I like data, especially when it comes to my business. It can tell me objectively what we’re doing right and wrong. As long as i know what metrics to pay attention to and which ones to ignore, the data helps inform my decisions for the better.
This week we’re looking at metrics and ROI for law firms – how to measure success and get suggestions for what you can improve.
Weekly Edge #15: ROI and Metrics for Lawyers
via Clio by George Psiharis and Joshua Lenon
This webinar discusses key performance indicators (KPIs) that are important to law firms – everything from traditional law firm metrics to more entrepreneur-oriented assessments of how your law firm is doing. Profit-per-partner has been traditionally the most significant KPI for large law firms, but it completely ignores other important factors responsible for the success of the law firm. Favorite action point: Instead of Profit-Per-Partner, look at Contribution Margin – What is the average revenue per client – the average cost to acquire the client? This margin can be assessed at different levels including the client, matter type, practice area, and attorney to help you get a better picture of every revenue-generating aspect of your practice.
via Forbes by Daniel Kehrer
This article is a counter to the idea that ROI is the most important metric for determining the value of your marketing campaign. First, the article disputes ROI as the most important metric, and second, it suggests looking at other business metrics in context. Max ROI does not equal max profits. If you spend more on a particular marketing channel because it has a high ROI and the ROI drops, you shouldn’t necessarily stop spending money on that marketing channel. Instead, the author focuses on a different metric – ROMI – return on marginal investment (measuring the ROI for the last incremental amount spent). Whereas ROI changes based on different levels of spend, it only matters whether ROMI is positive or negative to determine whether you should continue spending. It looks at a marketing investment in the landscape of all of a company’s marketing efforts. Favorite action point: If your ROMI is positive, you should spend more on a given marketing channel because every additional dollar of investment in this channel is providing a greater return than your “average” marketing investment.
This guide gives a run-down of different methods of marketing your law firm and how to track the success of each. It includes everything from word-of-mouth referrals to direct mail, PPC, SEO, and print advertising. Favorite action point: Track exactly how many new clients a particular direct mail or print advertising campaign brought in by having a dedicated phone number specific to that campaign. And it’s incredibly inexpensive to set up (~$3/month). Instead of asking “How did you hear about us?” and getting a potentially unreliable response, you can have the data easily accessible for your evaluation.
And for fun…
This video is a perfect example of why it’s nice to have real data rather than just a “hunch”.