Do you know how much your clients cost?
We’re not talking about referrals or word of mouth clients. We’re talking strictly about “stranger clients” – the people who you don’t know and who weren’t referred to you but contact you through your website.
Here’s a little inside secret from someone who has worked with hundred’s of law firms… Most firms have no idea how much new clients cost.
But does it matter?
Short answer – YES!
I’m Theodore M. DeBettencourt co-founder of Juvo Leads and I’m going to walk you through how to calculate your cost of client acquisition – often referred to as COCA. Here’s a homemade (and free) tool that top law firms use to calculate their cost of client acquisition.
Your firm needs more leads but it’s hard to know where to turn. By accurately calculating your cost of client acquisition you can quickly know your best (and cheapest) ways to get new leads.
Isn’t It All About SEO?
You need potential clients to be able to find you and contact you through the web. If they know your name and type it into Google and your website shows up – great! But if the person types a search phrase like “Divorce Lawyer Los Angeles” the law firm websites that show up at the top are the best in SEO for that keyword.
All lawyers want their website to be at the top of Google – but sometimes the time and expense to be #1 in Google doesn’t justify the cost. SEO comes down to content and links. The law firm paying $5,000 a month on SEO has either more content or better links, or some combination of both than the firm paying $500 per month.
So if getting to the top in your region is prohibitively expensive maybe it’s time to try another marketing channel.
Legal Digital Marketing revolves around calculating your cost per client through each channel. So far we’ve talked about SEO, which is the most common channel, but the second most common channel (and in our opinion the best) is AdWords and Bing Ads. These are the Ads that appear on the top of search results when people type search terms into the top of Google. As of today the have a little Green “Ad” symbol next to the URL.
As you probably know these ads cost money every time they are clicked, and sometimes those clicks can be expensive. If you don’t know how much you’re spending on these Ads and what you’re getting in return we advise you to stay away.
Here’s How You Calculate Your Costs
A law firm needs to know and spend in the profitable marketing channels and avoid unprofitable channels. If a law firm were to know that their “Bankruptcy AdWords Campaign” targeting the suburbs south of their biggest local city brings in leads at $42 per lead, while in every other location those leads cost $156 per lead, it would be smart to focus more of the budget at the lower cost per lead targets. Reallocating the budget in this instance would triple the law firm’s leads WITHOUT increasing the budget.
Here’s the sheet we use to find out what leads are the cheapest. Please download the tool below or just follow along as we go over the tool in detail.
Here is our “Metrics that Matter Tool”. The first tab in the Metrics that Matter Monthly Channel Totals is shown below. This is your summary page to know what channels are making you the most money per dollar spent. Looking on the far right we see “AdWords” and “Email Marketing” have the lowest Cost of Client Acquisition which means this law firm paid $231 for each new client it acquired through AdWords and $50 for the client they acquired through Email Marketing.
You can get almost every piece of data from Google Analytics and your website.
Now let’s jump to the top:
CPI = Cost Per Impression
CPC = Cost Per Click
CPL = Cost Per Lead
CPS = Cost Per Subscriber
COCA = Cost of Client Acquisition
The sample numbers you see are (mostly) from a law firm that actively uses this tool (May 2016).
The first thing to bring to your attention is that not all firms acquire subscribers (The SUBS Column). Niche firms (Maritime, Customs, IP, Etc), Real Estate Law, Elder Law (some), and Estate Planning Law firms typically acquire subscribers somewhat regularly but Personal Injury Lawyers, Criminal Lawyers, Bankruptcy lawyers and many others often don’t (nor probably should).
Growing a law firm is simple – acquire as many profitable clients for as cheap as possible. And by simple I mean it’s very easy to “say” – but it’s obviously much tougher to do.
By calculating a firm’s COCA across different channels (and even within channels) you can learn where your clients are coming from so you can allocate your Ad Spend to maximize growth.
Now let’s jump into the individual channel rows.
The first column “Traffic Source” is the source of traffic to the firm.
Here, we’re capturing the most common channels for new law firms. SEO, AdWords (including Bing Ads), Facebook Ads, InPerson, and Email Marketing. These are the main channels which 80% of firms use. There are many others, but these are the top channels and what we’ll focus on here.
“Impressions” – means your ad or search listing was seen but not clicked. “Clicked” means a human actually clicked your ad or search listing. “Subscribers” means someone gave the firm their email as well as permission to send them email pertaining to your firm’s expertise. Generally capturing subscribers entails giving away a free “Guide”, “Tool”, “ebook” or some other download.
Next on the left we have costs:
The Cost Columns 2-5 are all about spend. How much the firm spent is broken down into; Fixed, Variable, Other, and Total Costs. SEO cost is usually the price you pay to an SEO firm which sometimes includes the price for running a firm’s paid marketing campaigns. AdWords and Facebook ad spend is generally the money paid to Google, Bing, and Facebook to show the firm’s ads. In Person spend refers to the money a firm spends to attend events, email marketing (one of the cheapest channels) generally refers to the price of the software used.
Here’s an example of a “Free Download” an Estate Planning Lawyer uses to capture email addresses. This image appears in the middle of a blog post on this law firms website.
Next up we have “Messages” and “Calls”. Website messages are submitted contact forms on a website and “calls” are – phone calls. If you’re using an SEO only campaign you probably aren’t using call tracking – but once you start spending $500-$750 per month on SEM (AdWords, BingAds, FB Ads) you should invest in Call Tracking so you know where you phone calls are being generated.
Setting up call tracking can be somewhat complex, but if you work with an SEO company they can take care of it for you. CallRail is good solution and runs about $30/mo (link at the bottom).
On the far right we have the data that’s most important. How many leads came in through each channel, how many of those leads converted, how much were those cases worth and how much did each client cost by channel.
% Leads Converted = The % of leads (calls + messages) that converted into a new client
New Clients = The Number of New Client Signed
Avg CT Value: The Approximate Value of each new case
TTL Case Value: How much all of those new clients are approximately worth
Channel COCA: The Cost to Acquire a New Client
Individual Channel Breakdown
The first tab is the totals but now let’s jump into each individual tab.
Gathering Organic Traffic Data
Here we break it down by search engine but sometimes (depending on the firm) it makes more sense to break it down by practice area or sub-practice area.
With SEO Traffic, the average case value doesn’t usually change by search engine. You can do this in a few ways. You can break it down by practice area or sub practice area or you can assign a case value to each traffic row. The easiest way to do that is to copy the “Adwords” tab and replace the “Traffic Source” with the different practice areas or sub practice areas.
To pull the Google Data login to Analytics and go to “Acquisition -> Search Console -> Queries. “Clicks” and “Impressions” is what you want.
For Bing and Yahoo the data isn’t perfect for but we can get pretty close. “Click” data in Acquisition -> All Traffic -> Source Medium. Here I use the “New User” data. It’s not perfect but it’s about 90-95% accurate.
The Bing impression data isn’t perfect as Bing Webmaster Tools combines with Yahoo data. I usually allocated an even weighted percentage based on the export. To get this data login into Bing Webmaster Tools ->Reports Data -> Search Keyword. From there, click export and the impression data is on the spreadsheet.
The Subscribers, Messages, and Calls data can be pulled from Google Analytics, but it takes a little work to set up “Goals” in Analytics.
If you have an SEO agency they’ll be able to set this up pretty easily.
The big question is how do you know what lead came from where? It’s actually easier than you think. For each traffic source you set up a different contact page and different thank you page. For instance – for each AdWords campaign you set up (Business law Campaign, Person Injury Campaign, etc) you have a different landing page with a different contact form on each landing page. When a website visitor fills out the “Business Law Inquiry” form they should be redirected to the “Business Law Inquiry Law Thank You” page. In Google Analytics set these “Thank You Pages” as goal destination pages you’ll be able to see how many unique visits each pages receives.
AdWords and Bing Ads
Here all of the data can easily be grabbed from Google AdWords and Bing Ad.
The Adwords screen shot above is broken down by “Ad Group” but it can just as easily be broken down by campaign. Bing Ads is the same thing – just a slightly more clunky layout. Similarly you have separate landing pages for each campaign. So using the example above, if the person fills out the form on the “Criminal Defense Lawyer” page you know where the lead came from because it’s a different form than “DUI Attorney”.
Pop Quiz time. Looking at the above data – what Ad Group is doing the best?
If you said “Criminal Defense Lawyer” – you’d be right.
If you look at the “Average CPC” they’re all relatively similar. BUT check out”Conversions”.
“Criminal Defense Lawyer” has 78 clicks and 19 conversions while “Criminal Defense Attorney” has 66 clicks and 5 conversions.
Wouldn’t this criminal law attorney benefit from shutting down “Criminal Defense Attorney” and allocating those resources to the Ad Group “Criminal Defense Lawyer”?
This is the exact type of insight that the MtM sheet shows. If a law firm doesn’t know which campaigns or Ad Groups are profitable and which ones are unprofitable it won’t be ablve to reduce it’s COCA. Here is what the above data looks like the MtM Spreadsheet
The Facebook MTM summary below is just an example based on sample data. This law firm learned a long time ago that Facebook Ads weren’t very profitable. This isn’t the case with all law firms but for this one it was.
Here we have 3 Campaigns on the left with the data pulled right from Facebook’s Dashboard.
Facebook Ads, particularly remarketing ads can be a great source of leads for some law firms, but each law firm must test to validate this. Don’t rely on what others have said regarding Facebook ads, or any type of ads for that matter. For each marketing channel a law firm must test to see if it’s generating clients or not.
If you run a law firm you get this call at least 2 times per month.
Salesperson: “Sign up for an exclusive listing in our Directory which receives 40,000 Clicks per month. Don’t you want to be the #1 listed attorney in our Directory”?
Law Firm: “Sounds great – how many clients will I get from it?”
Salesperson: “We don’t guarantee results but we get 40,000 clicks a month and you’ll be at the very top. Why don’t you give it a shot it’s only $1,200 for your city. We do require a 3 month minimum but 87% of our clients reup after the trial period.”
Law Firm: “I’m not sure – let me think about it.”
How do you know if it’s worth it?
The salesman is making pretty big claims but for $3,600 is it worth it?
The short answer is for most firms is no. I’ve seen only 1 example where it paid off for the firm.
But how would you know for sure if you pulled the trigger? Here’s how. You’d calculate how many leads and clients you earned from that directory and compare it to your other channels.
Below is how we calculate
How much you spent vs how clients your firm gets. Here 0 clients were acquired so we don’t know what the COCA is because you can’t divide $1200/0.
Most of the directoryies or other types of offers like these have some sort of tracking. They sell you on the impressions and ranks, but at the end of the day the only thing that matters are New Clients and how much a law firm paid to acquire them.
In Person Events
Do lawyers in your firm go to BMI Groups? Charity Events? Local Lawyer Events?
These traditional forms of networking can be great sources for acquiring new clients. But how many should you go to? Does it make more sense to spend an Extra $500 in AdWords or go that BMI meeting every month?
If your firm attends a charity event and acquires a client from this event then you’d attribute that $450 (the money spent at the charity event) to that client. If you choose to, you can also calculate your hourly expense and multiple that by your hourly billing and enter that into the “Other” column. Here you won’t necessarily gets clicks, but you might get a phone call based on a business card you gave out or a call from a referral based on a morning chamber meeting.
Email marketing for law firms is different than most lawyers think. If you’re only “blasting” out emails your firm is doing it wrong. The key to effective email marketing is about sending the right emails, to the right people at the right time. This is done by creating rule based email automation. For firms doing this effectively its best to calculate your Email Automation costs based on email series.
As you can see the COCA for Email Marketing is very low. It’s a great channel for some firms. The hardest part is acquiring the subscribers. The most common way to acquire a subscriber is to offer something on the firms website in exchange for permission to send that person emails. This is often called a “Lead Magnet”.
Once an email is acquired a firm is free to send them emails until they either become a client or unsubscribe. Knowing what emails to send and when to send them is an art in and of itself and will vary greatly based on the firm’s practice area.
UTM Tracking For Link
The last section of the tool is a UTM tool that a firm can use to better track specific ads. By adding tracking links to different ads you can know which specific ads are resulting in leads.
This is not necessary to get the big picture but if your firm wants to track “Ad Level COCA” this tracking method is necessary.
When a law firm knows how much it spends to acquire clients they will know what channels are the most effective and what offers are good. We encourage all law firms to use this type of tracking because we know that once a firm can effectively calculate their cost of client acquisition they will see our offer and know it makes sense. This is because we drastically reduce most firms Cost of Client Acquisition.
This article used an Active example of a law firm that generated 17 leads in May 2016. The month before they earned 10 leads. This was a free trial month. Had they paid they would have spent an additional $340 (17 leads x $20 per lead).
Because they used Juvo Leads Chat they earned 7 more clients than the previous month. With this tool we know that each client cost $415.62
So those 7 new clients would normally cost ($415.62 x 7) $2909.34, but because they used Juvo Leads Chat it cost them $340 for those 7 new clients. They were actually on a free trial so it didn’t cost them a thing. If a firm doesn’t know how much a client costs they won’t know how much value Juvo Lead adds.
So download this tool – put it to use and see how much your firm spends to acquire a new client. Once you do, we know you’ll take us up on our offer for a free week.