Marketing investment has uncertain returns for law firms. This is the headline from a survey of CMOs at 68 of the world’s leading law firms by consulting firms Calibrate Legal and Totum Partners (1). This timely report is further evidence of the need for robust metrics to inform marketing and business development (BD) strategies in law and all professional services firms.
"Our research shows that CMOs understand the value of measuring return on marketing investment, but are not institutionalizing that measurement. Those that can confidently capture the performance of their marketing programs will be well positioned to achieve sustainable revenue growth."
The key findings of the report include:
Marketing performance management stood out as the area needing attention with ROI on marketing efforts lacking effective measurement.
Marketing data is clearly necessary and the study says CMOs need to make that a priority for their teams.
Client Relationship Management data should be key to this, including information on client interactions with the firm’s lawyers.
At beaton we provide a range of insights on how to measure ROI of marketing and BD activities, based on our own legal services market research and the best (and worst) practices we see across law firms.
Without gathering and using credible, proven ROI metrics:
Decisions on marketing and BD initiatives and resource allocation are often based on the subjective and variable opinion of partners
Marketing and BD are seen as art forms, not sciences
Marketing and BD budgets are seen as a cost, rather than an investment … and the first to be cut when savings are required.
The best firms use research as an evidence base to select the right metrics to measure, set targets metrics against competitors, develop initiatives to achieve the targets, track performance and adjust execution accordingly.
Here is our 5-step approach to measure and optimise and your firm’s marketing and BD ROI:
1. Select ROI metrics to provide evidence of execution against the firm’s marketing strategy, and effectiveness at influencing client buyer behaviour
Delineate between the key stages of buyer behaviour as outcome metrics for ROI:
Set the client choice metrics for each stage of buyer behaviour. Examples input metrics from beatonbenchmarks research which drive Purchase include experience of prospecting, perception of expertise in the client’s area of need, leading sector reputation.
Quantify the impact of different BD and CRM activities on client choice. Set metrics for the highest impact activities. Not surprisingly, beaton research into BD and CRM effectiveness highlights that some of the areas where firms invest the most time and effort has little impact on choice e.g. directories.
2. Set benchmarked targets for each metric that can be objectively measured, i.e. SMART (2):
Know your firm’s current position
Collect data on your competitors’ relative positions
Set targets for your firm in your primary target market for:
Outcome metrics e.g. increase Consideration from 60% to 65%
Client Choice metrics e.g. increase experience of prospecting from 12% to 15%
High impact BD and CRM activities e.g. number of off-matter client meetings.
3. Allocate resources to execute the highest impact initiatives to achieve ROI targets on your firm’s metrics.
4. Measure your firm’s performance robustly and transparently on each metric vs target, using available sources:
Firm systems e.g. CRM, practice management
5. Review performance vs metric targets and adjust resource allocation towards the most effective marketing and BD initiatives to optimise ROI.
(1) Reported by Calibrate Legal and Totum Partners
(2) SMART targets are Specific, Measurable, Actionable, Realistic, Time-bounded.
Paul Hugh-Jones, Partner at beaton