Key Performance Indicators: Finding the Metrics that Matter
BY Brendan Conley
One reason online marketing can be so effective for law firms is the amount of data that is available about how prospective clients come into contact with the firm. Nearly every online interaction generates information that is easily measured, but to determine the best return on investment, law firms need to zero in on the most crucial metrics.
These are your firm’s key performance indicators (KPIs), and identifying and measuring them can be vital to success.
The first step in assessing your firm’s KPIs is making sure that you are actually collecting all the information that is available. The raw data on clients, revenue and expenses should already exist in the firm’s practice management system, but the right comparisons need to be made. Monthly metrics like revenue billed, revenue collected, number of new clients and expenses – especially advertising expenses – should be analyzed in an integrated way to arrive at a broad view of the firm’s return on its investment in marketing activities. Most firms already pay close attention to these numbers, since bringing clients in is critical. What is often neglected is at the other end of the client journey: client loyalty. If your firm does not consistently survey clients to gauge their satisfaction, a key metric is being overlooked. Happy clients spread the word about their experience, and unhappy clients do too. Your firm needs to know these numbers.
When it comes to online marketing, the information is out there, but your firm’s marketing team needs to know how to access and interpret it. The firm’s website administration dashboard provides the basic numbers on traffic to the site and where it comes from. Tools like Google Analytics and Google Search Console provide a wealth of detailed data, including links to your site, search queries that bring in traffic, clicks, impressions, click-through rate and bounce rate. If your firm runs ads through Google AdWords, even more metrics pour in, including average cost-per-click, position on page and conversion rate. The flood of data can be overwhelming, and that is why your firm must focus on key indicators.
Which Indicators Matter for Your Firm?
Too much data can be a problem if you are watching the wrong numbers, so one of the first steps in identifying KPIs may be filtering out vanity metrics and distraction data. It may be fun to watch the number of your firm’s Facebook or Twitter followers grow, but if those platforms are not where your clients are coming from, those metrics should not be where your attention is focused. Likewise, website visitors and ringing telephones are good things, but the more important question is whether website visitors are becoming clients and whether the leads you are generating are profitable. The process of identifying key performance indicators involves separating the appearance of positive activity from the measurement of the information your firm actually needs to focus on.
What is key to each law firm’s success depends on the firm’s unique goals, so there is no boilerplate checklist. Developing your firm’s KPIs requires time and effort, combining careful analysis of the data with big-picture thinking about the firm’s growth.
In the broadest sense, developing key performance indicators involves an analysis of costs and benefits. Every firm needs to understand the value of its clients and the cost of bringing them in. But a true measure of this return on investment requires an integrated analysis of multiple data sources.
A metric such as the marketing expenditure per conversion of a paying client is likely to be crucial for any firm, but such a measurement involves several different data points. A firm might begin by comparing the amount spent on direct advertising and other marketing activities through a particular channel, to the value of the leads generated. Of course, the value of the leads is its own metric which can be determined by measuring the staff time required to process them and convert them to paying clients.
Measuring the value of a paying client depends in part on the types of cases the firm accepts and how predictable the fees are. This in itself requires its own detailed, firm-specific analysis, which may go far beyond just measuring billable hours. Broadly speaking, the average net revenue per client can be compared to the average marketing expenditure per conversion to determine a return on investment. But a client’s value does not end with a closed case, because satisfied clients bring in more business through word of mouth. Therefore rates of client satisfaction need to be incorporated as well.
Every metric can be analyzed in more detail, and this process is often valuable. To take one example, the value of leads generated depends on staff time to process them, but this cost may not be fixed. High staff turnover may be more costly than making changes that would reduce turnover, and measuring the satisfaction of staff members is another metric that can help the firm identify what those changes might be. If the firm’s attorneys themselves spend time on free initial consultations, the value of that time processing leads and converting paying clients’ needs to be compared to the value of attorney time spent working cases and generating revenue.
The firm’s online marketing metrics are especially well-suited for detailed analysis. For instance, if the firm is engaging in a pay-per-click campaign through Google AdWords or another service, fine-tuning the details is imperative to success. The wealth of data available means that every aspect of the campaign can be carefully calibrated, by generating alternatives and engaging in simple A-B testing to determine what is most effective. That goes for the specific wording used in the ads, as well as the design of the targeted landing page. Each campaign should have its own landing page, a specific page on the firm’s website, so that conversions from that page, and therefore from that advertising campaign, can be measured independently.
Of course, paid advertising should not be the firm’s only, or even primary, form of online marketing. To maximize cost-effectiveness, the goal should be for most traffic to the firm’s website to come from organic search. That goal can only be reached by moving to the top of search engine results pages, which requires an investment in search engine optimization (SEO). The return on this investment can be measured effectively with clear goals and a smart SEO strategy. Likewise, a targeted social media strategy can be a powerful use of the firm’s marketing resources, but to measure its effectiveness, the firm needs to look beyond vanity metrics to the hard data on the cost of each social media campaign and the number of client conversions it generates. With an increasing amount of online traffic coming from mobile devices, firms also need to ensure that their website is mobile-friendly and examine the numbers on lead conversions and bounce rates from mobile devices.
With online marketing for law firms, as with every aspect of the business of law, information is plentiful, but committing the time and effort to sort through the numbers and arrive at your firm’s key performance indicators is the only way to take full advantage of the data.
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