’s my ROI? It’s a question we get asked every day. Understanding the return on your investment (ROI) can be tricky. Especially in professional services, most clients’ hiring decisions are based on a combination of factors, so it can be difficult to attribute a new client to one specific marketing line item. Often a potential client will become aware of your services in multiple ways, frequently through a referral from a trusted friend or business associate, perhaps building a relationship with you over time and eventually hiring you when an immediate need presents itself.

Firms want to understand the best places to spend limited marketing dollars. For very large firms, it may make sense to put sophisticated tracking mechanisms into place for determining the relative contributions of various marketing tactics to the client development process. For smaller shops, a few basic and manageable measures may prove helpful enough without creating an undue burden. Following are a few guiding thoughts.

Begin With the End in Mind

At the start of each marketing campaign or activity, ask yourself what success will look like. What is the business driver for your campaign? Are you trying to drive revenue for a specific type of work? Increase traffic to your website? Do you need to recruit talented associates? Are you supporting a succession plan to transfer firm ownership to the next generation of leaders?

How we measure marketing and public relations results has evolved over the years. As digital platforms offer increasingly sophisticated tracking insights, there are new data points and ways to measure online results. But “real world” activities require a more human touch. In any case, you don’t have to measure everything possible to gain useful insights into the effectiveness of your marketing spend. Instead, start with a few manageable objectives that support your overall business goals and build on them over time.

Define Your Goals

If your goal is to increase traffic to your website, think through the why, the how, and, most importantly, the where. Is your inbound traffic visiting the right pages of your site to take the next step in their journey with you? Set up key event goals to track in Google Analytics 4 (which has replaced Universal Analytics). In addition to looking at simple site visits, track where and how long people spend time on your site. Did they follow a call to action (CTA), such as downloading information, filling out a form, or contacting the firm?

If you invest in a conference exhibit booth, plan ways to track the number (and quality) of attendee contacts made during the event. Were you able to convert these people into LinkedIn connections, newsletter subscribers, follow-up calls, or other measurable post-event activities? A firm can look at successful results through many different lenses, each as one stepping stone to building practice success.

Tracking

Whatever your ultimate goal, you’ll need a way to track results. It’s helpful to start with a baseline prior to initiating your activity. For example, if your goal is to gain more clients in a particular practice, you’ll need to know how many matters you have in that area and where your clients have come from historically. If you haven’t been tracking referral sources in the past, do the best you can to gather the information and then begin a system for tracking this going forward. The most common way would be to have a “Referred by” field or two associated with your intake process. Ask every potential client how they found you, even if they don’t end up hiring you. You’ll want a way to generate reports based on this information, whether as part of an accounting system, a contact relationship management platform (CRM) or a simple Excel spreadsheet.

Reviewing your referred-by information at regular intervals, you can attach revenues generated (or projected) on those specific matters to determine the ROI of the marketing you do. Keep in mind, that the client may tell you that their accountant referred you, but you’ll want to try to understand how that accountant met you in the first place. Perhaps it was because you spoke at an accounting industry event or met them through a networking forum. Those insights will help you to identify the ROI of your various activities.

Depending on the volume of data you will need to digest, track, and report, it may be beneficial to standardize some information. For example, you might want to have a set of general categories on which you can sort and filter, such as “Print Ads,” “Organic Internet Search,” and “Conferences,” as well as a freeform field for additional information, such as the name and firm name of a specific referral source or the name and year of the conference or advertising campaign. Memories will fade, so the more specific you are now, the better your future decision-making will be.

Quantity vs. Quality

Many traditional (and even current digital) sales funnel principles are developed from a consumer products (and services) perspective. This model assumes that casting a very wide net (i.e., being in front of a high volume of eyeballs) will equate to higher sales. For some aspects of your marketing, this may offer some useful guidance. Especially if you run a practice that relies on reaching clients who are likely to use your services only once, such as personal injury or consumer bankruptcy.

In these cases, you can look at the cost of, for example, a pay-per-click (PPC) campaign and track how many qualified leads contact your office based on that campaign. Then, determine how many of those contacts convert into actual clients. Of course, there is a lot that happens between those two events, so make sure you are not making false assumptions about effectiveness. For example, if many people contact your office based on an advertisement, but you don’t respond to the majority of them until three days after initial contact, most of those people probably won’t become clients. In that case, the activity generated from your marketing spend might be high (demonstrating a high ROI for driving clients to the firm), but your lack of follow-through may be crushing your conversion rate (creating a low ROI when measuring the number of actual new clients gained).

Many legal practices and B2B services have long sales cycles. These firms may need to spend more dollars (and time) on long-tail initiatives that deepen relationships with key referral sources or concentrate on building impressive credentials for their attorneys showcasing niche expertise. While it is rare that publishing a single article in an industry trade publication will cause the phone to ring with a new client, having that publication listed on an attorney’s bio will likely be an influencing factor in their assessment of the attorney’s expertise. These types of activities will be harder to attribute individually to a specific client acquisition. However, they are worthwhile as contributing factors, making their cumulative effect very powerful. In these cases, the most important measure may not be the number of reader impressions with potential clients or referral sources, but rather ensuring that the activities are targeted to engage the right specific people with hiring or influencing authority – typically a small subset of individuals.

Measuring What Matters

There are nearly limitless metrics you can use to determine whether a marketing campaign is effectively supporting your goals. Here are a few more ways to think about the question of ROI.

  • If the firm is expanding into a new geography, is your marketing generating new leads originating from that location? Are website visitors engaging with content that is specifically relevant to that location?
  • If the firm places digital ads with a publication, have you set them up with tracking links so you can see the number of visitors that come to your website directly by clicking on that ad? Are you testing and tracking different versions to continuously improve on your results?
  • If you want to showcase niche expertise, have you increased the volume of content published on the topic (via blogs, article placements, podcast appearances, videos or other media)? Are you leveraging that content across multiple platforms? How are your audiences engaging with that content?

Final Thoughts

Be patient. Remember that marketing requires consistency. Just because you become bored with your campaign and are ready to move on to the next shiny marketing object, doesn’t mean that you’ve even scratched the surface of market penetration. Some say that it takes seven impressions before your audience will consciously process your advertising message. Of course, having the right solution communicated to a potential client exactly when they need that particular service is the secret sauce. Since you rarely know when that is going to be, having a consistent presence is the key.

The value of any marketing activity is ultimately how well it helps support your business goals. You don’t have to address all of the aspects discussed above with a complete overhaul of your marketing program, especially if you are a small team or managing a limited budget (and let’s be honest, who isn’t). Rather, identify one goal, build a targeted campaign around that, and measure it (ideally, you’ll have a baseline based on historical data). Try new things, measure, analyze, and adjust. If you aren’t seeing the needle move after a reasonable period, try something different. The better you focus your marketing and business development activities in support of specific firm goals, the more you will realize a positive return on your marketing investments.

 

Lydia Bednerik Neal, Vice President of Marketing Services at Blattel Communications, has nearly 30 years of experience helping law firms and other professional services maximize their marketing, communications, and business development activities to support strategic practice growth. She can be reached at lydia@blattel.com.

 

 

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