How should you really evaluate ROI when advertising your law practice?

Many lawyers tell me that they would like to try TV advertising or billboards for a month. If it’s working at the end of the month, they will continue. When these lawyers consider if their advertising is going well, they look at the number of calls they received and want to see that enough clients were retained. Many of these lawyers will be disappointed and go away happy that they cut their losses, never realizing that they really cut their profits.

Outside of the legal profession, retailers, long experienced in advertising, plan their advertising campaigns differently and evaluate ROI differently. For instance, stores routinely sell “loss leaders” just to get customers into the store with the hope that they will purchase other items, come back again, and refer their friends. Retail stores look beyond the initial customer that was brought in by advertising.

When I started working at a personal injury law firm, I asked my boss why we were working on cases with minor injuries. These cases earned legal fees that were less than it cost him for lawyers, support staff and overhead. He explained to me that all of his many seven-figure cases were referred by clients who had minor injuries. He understood the value of referrals from existing clients. He understood that his advertising had to be evaluated beyond the clients directly retained by the advertising.

Consider the fact that six months ago, being unhappy with my previous plumber, I decided to look for a plumber on the Internet. I found a plumber who I was very impressed with and liked very much at 1888JustPlumbing.com. Since then, he has been back here twice and I will need him here again in two months. Additionally, I just referred this plumber to my neighbor and she was also very happy with. She is now also likely to refer him to her friends.

From his advertising, he obtained a customer who used him three times, will use him again at least once in the next two months and has referred him to a friend. That’s five jobs from one customer. Like the old Breck shampoo commercial said “I told two friends, and they told two friends, and so on, and so on”.

Retailers and major brands know that branding takes time and advertising results should be evaluated over the course of two years when branding reaches full effectiveness. According to the report Brand-Building Effects of Television Advertising by E. Craig Stacey, Ph.D., The Analytic Consulting Group (page 6), long-term advertising is at least twice as effective as short-term advertising and payout should be calculated over at least a two-year period.

So, when evaluating your advertising campaign, don’t forget that the purpose of advertising is not just to get an initial customer or client. The purpose is to grow your business in the long run. After all, when you started your law practice, you didn’t make a decision to try practicing law for a month to see if it works. Evaluating an advertising campaign over a short period of time will provide you with false information which may lead you to an incorrect decision. Lawyers who persevere eventually see success and increase their advertising budgets every year, while other lawyers come and go.