*Foreboding, creepy music plays*
Our law firm marketer hero is alone in the office, at her desk. Everyone else went home hours ago. It’s deathly silent, aside from the echoing sound of her keystrokes as she sets up tomorrow’s social media posts on Buffer. She’s just about done. She can go home after a long day of helping build the financial future of her firm.
An email? At this hour? Annoyed, she switches windows to look at the offending message. Annoyance morphs slowly into creeping dread and then abject horror as she reads the name of the sender and the subject line.
From: Managing Partner
Subject: WHERE IS YOUR 2020 BUDGET?
To a law firm marketer, no Hollywood monster flick or haunted graveyard can compare to the fear that budget season can bring. And with good reason. It’s a time when everything you and your team do is under scrutiny, and what you can accomplish in the coming year is up for grabs. Everything depends on getting your numbers right — and having them approved.
But, it doesn’t have to be. Just like two necking teenagers in a parked car at night will always attract psychotic killers, there are budgeting pitfalls you can avoid, making this season far less scary.
In fact, you may even enjoy it!
Here are five things to do differently this year.
Pitfall #1: Prioritizing cutting costs over value
Many legal marketers go into budget season like an honorable vampire given short rations by their blood bank. They approach their number-crunching with a scarcity mindset — obsessed with cutting costs above all else to keep their department afloat. This usually involves looking at what was spent last year and then wielding a knife like they’re the villain in a slasher movie.
Saving money isn’t bad. It’s just that if it’s the primary goal, that likely won’t serve legal marketers or their firms very well. Marketing, after all, is the lifeblood of a firm — bringing in new business and new clients to ensure its future. Scrimping on that is not strategic. It’s also not the best way to figure out how to spend the budget you do have.
The reality is that no firm has infinite money to spend on marketing. However, if marketers focus on the value they’ll get from what they do with their budget, rather than simply cutting costs, the firm will be better served.
This, of course, requires asking some deep, strategic questions, such as:
- Where are we as a firm right now? What’s our market position? Our financial picture?
- What do we want that to be 2-3 years from now?
- What internal marketing resources do we need to make that happen?
- What initiatives and investments do we need to make that happen?
Asking these questions, and developing thoughtful answers, can really bring a whole new perspective to the budgeting process. You’re not trying to predict next year’s spending by looking at what you did last year. Instead, you’re focused on the value that marketing will bring to the future of the firm, and how to get there. And you then spend on things that will make this a reality.
Focusing on value rather than cutting costs is one of the best ways to make both budget season and the coming year seem far less scary.
Pitfall #2: Relying solely on benchmarking against competitors
Ever been really happy with your Halloween costume only to go on Instagram and see someone who has a better one? Did you immediately feel worse about yours? That’s OK, it’s only human. But that person may have had professional training in theatrical makeup, or maybe they know someone who works in a Hollywood wardrobe department. You don’t know that just from the photo — and that’s why comparing yourself to someone else is just asking for trouble.
It’s the same when trying to benchmark your marketing budget with that of other firms. Yes, there is value in knowing what others are spending, but they’re not your firm. Some could be throwing more money at marketing than they need to be or making poor strategic decisions that don’t serve the firm.
There’s not even a good consensus regarding what firms should be spending. The average Am Law 200 firm spends about 2% of annual gross revenues on marketing. But, most law firm management consultants recommend between 2% and 5% — more if your practice involves a lot of consumer-focused advertising, such as personal injury.
Law firms also spend much less than most other businesses. According to Gartner’s 2016-2017 CMO Spend Survey, the average marketing spend is 12% of annual revenue — but that’s across a lot of industries and includes companies of vastly different sizes.
Given all of this, it’s best to look at benchmarking as a way to make more informed spending decisions, but it should not drive your entire process. Instead, use it as a guide to a process that also factors in things such as:
- The kind of law you practice
- Firm size
- Annual gross revenue and profit margins
- Target market
- Market area
- Existing client base and client turnover
Pitfall #3: Underinvesting in proven strategies
When battling for your life with a werewolf, you use silver bullets. Why? Because they work. The same can be said for marketing and what you spend on it. A proven strategy or tactic is always worth your firm’s investment, and you shouldn’t be afraid to double down.
Ryan Holiday, the author and media strategist who counts Tim Ferriss as a client, says that one of the biggest mistakes marketers make is not going “all in” on a tactic that works. You actually get more bang for your buck if you put more money towards what’s successful.
This also means not going after every shiny new marketing trend. Even though the next generation has left Facebook and is now on TikTok, that doesn’t mean you have to get every lawyer in the firm taking short, funny videos of themselves if their clients aren’t also on that social network. Learn from horror films — following your dumb friend into a haunted house will just get you both killed.
Instead, focus your budget on what will bring your firm more clients, and provide the resources needed for success. Email marketing, for example, is a proven tactic for professional services firms to reach both new and existing clients. Putting money there, and then taking the time to do it well, will likely be a good use of your limited annual budget.
Pitfall #4: Spending less because you’re a smaller firm
It takes courage, fortitude and amazing internal resources to venture into that haunted forest alone to kill the monster that lurks within. Going solo means having to be as strong as a group in order to defeat the demon. The same holds true with law firm marketing budgets.
Small or mid-size firms might believe that, because of their size, their marketing budget should scale. Yeah, not so fast. Marketing any firm, regardless of how big it is, still requires the same things. You need a website, for example, and people to write the content for it and maintain it. Today, there are social media accounts to manage, email newsletters to get out, events to attend and organize. You get the picture. Those fixed costs don’t get smaller because a firm doesn’t have 500 lawyers.
It also takes more effort for smaller firms to get noticed. Larger firms tend to have more visibility by virtue of their position in the market and, usually, a much bigger referral base. An established brand is simply easier to maintain.
So, when crunching numbers, consider that you may have to spend more than you think even if you’re a small firm. It’s just a fact.
Pitfall #5: Not analyzing last year’s performance
In nearly every episode of Buffy the Vampire Slayer, the Scooby Gang’s first encounter with a new big bad monster does not go well. In fact, they’re often sent home licking their literal wounds. What they do next, though, is important. They rally in the school library with Giles, discuss what went wrong, what went right, do some research and then the next time they face that evil foe they are victorious.
How does this apply to law firm marketing budgeting (and not merely a way for us to get in a Buffy reference)? Well, the best way to plan for the year ahead is to see how you did this past year. And the only way to do that with any accuracy is to look at hard data.
Thankfully, today’s law firm marketers are awash in data. It’s glorious. Nearly everything legal marketers do can be measured in some way or another. Here are a few examples:
- Google Analytics: Your website’s traffic is a treasure trove of helpful information, and Google Analytics can help you sort through it. It provides insights into how people are using your website, what they’re focusing on and more. That can inform budgeting decisions around changes to content and design in the coming year.
- Email marketing analytics: If you use email marketing, you should be analyzing the analytics you get from your provider. Depending on the service you use, it will reveal how your messages are being received, activity on your website linked to the e-newsletter, and other helpful insights. Use this to determine what you will do with email marketing over the coming year.
- Social media metrics: Tracking likes, follows and shares is important to get a sense of whether your content is leading to engagement. More importantly, however, you should analyze social media data alongside your website analytics to see if what you’re doing is driving people to your website.
- Lead source metrics: If you use a marketing automation system — and you should — you’ll have access to information that shows which campaigns generate prospects. Analyzing this information can help you decide what kinds of campaigns to spend money on next year.
Analyzing all of this information can help a law firm marketer make budget decisions that are data-driven and based on what’s actually happened over the past year — and that’s a recipe for future success.
Don’t get scared! Get strategic!
Budget season doesn’t have to be scary — or something to be feared. Getting strategic in your approach to budgeting is key to developing a plan for the coming year that will serve both the marketing department and the wider firm. By avoiding these pitfalls you’ll take a lot of the pain out of the process, and you won’t fear the sound of your managing partner’s footsteps coming down the hall to your office.