You Get Out What You Put Into It - Underfunding Your Marketing Plan June 2010
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You Get Out What You Put Into It:
Don't Under-Fund Your Marketing Plan
If your marketing plan only has enough steam in it to produce five meaningful touches, it will be almost as if you never touched them because it won't break through all the other marketing efforts made by other attorneys vying for that person's time and money, including your biggest
competitors. How much do you need to invest in your marketing efforts?
There are many variables to consider in answer to that question. Here are a few variables you need to consider:
- What practice area are you in? Some practice areas require significantly more time and money to market (litigation and personal injury to mention two).
- What are your profit margins? The larger your margins, the more you can invest on marketing and new business development. Some practice areas have bigger profit margins (litigation) while others have notoriously low profits (insurance coverage and residential real estate).
- What are your annual revenues? It is not unusual for successful law firms to spend between 15 percent and 40 percent of their annual revenues on marketing.
- Are you targeting other businesses or individual consumers? Anytime you are marketing directly to consumers, your marketing budget must be bigger because of the intense competition for consumer's pocketbooks.
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- What are the
size of your competitors? Obviously companies trying to take
market share from Wal-mart are going to need a lot bigger marketing
budget than a beauty salon owner. Analyze your competition-what kind of
marketing materials do they put out? How are they positioning their
firm?
- How sophisticated are your competitors when
it comes to marketing? Typical companies in service-based
industries and professional services (like law firms) are a lot less
sophisticated than other industries.
- How much time can you devote toward
your marketing plan? In general, the more time you can devote toward
implementing the plan, the less money you have to use. For example, if
you use direct marketing as part of your plan, you can spend less money
and send out fewer letters with less frequency if you're able to follow
up with a phone call.
- Are you marketing directly to the end
user or through a referral source? Marketing to the end users of your
services is more difficult than working through an established marketing
channel like a referral source.
- How long is the typical
marketing-cycle? How long does something take to make a decision after
they have gathered all the information they need? Is it measured in
minutes, days, weeks, or months? The longer the marketing cycle, the
more money you need to spend on marketing because after you have given
them the information they need, you still need to stay in touch with
them.
- What's the geographical size of your prospect base? For
many professional service firms, like doctors, lawyers and accountants,
it is usually limited from five to 25 square miles.
- What is the
average sale size? How much does your average client spend with you?
$500? $5,000? $500,000? $5 million? Items costing less than $500 require
different marketing strategies than those costing between $500 and
$5,000. Typically, the higher the price tag, the more you need to
educate your customer as to the benefits of your services and provide
more evidence of your credibility.
- What's the lifetime value of
your average client? How much does your average client spend with you
over a given time frame? If they spend $1,000 a month with you, year
round and the average customer stays with you for 3 years, then the
average customer is worth around $36,000 to you. If you know that, you
know how much you can afford to spend on landing each customer before it
starts to negatively affect your profit margins. If your average client
only makes one "purchase" from you and never comes back, then you will
need to use lower cost marketing strategies to reach them.
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