Are You Leaving Money on the Table?
Hello, I'm Davina Frederick. And
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lawyer. So today's topic was
inspired by a conversation I was
having with some of the members
of the wealthy woman lawyer the
community about key performance
indicators or KPIs, as we call
them. One important performance
indicator in your law firm
business is the cost to acquire
a new client? In other words,
how much does it cost you on
average to acquire a new client.
And a lot of people are get
really confused about how to
work through this calculation.
Well, there's a really simple
way to calculate this. And that
is to add up all you spend on
marketing, all you spend on
marketing last year, and then
divide by the number of new
clients you brought in during
that same time period. So for
instance, let's say you spent
$50,000, on marketing and
advertising your law firm
business in 2021. Perhaps you
paid someone to create content
for you on social media, maybe
you tried out Facebook
advertising or your aunt's
Google ads, it could be that you
had a professional photographer,
take photos of your team. So you
could use that on your website
and in your marketing. Whatever
you invested in branding,
marketing, advertising, speaking
engagements, webinar creation,
add all of it up, you should
have a line item in your Profit
and Loss report for advertising
and marketing that provides this
total if you don't, that's a
whole nother discussion for
another day. But we need to get
a bookkeeper for you providing
that information, right. So now
let's say you acquired 100. New
matters last year, we're going
to take and divide that 100 into
the $50,000 you spend on
advertising and marketing. And
we'll see that your cost to
acquire a new client is about
$500 per new client, if the
average value per matter is
let's say 2500. So let's say you
only bring in on average 2500
For every each one of your
cases, and it cost you $500 To
acquire HD matter, you can see
where there can be a problem
with this over time you are it's
costing you way too much to to
acquire that client if all
you're charging him is $2,500.
However, if it costs you $500 To
acquire a new client and your
average value per matter is say
$30,000, it might be well worth
it for you to pay $500 to
acquire that new business,
right? Of course, there are a
couple things that can skew
these numbers that are sort of
out, we've left out of this
calculation, and that you may
want to take into consideration.
So number one is the calculation
doesn't take into account the
amount of time you personally
invested in marketing. So you in
your marketing and advertising,
if you have a team member who's
devoted to marketing, that costs
can show under your marketing
and advertising. Or you might
have it listed as a professional
service provider. So that might
be like a graphic designer you
have on contract or whatever,
that you that's an easy way to
add that hard cost into that.
Okay, so you would just simply
add whatever you're paying the
graphic designer on top of the
other hard costs, right? If it's
not already calculated there,
but the time you personally
invested we often forget about
that. So let's say you do that
at a rate of $400 an hour,
right, your your time is worth
$400. Okay. So if you add up all
the time you spent on marketing,
and then you add that to your
heart costs. Now you can see
where the cost to acquire a
client figure of $500 may not be
the complete story. So when
you're when you're calculating
this KPI, you really want to
think about the true cost of a
thing, not just the hard costs
that we're seeing there. That
doesn't mean that I'm advising
you to take yourself out of your
marketing. If we need to take
photos of you if you need to
create some videos, batch those
videos and create them that
certainly can be important. You
also might consider having other
team members involved in that
process as well. So So that cost
could go down. Or you might
consider investing more in,
let's say, Google advertising.
Because while at first blush,
Google advertising may seem more
expensive, it may be less
expensive if you don't have to
put your time cost calculation
in there. Okay? Also, number
two, we have not yet considered
the lifetime value of a client,
not only in what they invest in
working with your law firm over
time, but also the value of
their referrals. So this may be
harder to calculate, just like
calculating your time. But it
can be done if you haven't
accumulated historical data that
you can reference, right. So in
fact, in your accounting
software, you might be able to
pull report income by customer.
Okay, I know in QuickBooks, you
can do that. That'll tell you
exactly what each client has
spent with you for any given
period of time. tracking
referrals is a whole other
animal and one we will get into
today, because there's something
more important I want to share
with you in the limited amount
of time that we have.
Did you know According to
Harvard Business Review,
acquiring new customers for your
business is anywhere from five
to 2525 times more costly than
retaining an existing one. Not
only that, they're 60 to 75%
success selling rate to
customers who already have you
that you already have while five
to 20% success selling rate to
the new prospect. So reselling
services to your existing
clients, people have already had
a chance to work with you and
have a great experience with you
is much much easier than trying
to sell to a brand new prospect.
So instinctively, you probably
already know that it's easier to
sell to someone who's already
bought your services services
before. Most of us may have even
heard this type of statistic
before. But when was the last
time you thought about how you
can do that more effectively in
your law firm business. If you
haven't given it some thought,
then I promise you, you are
leaving money on the table. So
here's how I've seen law firm
owners do just that leave money
on the table by not giving
thought to their current
clients. Number one, is they
neglect to set up a marketing
system that retargets clients,
once their current matter is
complete, something that softly
reminds them that you're here
for them for life and happy to
serve other needs, they may come
up that may come up in their
lives, or to serve the needs of
family members and friends, you
may think you're in one of those
practice areas where it's a one
time deal one, maybe they're
going to get divorced, and it's
only gonna be one time. But
that's not really what
statistics bear out. And also,
there may be modifications and
things like that in the future.
So you want to make sure that
you set up a marketing system
that retargets clients once
you've closed their case out and
just kind of keeps that
relationship that you've worked
so hard to build with them go
away because you definitely can
get increase their lifetime
value with you if you do that.
Number two is failed to set up a
tickler system to remind clients
when something you know is going
to come up in the future is
about to occur. So perhaps it's
been three years since they did
their estate planning a lot can
happen in three years. Now maybe
time to reach out to them to see
if they need to revisit their
estate plan. Perhaps you've
helped an entrepreneur trademark
their brand or form a company
you know, what would it be like
if to reach out every year with
a check in to see if they've had
any new business ideas or
they've expanded their current
business which could raise new
legal issues and needs. So think
through your your own clients in
your practice areas and play
futurist for a minute. It's
really fun to play futurist,
right. I've always wanted to
have a business card that says
futurist Divina Frederick
futurist on it. Alright, number
three, treat clients
disrespected disrespectfully,
once you've acquired them. Now,
this is kind of my pet peeve. It
drives me absolutely crazy. This
often comes up in the form of
making clients feel like you are
a very important person. You're
very busy and you're very
important, and they are
bothering you when they have a
question or they need
clarification. Yes, you need
boundaries as professional don't
get me wrong. I know that you
need boundaries. But I want you
to remember the time you want to
clients, new clients so badly
You were hungry you want to new
clients, you were worried about
whether they were going to keep
coming in, would you ever be
able to get enough to build a
nice referral network? So now
that they're here, consider how
are you treating them? How are
you treating them? Are you
arrogant? Are you letting your
ego lead the way? Do you feel
like that they should be feel
lucky that they have you. There
are numerous ways you can make
your client feel valued and
important without sacrificing
your personal and professional
boundaries. condescending to
them. Training your team to
condescend to them is the surest
way not only to lose them, but
to damage your firm's
reputation. As my Angelo
famously said, I've learned that
people will forget what you
said, people will forget what
you did, but people will never
forget how you made them feel.
So if you have not got a system
set up in your law, firm
business, and a culture where
you have trained your team, to
make people who your clients
feel important and valued and
like you appreciate them, then I
would really recommend you do
some work here because this will
be more damaging to your
business in the long run than
anything. That before us forget
to say thank you to your clients
kind of following along that
same vein, there are 1.3 million
more than 1.3 million lawyers in
the United States alone. They
did not have to choose you and
yet they did. When was the last
time you thank them for being
your client. And how many ways
have you thank them? Did you put
it on your invoice, but never
say it to their face? Because as
someone who has received
invoices with thank you on it,
well, that's really nice. But
it's even nicer when somebody
says to your face, I really
appreciate you and what and that
you chose us. If you think
showing appreciation for your
clients is too much work. That
is because you haven't learned
how to incorporate appreciation,
engagement and relationship
building in your law firm
culture and in your systems. And
the wealthy woman lawyer league
that's one of the skills we
teach our women law firm on our
clients. If you were a woman,
law firm owner, and you're
considering joining the wealthy
woman lawyer League, the wealthy
woman lawyer League is a coach
led mastermind community
exclusively for women law firm
owners who are ready to scale
their offer businesses to and
through a million dollars with
total ease and learn the skills
they need to do so. You can find
out more by visiting www dot
wealthy woman
lawyer.com/league/so. There's
two brackets around the word
League. The link is in the show
notes excuse me, the link is in
the show notes. So that is a
wrap for this episode of the
wealthy woman lawyer podcast. I
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way to add value with my
clients. I will often listen to
a podcast episode and I will
just share it from my phone to
theirs. It's really easy to do
won't cost you a cent and your
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