In this turbulent economic era, companies are now being challenged to adjust to unstable market conditions in order to stay profitable. Those that do, adopt new best practices to remain profitable. It used to hold true that word of mouth alone could generate a healthy level of prospective clients but with purse strings being held tight launching a legal website design and marketing campaign can make all the difference. The question then becomes how to identify the amount a company should dedicate to marketing. One thing that still does hold true – you must spend money to make money.
What is the industry standard for marketing budgets?
While suggested legal internet marketing budgets vary significantly from one industry to the next, the U.S. Small Business Administration (SBA) suggests a marketing budget between 2% and 10% of gross revenue. However, budgets for larger retail and corporate lawfirms can exceed 20%. But with a range of between 2% and 20%, where should a medium size practice be?
How much should I spend?
There are a few questions to consider when identifying a marketing budget for your business. Start with a 5% marketing budget with consideration that marketing is an essential ingredient for increasing profitability and sustaining growth.
4 crucial questions to ask yourself when setting your budget:
1) Do you receive the majority of your clients through referrals?
If so and you don’t foresee any future disruption in the current level of referrals, then you may want to consider staying around 5%. However, you should consider that if you do receive most of your clients through word-of-mouth, the value of developing new word-of-mouth networks can be very high. If on average, one client turns into five then there is significant value in getting that one client. Consider launching a marketing campaign to attack new clients, in networks.
2) What are your high-profit services that have additional room to grow?
If you offer multiple services with varying profit margins, consider reducing your focus on low profit margin services and increasing your marketing budget to attract more sales on those with higher margins of profit. This could be a great time to consider internet based marketing. Your online marketing campaign could focus solely on your high-profit margin services, thus making it very easy to track the final success of the campaign.
3) Are you losing market share to another firm in your area?
Keep your friends close and your enemies closer. Find out what they’re doing — they may be diversifying their marketing budgets into avenues that you didn’t even know existed (paid Google PPC campaigns, newsletters, social media campaigns, etc). If you are losing out, introducing new methods or increasing your old, proven efforts can win back your market share.
4) Are your current marketing efforts producing a positive ROI?
If so, it’s a no-brainer. So long as you can handle the work load, max out your budget! Identify which of your marketing campaigns have been successful. Define why these campaigns have been successful in order to make sound decisions as to where to dedicate an increase in budget. Internet marketing is one of the most effective forms of marketing and also offers the highest ability for precise ROI tracking. If you aren’t already leveraging the internet and you’re currently seeing a positive ROI in your marketing efforts, you should strongly consider expanding to the internet, which is known to produce a higher ROI than most marketing channels.
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