The following is a guest post, courtesy of Deanna Powers, eGeneration Marketing.
There are more than 12,000 attorneys in the state of Oregon. Many firms, particularly small firms or solo practitioners, may not be able to hire someone to handle all marketing efforts. If you’re in charge of marketing for your law firm, it may be challenging to know which channels are most profitable. TV ads usually lead to a lot of claimants calling your office, but is this marketing option overall more profitable than simply spending more time optimizing your firm’s social media pages? Fortunately, there is a way to accurately compare every marketing venture to one another. A cost per case metric will help your firm make better-informed spending decisions by examining the profitability of all current marketing efforts.
What Is Your Cost Per Case?
A cost per case (CPC) analysis examines the profitability of a particular marketing venture by taking the total dollars spent on that advertising effort divided by the new clients signed because of that effort.
Marketing Effort Budget ÷ New Clients Signed = Cost per Case
It’s unlikely that your marketing channels will all yield the same CPC. Some new clients will have a CPC of $0. This happens when past clients refer your firm’s services to their friends or family members. This is perhaps the most beneficial marketing avenue for your firm, since it cost you nothing in terms of advertising dollars.
Unfortunately, no matter how strong your firm’s reputation, not all new clients can be signed from referrals. A CPC metric gives you the data you need for a thorough analysis of every paid marketing effort, which in turn puts stronger marketing budget decisions well within your reach. Some profitability can be calculated for you—Google AdWords gives your firm a wealth of data on how your campaigns are performing if you use PPC ads. Unfortunately, non-digital marketing efforts are a little more challenging to evaluate, but the CPC calculation still comes into play. We can use billboard pricing as an example as how you would calculate your firm’s CPC through a traditional marketing channel.
Billboard Ads: High Exposure Generates Greater Leads
When considering marketing avenues for law firms, high exposure is a key factor. Many firms choose to use billboard marketing because it gets you the most views for the lowest price. Outdoor ads have a crucial place in a well-devised marketing strategy according to the Arbitron Out-of-Home Advertising Report, a national survey that examines advertising and spending habits in relation to the increasingly mobile lifestyle of Americans. According to this report, eight of 10 Americans make buying decisions while out of the house and many of these decisions are made in the car. About 75% of travelers see billboards, and about 50% internalize the messages viewed, often later acting on them.
Lamar Advertising, one of the nation’s biggest billboard and other outdoor advertising firms, offers a range of marketing locations in Portland, Oregon and the surrounding communities. Prices vary, based on ad size, location, and whether messages are static or digital, but this means your firm has ample choices for remaining within an established marketing budget. For example, Lamar offers a billboard on Mt. Hood Highway, near Haley Road, which receives more than 92,000 views during an average week. This 14’ x 48’, permanent billboard rents for $7,500 per month.
It’s very hard to know how many clients you’ll sign from a billboard, as the overwhelming majority of commuters won’t need your legal services. Conversion rates for billboards can be as low as 0.002%, and this is simply the number of people who call your firm, not the number of cases you take! You may only think one of 10 claimants who reach out to you have a pursuable case. If you sign a respectable two new clients per week due, your CPC for this example will be $938.
Is This a “Good” Cost Per Case?
Some firms may be thrilled with a CPC of $938, while others will be horrified. It all depends on how much return you’re expecting from your claimant.
If your firm specializes in divorce and family law, for example, then you’re likely to see fees of $10,000 or more per complex case, which would make the spend of $938 for signing a new client profitable. On the other hand, if your firm specializes in Social Security disability law, then the $750 spend might be a bit steep. The average Social Security attorney only receives $3,000 per settlement, with a maximum of $6,000. The profit margins would be too slim for Social Security attorneys to pursue any marketing channel with a CPC that high.
Ultimately, if your firm realizes a CPC of about 15% of the fees earned per claimant, then the marketing effort is considered a profitable advertising venture.
Getting the Facts Needed for CPC Analysis
A CPC metric only works if you have the appropriate data to complete a reliable analysis. With many of your online advertising efforts, you can easily determine how and where clients learn of your firm. When a new client calls or walks through your doors though, you’ll only discover the data you need if you pose the appropriate questions, and the most important one is:
“Where did you hear about us?”
A new client’s answer lets you construct a reliable CPC. This in turn allows you to evaluate accurately your current marketing efforts. It additionally offers the data necessary for developing profitable marketing plans for the future. Regardless of whether you use TV ads, billboards, digital marketing, or are simply working to build a name in your community, calculating your CPC can all you to pinpoint your marketing inefficiencies and invest more into your most successful campaigns.