Cart Before Horse? Chicken Before Egg? Is Your Marketing Budget Based on an Actual Plan? 7 Things to Know for a Realistic Budget and Plan
How Much Should I Budget for Marketing?
Respectfully, I’ll give you the lawyer answer: It depends.
There are many schools of thought out there and percentages from 2% to 20% of gross revenue have been tossed around — not helpful. And, honestly, you’re getting ahead of yourself if you’re trying to determine an amount or percentage to spend on marketing without knowing the “Ws” — What, When, Where, Why, and Who.
So many times, law firms approach us with what they believe they should be doing from a marketing standpoint, only to discover what they really need to focus on is much different. Once we learn details such as their practice areas, clients, competitors, industries and much more (we ask the Ws), it’s revealed that where and how they were planning to spend their marketing budget is way off course and, therefore, so is the budget they had in mind. Knowing a handful of key pieces in the beginning helps us get the law firm on the right track, determine a realistic budget and make better use of their marketing spend.
What’s my point? Simple: Don’t attempt to determine a budget until you speak with your internal marketing team or external agency.
You may not know exactly what you want to do with your marketing plan, and that’s OK. Sometimes, it’s better to know what you don’t want to do with your marketing plan. It’s more about understanding what you need, especially when determining a marketing budget.
7 things you need to know for your marketing team to determine a realistic marketing budget and plan
Where are you getting your current work?
If you don’t know where you’re getting your current work or clients, then you don’t know where to invest your money where it works best for you. Do you document how the client came to you during your intake process? If you don’t, please start now. Create a “source of business” list and for every new matter, assign one. Your list could be:
Current client (new/additional work from a current client)
Referral from ABC networking group
Referral from XYZ conference
Referral from association membership
Your source of business list has to be as specific as possible. You have to know exactly where your business is coming from to determine how much budget to dedicate to maintain successful referral sources, as well as determine where you have gaps so you can dedicate budget to those sources.
Most likely, your intake process is automated, and you can extrapolate this data. The issue we see most is that the information is not asked for and documented during the intake process. When someone tells you they found you from your website or LinkedIn profile, ask them how they found your online profiles in the first place — that's the true source of business. Your website bio or LinkedIn profile provided a means to justify you being referred and nudged them to contact you.
What is the practice area you’re trying to promote/raise awareness of?
For example, a business attorney might focus on a client retention plan as well as a plan to grow their referral sources/network, both of which are relatively inexpensive to do. The costs incurred are client meetings over coffee or lunch and attending events and conferences to network. They could also join a professional networking and referral group; membership costs range from $1,800–$2,000 annually. Additionally, their law firm could host a series of mixers or client appreciation events.
Alternatively, a personal injury attorney’s matters are mostly “one and done,” so they might seek a steady flow of leads and invest in digital marketing, billboard and print advertising, all of which are considerably more expensive but generate more predictable results.
A few notes about print advertising. Of course, your budget for print advertising depends on the practice — a family lawyer will be found via print advertising more often than an employment lawyer on the management side. For business lawyers and law firms, print advertising can include directories and listings (such as offers to “expand” your Super Lawyers profile), an ad that comes with sponsoring a conference or event, a local or community lifestyle magazine or newspaper, support of a client being featured, etc. Naturally, print advertising is all about being seen repeatedly, so it should be a term spend with a commitment to multiple occurrences. A general rule of thumb is that if your advertising only appears once, it’s not an effective spend.
What is the marketing make-up of your firm?
Every law firm has its rainmakers, its minders and grinders, and lawyers who fall somewhere between the two, and all are necessary for successful implementation of a marketing plan. Be realistic about the marketing capabilities and desires of each player. For instance, if you’re going to execute an inbound marketing campaign to get the phones to ring, make sure that you have the right people assigned to complete effective intake calls. If an attorney is completing the intake calls, what is your arrangement for credit for that attorney (i.e., origination for closing the deal)? If you have your rainmaker out in the market drumming up business for the minders and grinders to work, how will you handle origination and working credits? Have you thought about the process and plan for when the rainmaker hands over the new client to the working attorney? Is it an expectation set from the beginning that the client’s day-to-day contact will not be the rainmaker?
Obviously, there are hundreds of systems and processes your firm could put into place — just be aware of who you’re putting where to execute your marketing plan. Placing attorneys in the marketing situations they are most comfortable and capable of functioning saves the marketing budget and eliminates waste. Don’t try to force your introverts to work the room at a networking event and don’t keep your rainmaker behind their desk working matters when they can be so much more effective at client acquisition.
Who are your champions?
There are several things to consider when you're thinking about your firm’s “who.” First, you need to know who in your firm “gets” marketing to understand why the plan is what it is and how the marketing budget is best spent. They don’t have to completely understand the intricacies and the day-to-day plan — they just need to understand (believe) that marketing is a necessity and be willing to support the firm’s plan.
If you’re an in-house marketing professional for a law firm, you know how important it is to identify the attorneys who support and champion you and the marketing department. You’ll also need to know how to make champions out of the others.
Bottom line, the firm’s culture should support the marketing efforts of the firm, everyone at the firm has a role in the marketing efforts of the firm, and your internal or external marketing team should have a seat at the table. If you have a supportive culture and a well-informed team, marketing budgets will be better understood and implemented more effectively.
Why do it?
Needing a marketing plan and budget may be obvious, but the why of it has to be defined. “I want to grow my law firm/practice” is nice — but why do you want to grow your law firm (and even that isn’t specific enough!)? Is it because it provides a nice living for you and your family? Is it because you’re a senior associate and want to elevate to partner? Is it because you want to raise the awareness of a specific practice group/area? Do you need more work coming in the door to keep all of the attorneys in the firm busy and productive? Again, you don’t necessarily have to know how you’re going to market, but you need to be able to explain the why to your marketing team so they can build an appropriate budget that directly correlates with your goals.
What are the marketing expectations for the lawyers at your firm?
Do you expect everyone to contribute to the marketing efforts of the firm? If so, you’ll need to assign a portion of your budget to training and support. Do you have a billable hours requirement and if so, how will you structure/account for the hours your attorneys use to market? Are you willing to build in a compensation plan for marketing hours? Are you willing to pay for membership fees and conference registrations? The marketing expectations you have of your attorneys must be supported by the marketing budget.
When should it happen?
Are you prepared to track and analyze results to truly understand the return on investment (ROI) of your marketing plan?
We see it every day: Law firms spend valuable resources, time, energy and money to execute a marketing activity and then ... crickets. That’s often because no one has looked at the best timing for marketing efforts. If you can’t determine that your marketing dollars were a good spend for you, you’ll continue to spend money on the wrong tactics and miss the productive opportunities because you ran out of marketing budget. You’ll also need to budget support (time and/or money) for your marketing team to track and analyze your marketing efforts.
According to the U.S. Small Business Administration, an average marketing budget for a law firm should be approximately 7–8% of gross revenue. However, recent surveys say that the legal marketing industry recommends 3–5% of gross revenue. I still come back to “It depends” — it depends on the unique circumstances of your firm and therefore, asking and answering the W questions is vital to devising a realistic marketing budget.