Law Firm Management: The benefits of a marketing budget unique to you firm
By Christopher Earley
“Know your numbers is a fundamental precept of business.” – Bill Gates
The better you know your numbers, the better and more effectively you can manage and grow your law firm. In particular, the better you know your marketing numbers, the easier it becomes to scale your practice and develop a strategic plan. Too few attorneys know their numbers. But we are not in the practice of law, but rather in the business of law. Any business, including a law firm, must be run like a business and a marketing budget is an indispensable tool for doing so. Before spending any more money on paid marketing efforts, it is wise to create a marketing budget. This budget will deliver the data you need to make sound marketing decisions.
Instead of randomly spending money on marketing (which many attorneys do) and hoping it brings a return on their investment, a marketing budget allows for an intentional and disciplined marketing spend. A budget results in less money wasted and better use of marketing dollars. A budget keeps you organized and on-target to reach your firm’s marketing goals. This lends itself nicely to driving the business forward.
Many attorneys are understandably uneasy with financials. This is not a topic generally covered in law school. But a marketing budget is easy to set up and doesn’t require accounting proficiency. A simple spreadsheet is all you need. The key is to create a marketing budget as soon as possible. Delegate its management to a trusted employee. The budget will give you peace of mind and direction in making data-driven decisions. The data also reveal the return on investment for a particular spend.
The marketing budget will reflect the proportion of your income allocated to marketing. At my firm, because we are in very aggressive growth mode, we are spending 20 percent of gross revenue on paid marketing. Our budget breaks down every aspect of our paid marketing, such as Google Ads, TV, mailed newsletters, and all other efforts we pursue. Our spend allocations within our budget are fluid, but we always stay within 20 percent of the gross revenue. For example, if we find a particular initiative is working well, we will add more money to that spend. Conversely, if a marketing channel is not producing desired results, then we will pull money from it. The budget is always being adjusted as circumstances change. Make sure your marketing budget is set to a percentage of your gross revenue that is in line with how much you are looking to grow. Each firm has a different number, but it is important to identify that number so that the marketing financials are in line with the firm’s overall financial spend.
The budget also ensures your marketing investments are diversified. You never want to be stretched too thin in any one marketing channel. If for example, you are highly overleveraged in SEO spend, and Google suddenly and radically adjusts the algorithm (that does and will happen), you are in trouble. A budget allows you to make sure you have a diverse set of marketing dollars spread across multiple channels, which gives you greater and more predictable results.
Our marketing budget is divided into different verticals such as external marketing to attract new clients, and internal marketing to stay top-of-mind with past clients, who are part of what I call “extended family.” Never forget it is easier to retain a past client than it is to attract a new one. Make sure your marketing spend has ample allocation for marketing to past clients. That is a great way to drive referrals, which often become the best cases.
As with anything in life, and in business, the key is to get started. Once you do create your marketing budget, you will be taking a large leap in moving your business forward. If you have other ideas about marketing budgets, I would love to hear them. Please share them with me at [email protected].
Christopher Earley is a Boston personal injury attorney and author who focuses his practice on the representation of the seriously injured and their families. His firm website is www.ChrisEarley.com.