How to grow a law firm using data: Leveraging law firm KPIs
Summary
Leveraging data and identifying KPIs are vital when crafting effective marketing strategies. A data-driven approach to your marketing and operations will enhance client service, optimize marketing efforts, and increase operational efficiencies amid industry changes.
I've said it before, but it's a shame that law school doesn't focus more on the business of law. In today's highly competitive legal landscape, lawyers are facing new challenges and competitors. Legal tech is disrupting some practices. Rules permitting non-lawyer ownership of legal practices are becoming more and more common. Your industry has always been competitive, and things aren't getting any simpler.
So, what are lawyers, especially small law firm owners, supposed to do? Do you know how to grow a law firm during this era of rapid shifts and disruptions?
Recently, I chatted with Brooke Lively, president and founder of Cathcap. She had a simple answer, one that I agree wholeheartedly with. Build a data-driven plan, establish key performance indicators (KPIs), and identify "circuit breakers."
Data-driven strategies can transform your practice. By effectively gathering, analyzing, and applying data, legal professionals can make more informed decisions, enhance client service, optimize legal marketing efforts, and create operational efficiencies.
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The business of law with Brooke Lively
The role of data in law firm growth
Effective law firm growth strategies are always grounded in data. Since I'm a legal marketer, I'm going to focus on marketing strategy. Suppose you have a $50,000 annual marketing budget. Without a holistic marketing plan and solid data, you might have some success, but it would be haphazard-and you wouldn't get meaningful insights from your efforts.
Rather than throwing tactics at a wall and seeing what sticks, build a business plan.
- Identify specific marketing goals, like increasing your number of organic leads or decreasing your cost per acquisition by a specific percentage. You need to go beyond the vague goal of "getting more clients."
- Build a marketing plan that aligns with your precise marketing goals. For example, suppose you want an immediate increase in leads. In that case, you might prioritize bottom-of-funnel tactics like paid advertising, local SEO, and map packing rather than traditional, long-tail SEO (search engine optimization) and blogging.
- Set specific KPIs focusing on your client acquisition or lead generation process, like target conversion rates.
- Review your performance consistently, evaluating whether your campaigns and tactics are effective. We'll touch on data analysis in the section: making sense of your data using visualizations and tools.
- Consider doing market research, like that offered by Orchard Insights, to get the most out of your high-value marketing campaigns.
Competitive and market analysis can also deliver actionable insights to your law firm. When the evidence shows that a campaign or tactic is not working, kill it and adjust your strategy accordingly.
Brooke refers to this as "circuit breaking," which I love. It's also the most frequently ignored step of the process. Many firms continue to spend their time and money on ineffective tactics because they're not looking at the data.
Identifying law firm marketing KPIs
To make the most of a data-driven strategy, knowing which metrics provide the most insightful information about your firm's health and prospects is vital. The trick is taking that information and building a data-driven growth strategy.
Even small law firms have a remarkable amount of business data, including financial data and marketing data. You don't want to focus on vanity KPIs, like the number of top 100 keywords you have. So, how do you identify the right KPIs?
In Brooke's book, From Panic to Profit, she outlines six key numbers that are essential to your law firm's growth:
- Cash flow forecast
- Owner compensation
- Work in progress
- Budget vs. actual
- Sales calls booked
- Net new engagements
You should read Panic to Profit (as well as Brooke's newest book, Exit on Top: Sell Your Law Firm to the Right Person at the Right Time for the Right Price,) for more details about how these key numbers will contribute to your law firm's growth.
I'd also encourage you to track your clients' net promotor scores (via surveys; engagement with social media, your law firm's website, and email campaigns; and referral rates) and your top lead sources (like your website, social media marketing, advertising, and human referrals).
By tracking these metrics, you gain a clearer understanding of their current operations and pinpoint areas for improvement.
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Human-centered, data-driven strategy beats tactics every time
Make sense of your data using visualizations and tools
We're in the era of big data, which means that your law firm needs to have a degree of data literacy. You might think, "Leigh, I'm not a data scientist. Heck, I don't even really like math." Today, there are a lot of tools out there that can help you make sense of your data. Ask your partners about their dashboards, client portals, and analytics tools. Can they help you navigate all this information with data storytelling?
When tracking your clients' net promotor scores, consider SproutSocial to analyze engagement with social media. Your law firm's website should be using GA4 to track your visitor data. And, while LaFleur Marketing already offers its clients dashboards, we're working on a new and improved platform that will help our clients deepen their understanding of their data and make more informed legal marketing decisions.
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Treat business development experts like they are expert witnesses
You would never take a case to trial based on a few snippets of information and your gut instinct. Instead, you'd compile all the relevant evidence, consult with respected experts, and build a roadmap. And if the case didn't go as planned, you'd strongly encourage your client to cut their losses and settle the claim.
When it comes to the business of law, your law firm should take the same approach, building a plan and working with financial and marketing experts who can help your law firm grow and refine its strategies. You need to delegate tasks to trusted experts.
Even if you're an attorney who primarily sees yourself as a business owner, no one has the time or capacity to do everything exceptionally well. Delegating administrative tasks to experts with specialized business training frees you up to do what you're great at-whether presenting a complex TBI case to a jury, nurturing existing client relationships, or identifying new practice areas to expand into.
Law firm marketing and data: How it works
Suppose your current marketing partner pushes an SEO-first (or only) approach. You're spending most of your budget on long-form, informational content. Every month, you review the blogs and videos, and they're solid-providing keyword-driven information about seatbelts, intersection right-of-way rules and answering the age-old question, "What is a car accident?" (It gets 170 monthly searches and has a low keyword difficulty!)
You rank in the top 20 for thousands of these keywords. But if you look at some of Brooke's and my KPIs, these blogs are underperforming. They don't attract potential clients; they attract driver's education students. Most of your new clients come to you via referrals-from people you've represented, fellow attorneys, and other professionals.
You sit down with your marketing partner and establish two goals: increase both your number of online leads and your active referral network by 15%. And you can do this without increasing your budget.
You might shift some of your blog budget and start investing in campaigns that nurture referral sources and build up your law firm's online social proof. You might also try to reach your target market, people who have an immediate need for legal services, via paid advertising.
After a couple of months, you sit down with your agency and review their performance. The paid ads, especially those on social media, are performing well and getting you results. But your video testimonials' performance has plateaued. Based on this information, you decide to reduce your testimonial budget, reinvesting those dollars in ads.
You'll notice I didn't give you a marketing example where the lawyer tries to manage their own marketing efforts and practice law. It's too much for one person to do. Marketing is an iterative process of testing and learning, not a tactic-driven, set-and-forget plan. You'll get more of a competitive edge if you find a partner who can help you make sense of all that data through visualizations, human-centered insights, and strategies that get you the most ROI.
By adopting a data-centric approach, you can level the playing field, making your law firm more competitive against larger entities with more resources.
Grow your law firm with LaFleur Marketing
Right now, small law firms have a unique opportunity to leverage data to enhance their competitive edge and drive growth. Embracing a data-driven approach may seem daunting at first, but the potential rewards are immense.
By understanding the role of data in modern law practices, identifying key metrics, implementing effective data collection, and analyzing this information to inform strategic decisions, law firms can improve efficiency, client satisfaction, and profitability.
If you'd like to learn more about LaFleur Marketing's data-driven approach to law firm marketing, send us a message or give us a call. We'd love to dig into your numbers and help you become an even more successful law firm.
See how LaFleur used data analysis for a law firm to increase conversions by 126% in one year:
