1 Strategies V13.N06 The Journal of Legal Marketing Managing with Key Performance Indicators Law Firm Key Performance Indicators A Primer How to Intelligently Run a Law Firm Dude, Where s My ROI? KPIs for Marketing What Am I Worth?
3 Strategies V13.N06 The Journal of Legal Marketing CONTENTS Features Mike Mabey and Stephen Mabey Law Firm Key Performance Indicators A Primer... 4 Fred Quenzer, JD How to Intelligently Run a Law Firm... 8 Jamie Diaferia Dude, Where s My ROI? The Value Conversation That Actually Pays Dividends...10 Daniel Weglarz, JD Measuring Marketing Success...12 Aria Vaida What Am I Worth? Key Performance Indicators for Solo Marketers...14 Paul M.W. Hackett, Ph.D., and Yulia S. Sovenkova Not All KPIs are Equal: Understanding the Interacting Role of KPIs Through the Use of a Mapping Sentence...16 Donald Aronson Quant or Qual? KPIs Require Both...18 Departments President s Podium, Jeanne Hammerstrom... 2 About This Issue, Silvia Hodges... 3 Dicta, Marketers on the Move...21 Ask the Authorities...22 Message from the Editors, Steve Conley & Melissa Hoff...24
4 No Strategies The Journal of Legal Marketing Editorial Board Co-Executive Editors Steve Conley Freelance Writer/Reporter Boulder, Colo. Melissa Hoff MBH Strategies Kirkland, Wash. Editorial Board Members Carol Alfred InsideCounsel Washington, D.C. Marguerite G. Downey Adduci, Mastriani & Schaumberg LLP Washington, D.C. Brian Hickey CJP Communications New York, N.Y. Joe Calve Morrison & Foerster New York, N.Y. Dr. Silvia Hodges Fordham Law School New York, N.Y. Julie Meyers, Esq. Burns, White & Hickton Philadelphia, Pa. Leesa Petrie Fenwick & West LLP Mountain View, Calif. Dave Poston Poston Communications Atlanta, Ga. Stephanie Richter Williams Venker & Sanders LLC St. Louis, Mo. Anisa Salam BD&M Consulting Redondo Beach, Calif. Managing Editor Theresa Wojtalewicz Chicago, Ill. Assistant Editor Frances Moffett Chicago, Ill. Art Director Bill Wargo SmithBucklin Corporation Chicago, Ill. Graphic Designers Steve Biernacki and Patrick Williams SmithBucklin Corporation Chicago, Ill. President s Podium It s Up to You to Collaborate By Jeanne Hammerstrom, LMA President silos. No cowboys. We are a team! In my more than 20 years working in legal marketing, this mantra of teamwork is one I ve chanted the most. It s also one of the most difficult mindsets that firms have had to embrace to be competitive. Teamwork and collaboration between marketing departments and other operating units are essential for success. One of my philosophies for success is to surround yourself with good people. To the extent that I am able, I apply this philosophy when working with other departments at my firm. Here are the key departments you should be working with at your firm: 1. A solid partnership between the IT and marketing departments at law firms is critical for firms to differentiate themselves and to streamline processes for both our external and internal clients our attorneys. At my firm, my department meets almost daily with IT to brainstorm ideas to simplify processes and invent creative solutions, which has resulted in our best firm processes and technologies. 2. Take advantage of your firms human resources and recruiting departments. Lawyers and staff join or become involved in the firm every day, and relationship issues arise. Marketing departments should act as the public relations arm, providing a new perspective and helping leverage their services. At my firm, these departments regularly help us provide valuable information for client pitches and RFPs. We can help to brand, simplify and execute the processes and programs that may challenge them. 3. Legal marketers rely heavily on the accounting department in order to know which practice areas of the firm are profitable and which need more assistance in marketing and business development. The same is true for our client base. Our close relationship with this department makes our service to attorneys and clients more valuable. Working with accounting allows marketers to get a clearer picture of the future and to avoid pitfalls from the past. 4. LMA s service providers are crucial to successful law firm operations. Several LMA service providers have helped my firm establish great internal collaboration. Whether you ve introduced new business intelligence software or provided professional development training, you are just as instrumental in our departments working successfully together. 5. Just as important as those working in your firm are the ones who don t your LMA community. Participation in LMA s local chapter events, educational opportunities or shared interest groups are a vital part of your professional success overall. Collaborating with your LMA peers and fellow members can lead to unlimited opportunities that can enhance your success and promote career growth. Whatever your firms initiatives are, you will find yourself at a great advantage if you surround yourself with those in other operating departments and your LMA community. With the challenges of today s business world, having an open mind and working collectively can make you more strategic, competitive and valuable.
5 About This Issue Sizing Up for Success By Silvia Hodges Not everything that is countable counts, and not everything that counts is countable. W hat gets measured gets done is said to be one of the core principles of good management and leadership. Hence, we measure nearly everything in law firm marketing. After all, how could anyone argue with cold, hard facts? Even the most hard-nosed litigator is unlikely to win a battle if you are armed with numbers. Key Performance Indicators, or KPIs, are a jargon term for an approach to measuring performance. KPIs help manage complexity to drive performance improvement. Before 2008, the legal industry had to worry relatively little about complexity in regard to their service offering, organization and process. This is no longer the case. KPIs are increasingly used to evaluate a firm s success or the success of a particular activity. Success can be defined in terms of making progress toward strategic goals or the repeated achievement of some level of operational goal. When selecting KPIs, you need to think about your firm and department s goals. What are these goals? What is important to your organization? Today, it is often identifying ways to reduce costs and create flexibility so firms can adjust to a new normal. The articles in this issue of Strategies magazine will provide you with lots of food for thought and heated discussions in your firms, I hope on what you can and should measure. Please keep in mind that picking the right KPIs is only the start. We measure lots of things, but that doesn t mean that things really change. The challenge is using data to change behavior, enhance systems and have a robust process to interpret and apply data for continuous improvement. Best of luck with your quest for performance! Dr. Silvia Hodges teaches marketing and management at Fordham Law School in New York. Prior to joining academia, she worked as an in-house legal marketer. As a speaker and researcher, she focuses on how clients buy legal services and cross-cultural/international challenges of law firms. Hodges can be reached at advertiser index ALM: Corporate Counsel 212/ BC George Washington University 15 Gittings 7 Greenfield Belser 23 Hellerman Baretz 9 InsideCounsel 19 LMA Conference IBC The Closers Group IFC Vizibility 5 Find out how your company can benefit from advertising in Strategies. Contact Kris Wolcott, 312/ LMA Board of Directors President Jeanne M. Hammerstrom Benesch, Friedlander, Coplan & Aronoff LLP Cleveland, Ohio Immediate Past President Nathan Darling Van Ness Feldman Washington, D.C. President-Elect Secretary Treasurer Treasurer-Elect Members-at-Large Chapter President s Committee Liaison Executive Director Alycia Sutor Akina Corporation Oak Park, Ill. Laura Meherg Wicker Park Group Birmingham, Ala. Rachael W. Loper Nixon Peabody LLP Washington, D.C. Timothy B. Corcoran Hubbard One, a division of Thomson Reuters Lawrence Township, N.J. Per Casey Tenrec, Inc. San Francisco, Calif. Aleisha Gravit Akin Gump Strauss Hauer & Feld LLP Washington, D.C. Despina C. Kartson Latham & Watkins LLP New York, N.Y. Leesa Petrie Fenwick &West LLP Mountain View, Calif. Maggie T. Watkins Best Best & Krieger LLP San Diego, Calif. Judith Weingarz The Interlex Group Chicago, Ill. Jennifer Reynolds Larivee Akin Gump Strauss Hauer & Feld LLP Los Angeles, Calif. Betsi Roach LMA Chicago, Ill. The Legal Marketing Association (LMA) is a not-forprofit professional association serving the needs and maintaining the standards of those involved in marketing for the legal profession. Advertisements are not an endorsement by the Legal Marketing Association. Strategies (ISSN ) is published eight times per year for $80 by the Legal Marketing Association, 401 N. Michigan Avenue, Suite 2200, Chicago, IL 60611, Periodical postage paid at Chicago, Ill., and additional offices. Postmaster: Send address changes to Strategies, c/o LMA, 401 N. Michigan Avenue, Suite 2200, Chicago, IL Strategies is distributed to LMA members as a professional development tool for those involved in law firm marketing. In addition, it is distributed to others who support and write about this industry. The annual subscription fee is included in LMA members dues. The views expressed herein are not necessarily those of LMA. Strategies is copyright protected and is not to be reproduced in any form without written permission from the Legal Marketing Association. Article reprints are available by calling Theresa Wojtalewicz at LMA at 312/ An additional fee will be charged for this service Legal Marketing Association Legal Marketing Association 401 N. Michigan Ave., Ste Chicago, IL /
6 Law Firm Key Performance Indicators A Primer By Mike Mabey and Stephen Mabey Law firms of all sizes measure various behaviors and indicators of firm health and performance. These indicators are important sources of information for the management of the firm and its staff. The challenge is to identify the subset of these metrics that are critical to the success and life of the law firm and then focus on these metrics, which are referred to as key performance indicators, or KPIs. When choosing KPIs, your firm should consider that the KPIs must: reflect the firm s strategy and goals; be seen as key to the firm s success; and be quantifiable. All KPIs should be firm specific but also taken in context of an industry-level view. No firm uses all KPIs. Every law firm should identify the KPIs that are important to the firm and its definition of success and put in place a system for tracking and using these metrics to guide firm strategy. No one KPI tells the full story; rather, KPIs must be viewed collectively to ensure the firm s decisions are made on an informed basis. For example, if your firm has a strategic focus on specific client relationships and supports that focus with client teams, then perhaps the following KPIs might be important in measuring the breadth of the relationship: The number of matters per client as an indicator of growth in the client relationship; The number of practice areas that serve these clients as an indicator of cross-selling success; and The number of lawyers with time on matters connected to this client, as it measures the breadth and depth of the relationships between your firm and the client. Function-Specific KPIs KPIs typically have focused on the financial and operational aspects of law firms. Financial KPIs: Unbilled days Uncollected days Net income as a percentage of revenue Average net overhead Revenue per square foot Revenue per employee Revenue per matter Percentage at point of billing Operational KPIs: Billable hours per full-time equivalent timekeeper (FTE) Percentage of partner hours Billings per FTE Average bill rate Average work rate Ratio of billed-to-work rate Number of matters opened Staffing ratio Number of billable hours per legal assistant FTE Cost recovery revenue per matter Marketing and Business Development Firms are still in the early stages of exploring marketing and business development KPIs to understand what will work best for them. A firm s strategic focus will impact its selection of KPIs: Transaction-focused firms will have different KPIs than relationship-focused firms. Other factors, such as whether your firm is focused on new business or on retention of existing clients, will also play a role in your firm s selection of marketing KPIs. The following list of possible KPIs for marketing and business development in law firms is not intended to be exhaustive; rather, it presents examples of KPIs you might consider adopting and adapting for use in evaluating your firm s efforts: Client Growth Rate: The ratio of the number of clients the firm handled its first matter for in the past 12 months to the total number of active clients (active can be defined as having handled a matter for in each of the past two of three or three of five years). Dormant Client Percentage: The ratio of the number of clients that firm has not handled a matter for in two of the past three or three of the past five years to the number of total clients. Average Fee per Client: The fee revenue for the year divided by the number of clients billed during the year. continued on page 6
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8 Average Fee per New Client: The related fee revenue for the year divided by the new clients (of clients that the firm handled its first matter for in the past 12 months). Marketing Budget Ratio: The ratio of the total marketing spend (including salaries) to the total fees billed during the year. Business Development Ratio: The ratio of the business development spend for the year to the total fees billed during the year. Marketing Cost per Client: The ratio of the total marketing spend (including salaries) to the number of clients billed during the year. Business Development Cost per Client: The ratio of the business development spend for the year to the number of clients billed during the year. Average Fee per Matter: The fee revenue for the year divided by the number of matters billed during the year. Average Fee per New Matter: The related fee revenue for the year divided by the number of matters billed for new clients (handled its first matter for in the past 12 months). Client Retention: The ratio of clients billed in the last 12 months to the total clients that had been billed in the 12 months prior to the last year. Growth in Top Clients: The ratio of fees billed to top 100 clients (number can be adjusted to size of firm) in the past 12 months to the fees billed to the top 100 clients in the prior 12 months. Practice Areas per Client: The number of individual practice groups billed to clients on average. Number of Lawyers per Client: The ratio of individual lawyers who generate working fee credits billed to clients on average. Number of Matters per Client: The ratio of number of matters billed to the number of clients billed. The importance a firm places on specific KPIs can and will change over time. How the firm uses them should not change.... factors, such as whether your firm is focused on new business or on retention of existing clients, will... play a role in your firm s selection of marketing KPIs. Challenges to Using KPIs Utilizing KPIs to assist in making businesslike decisions does have its challenges, including the following points: Finding a relevant external benchmark against which to compare your firm s KPIs so it has real meaning and appropriate strategies can be developed. Most law firm accounting software packages don t lend themselves to generating the information in a timely fashion (if at all). Misinterpreting KPI results and overreaction to shortterm variations in results. Keep in mind that context is critical to the effective use of KPIs. An excellent way to do this is through benchmarking, comparing your firm s KPI results against the same KPI for other organizations. The trouble is that access to benchmarking data in the legal profession is limited. Several national sources of benchmarking include the following indexes:
9 Lexis Firm Insight BI Companion; Annual Survey of Law Firms, by Incisive Legal Intelligence; Hildebrandt Peer Monitor Economic Index (PMI); and LawFirm KPI Inc. annual survey. There are likely formal and informal local sources for benchmarking as well that firms can use; however, users need to make sure that it is a comparable group (firm size, geography, type of firm, etc.); that the indicators being measured are consistently calculated; and that the benchmarking is conducted by a third party so the results are not skewed to the goals of the initiator of the benchmarking exercise. Likewise, if you cannot generate accurate comparable information on a timely basis, then the information loses both value and credibility, even if you can find an external standard to benchmark against. But, perhaps most importantly, KPIs have to be interpreted accurately and acted on appropriately good judgment is still the final arbiter. The following scenario perhaps best demonstrates the need to exercise judgment: Your firm experiences a strong increase, year over year, in the average effective hourly rate (one of their KPIs), which would be seen as a very positive indicator of how a firm is weathering the current economic storm. However, when you dig deeper, you recognize that the increase exceeds the average hourly rate increase initiated by the firm. What this KPI is really indicative of is that more partner time is being billed out at higher rates and less associate time is being billed out at lower rates, which results in an immediate increase in the effective hourly rate. This may be indicative of the partners, in challenging times, having rolled the ladder up when is comes to allocating work to associates. In this scenario, the KPI is still acting as an important indicator of performance; however, it is doing so by being too good and therefore acting as a red flag. Two other KPIs, Billable Hours per Partner FTE, and, Associate FTE, would help provide the proper context for the initial KPI. As valuable as they are, KPIs are simply metrics they are no substitute for the use of common sense and good judgment when it comes to the management of your law firm. Mike Mabey is vice president of client solutions at Consumer Metrics Inc. (CMI), a market research and strategy consulting firm based in Atlanta. He helps his clients use research to identify and articulate solutions to their marketing and strategic challenges. He can be reached at Stephen Mabey, CA, is managing director of Applied Strategies Inc., which has a long-term contract to provide the chief operating officer function to Atlantic Canada law firm Stewart McKelvey. Stephen is the co-founder of LawFirmKPI, which was formed to specifically undertake benchmarking surveys for law firms with up to 100 lawyers. These surveys can provide law firm management with the information required to make better business-like decisions. He can be reached at Put your portraits to work Gittings will make all your people and your firm look outstanding Let Gittings handle all your firm s bio portraits locally and across the country. Get a consistent professional look and save time with our hassle-free online scheduling and image management. Call for more information. Strategies: The Journal of Legal Marketing, September 2011, V13.N06 7
10 How to Intelligently Run a Law Firm By Fred Quenzer, JD You ve implemented a number of strategic, cuttingedge marketing campaigns for your law firm. The partners in the firm have been diligently networking both with existing and new clients. How do you know all of your time and effort are paying off? How do you know what changes should be made and the effect of such changes on your profitability? The answer is a concept that businesses have been using for years but is only recently being adopted with any frequency by law firms: business intelligence. Business intelligence is the process and technology used to gather, store, analyze and provide pertinent data to help business leaders make better business decisions. The name sounds very cloak and dagger, but it is really a very simple analytical process that can be easily implemented for any business, even law firms. The implementation of business intelligence can be easily scaled to match the size, maturity and needs of the firm. Law firms need for business intelligence has never been greater. Global competition, legal outsourcing and clients pressuring law firms to cut costs have all created a need for lawyers to be more efficient with their resources. Also, more legal work has become commoditized. As a result, companies can make data-driven purchasing decisions for legal services. Procurement departments have started using quantifiable metrics to judge which law firms should handle their legal work. Law firms need to be ahead of their clients in determining how to provide efficient legal services. Business intelligence provides firms with this ability and to adapt to the changing legal market. Implementing a business intelligence process is straightforward. Numerous IT firms and consultants have experience successfully applying business intelligence outside the law firm industry that law firms can easily tailor to their own implementation. The process itself can be broken down into three main steps: metrics, tools and analysis. Step 1 - Metrics The first step to implementing business intelligence is deciding what measurements define business success for your firm. Key performance indicators (KPIs) are quantifiable measurements that a business can capture to reflect the critical success factors of the firm s business. KPIs must be tailored to the specific factors your firm defines as success. The types of KPIs important to lawyers can be grouped into three main categories: growth of business, results-to-efforts ratios and marketing activity measurements. Common KPIs within these groups include the following: Growth of Business: number of new clients, market share, number of clients by target market segment, share of client s wallet, cost of new client acquisition, etc. Results-to-Efforts Ratios: proposals won to total proposals, seminars-to-leads, networking-to-leads, revenue growth by service, profitability by client, etc. Marketing Activity Measurements: seminars presented, ads placed, interviews conducted, articles written, press releases placed, number of times partners/firm are quoted or mentioned, trade shows attended, etc. Firms will use these measurements in their business intelligence process to determine concrete results they derive directly from business development and marketing activities. Step 2 - Tools The second step is to implement the tools used to record, store and organize the KPI data. These tools can vary from the very simple, such as spreadsheets, to the very complex, such as enterprise business intelligence systems. In determining what is right for your organization, you will need to weigh the pros and cons very carefully. Spreadsheets are one of the simplest and least expensive tools; however, they do not scale very well. Firms with more than a few attorneys and clients have too much data to store and organize making a spreadsheet an unwieldy tool to use. Software from companies such as Redwood Analytics, SAP, Cold Fusion and Elite offer scalable solutions for law firms with more attorneys. The firm can install and maintain many of these applications on its servers or as a service (software as a service, or SaaS). SaaS provides professionals and staff in the firm with web access to the application hosted on the service provider s servers (and maintained by them). SaaS allows for monthly payments and provides the firm with the ability to budget more effectively for software usage. Making a decision on a particular software package and the type of license model will depend on the specific needs of your firm, your information technology resources and your budget. Dedicated business intelligence software solutions have the benefit of being able to aggregate large quantities of data, scale across multiple offices and attorneys and provide dashboard functionality to provide easy-to-read analytical information. The disadvantages are the significant costs involved in implementing and maintaining the systems; your firm must thoroughly plan for both.
11 In addition, firms should start small and implement their business intelligence systems in phases. Firms may then thoroughly test their chosen KPIs, the capture method for the data and the reports generated in manageable pieces. In the early stages, you will want to ensure a consistent message about the value of business intelligence and how you specifically use it to keep the firm s business on the right track. Initial reports should include only the highest priority KPIs and what these metrics mean to the bottom line of the business. You can phase in additional KPIs, reports and software functionality later. Step 3 - Analysis Once the tools are in place and data is collected, the most important step begins. The firm needs to analyze the data to make strategic decisions. Most tools will include dashboards or the ability to organize the data into meaningful representations of the state of the business. Management should review the data to determine the effectiveness of the firm s marketing and business development programs. When the firm adjusts or cuts a program, the result will show up in the data, allowing for fine tuning of business decisions. The firm s management can then decide what programs should be expanded and which should be scaled back or stopped completely. When analyzing the data, keep in mind the old adage garbage in, garbage out. The danger in implementing any business process is that faulty assump- tions will lead to faulty results. The data that may be useful for one practice group may not be useful for another group. In addition, keep in mind that profitability may not be the only success factor. It is important to view nonbillable qualities, such as leadership, mentoring and training, which are investments in the firm s future. A profit analysis that is too rigid can cause firm management to take actions that may show short-term gains at the expense of long-term firm growth. The successful law firm continuously will analyze the assumptions used to select which KPIs to collect and change the KPIs based on their evolving understanding of the firm s business. This creates a closed-loop process that ensures that information gained from analyzing the data captured in step one is used to improve the data collection process. By using business intelligence to document return on investment (ROI) of each business development and marketing strategy, law firms can more effectively position themselves for future growth. With careful analysis and continuous review of strategy, firms will be able to transform their services to meet any change in the marketplace to ensure that growth. Fred Quenzer, JD, participated in Dr. Hodges law firm marketing course (Fordham Law School, spring 2011). His article is based on a presentation he gave during the course. Before law school, he worked as an IT manager specializing in monitoring and business intelligence solutions. Contact him at PR FUELED BUSINESS DEVELOPMENT. Create Content. Share Content. Award Submissions News Features Byline Articles Speaking Engagements Expert Interviews Feature Profiles TURNING EXPERTISE INTO OPPORTUNITY DC NY
12 Dude, Where s My ROI? The Value Conversation That Actually Pays Dividends By Jamie Diaferia If so much money and time weren t at stake, the typical return on investment (ROI) 1 conversation within law firms would almost be funny: What was the return on our investment in public relations last year? asks the managing partner. Pretty good, I think, replies the marketing director. Well, how much revenue did you bring in? Revenue? That s hard to say. I mean, there was that profile piece in that magazine, and that blog everyone reads picked it up. Her voice trails off. Oh, and that Best Partner on Planet Earth award Alice won well, that was great. Right so you re telling me you have no idea what our ROI was? The two exchange a blank stare. The marketing director prays for an unexpected fire drill and wonders if she still has that recruiter she used to work with on speed dial. The directive to demonstrate tangible value from a firm s financial investment in PR often moves down the line from managing partner to marketing director to communications director and finally to an outside PR agency, gathering speed before landing with a resounding thud. It s an entirely reasonable request clearly, funds should not be spent without the expectation of a positive return. But how to measure that return, i.e., which metrics to use, is a milliondollar question. In many cases, literally: Which efforts should be measured? Media placements? Panel discussions in which clients participated? Crises strategically averted? A multitude of tactics and strategies comprise a modern PR campaign, and determining which efforts yielded which results often comes down to guesswork and faith. Measurement Merriment Measurement is the first step that leads to control and eventually to improvement. If you can t measure something, you can t understand it. If you can t understand it, you can t control it. If you can t control it, you can t improve it. H. James Harrington (quality guru) Communications professionals need to develop ways to measure their results and assign a value to them. For many years, the basic measure of the value of a media placement was based on advertising value equivalency (AVE), which made the assumption that the value of an article is equal to that of an advertisement. One could make the argument that measuring something is better than no measurement at all, but The Institute for Public Relations Commission on Measurement and Evaluation (IPR) ultimately came out against the practice in late AVE is no longer considered a useful tool of measurement for a number of reasons, the primary being that it only takes into account one aspect of a PR outcome: the value of the media placement itself. And it does so in a way that is not even remotely an apples-to-apples comparison. One significant flaw, the commission noted, is that advertising is controllable and always conveys a positive message. After essentially labeling AVE a superficial tool for assigning value to media placements, Dr. Brad L. Rawlins, who oversaw the study for the IPR Commission, stated: Advertising cost isn t a meaningful metric. Advertisers don t use the cost of placing their advertisements as an outcome. It s a cost of achieving the outcome of increasing sales or brand awareness. So, it makes no sense for public relations to compare its outcome to the cost of achieving advertising outcomes. Publicity isn t the outcome; it s part of the process of reaching a more meaningful outcome, such as protecting reputation or increasing awareness of responsible behaviors. Rawlins comment demonstrates a critical distinction between ROI and value that underscores the fundamental challenge of identifying a useful measurement system. Discussions about ROI that originate at the top of the law firm pyramid most certainly center around dollars out and dollars in, whereas the in-house marketing team and outside PR firms are likely to focus on value, a broader concept that encompasses the true range of PR activities: establishing thought leadership, changing perceptions and attitudes and raising awareness through media placements chief among them in other words, a rich stew of tangible and intangible returns. Yes, this is getting messier. For example, a critical bit of work we once carried out on behalf of a client entailed preventing a damaging article from being published. The law firm we represented was grateful, but how could we attach an accurate value to news not getting out? The article the first substantial media piece about the firm would have appeared in a prominent legal trade publication with a vibrant online presence. It s very likely that a link 1 For our purposes, we will define ROI as a measure of the financial benefits of an activity against its associated costs (Perspectives on the ROI of Media Relations Publicity Efforts by Fraser Likely, David Rockford and Mark Weiner).
13 to it would have ranked at the top in any Google search of the firm s name, and that most reporters doing their homework on the firm, for years, would have rehashed the news in subsequent coverage. The avoidance of pain, embarrassment and the tarnishing of a firm s reputation can be worth hundreds of thousands of dollars but accurate measurement in this case, as it so often is, was virtually impossible because of the hypothetical underpinnings. Certainty Certainly Ain t Happening Perhaps it s time to put this issue to rest forever and declare that it s impossible for law firms to calculate ROI across every aspect of a PR campaign. The aims are simply too diverse, often intangible, and spread along an extended spectrum of time in a way that makes measurement random at best. It s important to note, however, that I m not advocating the abandonment of metrics, measurement, dashboards, spreadsheets or even rulers. A lack of precise measurement does not connote the absence of value (or a return on investment); instead, marketing departments and PR firms would be wise to rethink the way they initiate campaigns to make them inherently valuable and then to measure what can be measured. One effective way to approach the measuring ROI of a PR spend is designing initiatives with the specific goal of measurability. For example, consider building media campaigns around targeted issues. To maximize ROI, a firm should identify areas of potential growth and match those areas to issues the media care about. For example, we represent an attorney whose background lends itself to the ongoing discussion of municipal bonds and the risk of default. This isn t necessarily the one topic this guy knows better than anything else in the world, but he knows far more about it than the average reporter and certainly the average Joe scanning a newspaper. It s a timely subject he can leverage to get himself in front of the audiences the firm cares about. Inserting the attorney into the news stream on this topic, therefore, supports the overall objectives of the firm. Prior to starting media outreach for any client, we make it a practice to identify relevant newspapers, magazines, blogs, conferences and even potential clients as a means of generating consensus about what would constitute success. Assuming we do our job correctly, the value is inherent. Each issue-based campaign should be treated as a distinct project with its own budget, goals, timeline and desired outcomes. In the case of the municipal bond lawyer, we were able to place him in target publications via quotes and bylined articles, some of which were picked up in blogs. This outcome had a significant positive impact on where his name and that of the firm appeared in a Google search. Likewise, he amassed a wealth of material to send selectively to clients and prospects, and the firm scored substantive material to add to its website. How much revenue did our client derive from the munibond campaign? Even if one client identified itself as signing on after reading an article our client wrote, that still doesn t provide anything more than a snapshot of the results. The metrics we have at our disposal are additional snapshots that, in total, tell a story. We looked at, among other things, the following aspects: the attorney and the firm s Google rankings before and after the campaign; spikes in traffic to the attorney s profile and the firm s website on days in which the attorney appeared in the news or spoke at an event; responses from clients and prospects to media clips sent by the attorney; the character of conversations the attorney had with prospects before and after the campaign; the anecdotal perception of the firm and its strengths after the media coverage; the increase in inbound calls from reporters to the attorney seeking his opinion; the ratio of interviews with the attorney to articles in which he was quoted; and the number of new followers the attorney attracted on Twitter and the number of connection requests he received on Facebook or LinkedIn. This list is in no way exhaustive, but it illustrates the nuanced view one can take of success and, by implication, ROI. Just as the media business has gotten more fragmented, so, too, has the business of reaching a firm s target audiences. Ultimately, the metrics we should all employ to track the impact of a PR campaign will indicate whether useful messages are reaching relevant audiences. These metrics are helpful in reframing the discussion so that it becomes goal-based rather than a frustrating annual economics lesson. Shifting the way you look at ROI may not prevent the awkward conversation with the managing partner from occurring, but it will allow you to provide some concrete answers. Jamie Diaferia, an attorney and former journalist, is the founder of Infinite Public Relations LLC. He is based in New York and can be reached at 212/ and
14 Measuring Marketing Success By Daniel Weglarz, JD Law firms are raving fans of marketing, and it is no wonder why. offers an effective, professional and inexpensive method of maintaining contact with current and prospective clients. A 2010 Nielsen study found that checking remains the dominant activity of mobile Internet users. A MarketingSherpa study found that the overwhelming majority of marketers believe that social media will complement, not supplant, as a marketing tool. Without question, newsletters, alerts and invitations are invaluable marketing tools for your law firm; however, several questions remain unanswered. Is your marketing campaign achieving good results? What is a good result? How do your results compare to those of your peers? In today s competitive marketplace, being average just won t cut it. You must rise above the crowd to where you can be clearly seen by those in need of legal services. Once pinpointed, a weakness can usually be eliminated through better compliance with best practices in copy, design, deliverability and list hygiene. In today s competitive marketplace, being average just won t cut it. You must rise above the crowd... marketing software provides five key performance metrics that help marketers measure their success. They include the open rate, click rate, conversion rate, bounce rate and unsubscribe rate. An industry report by elawmarketing titled The State of Law Firm Marketing: Benchmarks, Trends, and Best Practices, documented benchmarks for these metrics generated by marketing campaigns aggregating 6,896,610 s distributed by law firms of all sizes between July 2008 and June These benchmarks provide a ruler with which to measure up your own success. Open Rate As the name implies, your open rate measures the rate at which recipients open the s you send. Calculate the open rate by taking the number of unique recipients who opened your at least once and divide it by the total number of s sent. Opens are recorded when a tiny transparent image is displayed as the is opened. Therefore, open-rate data may be slightly skewed due to image-blocking technology that prevents the image from being displayed. In addition, open rates are made somewhat less accurate due to the fact that an open will be recorded even if a recipient merely passes their cursor over the and it displays momentarily in their preview pane. Aside from the obvious benefit of identifying how many recipients open your s, monitoring your open rate can offer additional advantages. For instance, open-rate data can serve as a short-term diagnostic tool. If the data reveal a sudden, drastic drop in your open rate, this may alert you of a possible technical issue regarding the individual domain that is keeping your s from reaching your audience s inboxes. Open-rate analysis can also serve as a tool for A/B testing, such as testing different subject lines on otherwise identical s to uncover which piece of bait appeared most appetizing to recipients. Throughout the two-year period analyzed in the 2010 Nielsen report, open rates have dropped steadily from a mean of percent to percent. Open rates are predominantly driven by three factors: 1. The degree to which recipients recognize the name of the sender in the s From line. Be sure to point out to new contacts the name that will appear in the From line of your s if it is one in which your identity may not be readily apparent. 2. The degree to which your s subject line entices the reader. s with short, descriptive teaser subject lines are most likely to get opened. 3. The degree to which your s are targeted. A shotgun approach is not the way to go. If your pertains to a specific area of law, send it only to those contacts who are interested in that subject area rather than to the firm s entire contact list. By sending untargeted s to uninterested contacts, they will quickly develop a mindset that your s are a waste of their time and form a habit of ignoring them. Click Rate The click rate measures the percentage of recipients who not only opened your , but also clicked on links provided in it. It is calculated by dividing the number of unique clicks by the total number of s delivered. Unique clicks count only the number of recipients who clicked any link in your at least once. This allows for an accurate indicator, even when recipients click several links or click the same link multiple times. However, delivered s must actually be opened in order for the links to be clicked, so dividing
15 by the total number of s delivered fails to provide a valuable metric. This problem is sidestepped by analyzing conversion rates. Conversion Rate While assessing open rates to identify who opened your s is of great interest, examining conversion rates to understand how interested those people are is of much greater value. Compute this metric by dividing the number of unique clicks by the number of unique opens. Unique opens count the number of unique recipients who opened your at least one time. This prevents over-counting by taking into account the fact that many of your subscribers may open an multiple times. Your conversion rate gives you a very good indication of how effectively your engaged the recipients, how interested your audience actually was in the subject of your and how well you persuaded recipients to follow your calls to action. marketing software makes it possible to discover which recipients clicked on links, visited the landing page, viewed other pages, submitted web forms or downloaded white papers. With this software, you ll be able to pinpoint what topics individual recipients are reading about. For example, marketing technology guru Anthony Green says: When I meet that guy, when I play golf with that woman, I can bring these topics up in conversation. That can mean million-dollar deals Nationally, conversion rates have increased slightly from a mean of percent to percent between 2008 and Targeting will help you raise your conversion rate to meet or exceed this figure. Create content that focuses on niche topics and send it only to a niche audience. Your conversion rate will also largely depend on the extent to which you follow design best practices. This includes rendering your key calls to action as text as opposed to images that can be blocked; ensuring your calls to action are persuasive and conspicuously positioned throughout your s, such as near the top, middle and bottom; making good use of the upper left-hand corner in your template; and appropriately sizing your banner graphics. business relationship. Between 2008 and 2010, bounce rates have dropped slightly from a mean of 3.68 percent to 2.27 percent, which indicates better adherence to best practices in the area of contact list hygiene. Unsubscribe Rate The unsubscribe rate is the percentage of total s delivered that triggered a request by the recipient to be removed from your mailing list. Between 2008 and 2010, unsubscribe rates have increased slightly from a mean of 0.13 percent to 0.17 percent. By monitoring this metric, you can gauge whether you are continuing to generate content that is interesting to your audience. These five key performance indicators provide great insight into the effectiveness of your marketing campaign and are tremendously beneficial in evaluating where to focus your marketing efforts. marketing software helps you measure your success, uncover weaknesses in your marketing campaign and can even give you the inside scoop on what interests your current and prospective clients. So get your hands on some quality marketing software if you haven t already done so, and take advantage of the huge array of benefits it has to offer. Daniel Weglarz, JD, participated in Dr. Hodges law firm marketing course (Fordham Law School, spring 2011). His article is based on a presentation he made during the course. Daniel can be reached at Bounce Rate The bounce rate is the percentage of the total s you sent that bounced, either because of a permanent problem, such as an unknown address, or a temporary issue, such as a temporary connection failure. Your bounce rate is a good indicator of how clean your contact list is. Strive to lower your bounce rate by maintaining an updated contact list of only those contacts with which you have an existing
16 What Am I Worth? Key Performance Indicators for Solo Marketers By Aria Vaida Solo marketers in law firms often face the problem that no one in their firm understands what they really do or how to measure marketing s effectiveness. By setting key performance metrics, firm management can better understand the scope of the marketer s activities and their impact on the firm. The Legal Marketing Association s Core Competencies (https://e.learn.com/learncenter. asp?id=178415) can be helpful tools to determine both personal and firm KPIs. These indicators assist in formulating your marketing plan and budget for the year and serve as a guide for your individual performance review, as well as that of the firm, at year end. Amy Smith, co-chair of LMA s Education Committee, comments: Measuring for learning and improvement is the most natural form of using KPIs. The aim is to equip ourselves with the information we need to make better-informed decisions that lead to improvements in our work and our projects. Each Core Competency already has clearly defined needs. The next logical step is to design the indicators to assess the performance. This article focuses on the LMA s 10 Core Competencies and some KPIs that solo marketers can put in place with little to no cost to measure performance. Technology Within the category of technology, you can measure success in many ways in your marketing department. You can measure your success through your client relationship management system (CRM) by doing a quarterly check and report on your data. For example, when we first launched the CRM, we had 500 good contacts. Now we have 2,000 good contacts and are reaching more potential and current clients. You should report on the validity of contact information for these contacts as well as the decline in bouncebacks from mailings and blasts. Your website or blog is another valuable resource within technology. Google Analytics is a free way to measure website traffic and provide an up-to-date report on your success within the website. You can attribute numbers to how many articles from your blog were posted, determine if they were picked up by other online sources, and see whether there was a call from a reporter or potential client. Remember, always document and report! In addition, social media is an inexpensive and easy way to communicate and track your firm s message. Use KPIs to monitor your social media efforts, including implementation of a social media plan and policy. Branding Branding can be difficult to measure, so implementing KPIs will show your attorneys that your efforts are successful. Before you start your branding campaign, make sure to do market research on demographics such as age, location and what your audience is reading. Next, provide a report of your findings along with a detailed plan of attack. When you launch your campaign, get your whole office involved. Put your new ads everywhere and anywhere you can. At the end of the year, record how often ads were placed, list the publications and document every time there was a comment about your ads. Measuring for learning and improvement is the most natural form of using KPIs. Branding comes in all forms. Pitch books, logo d promotional items and holiday cards are all examples of branding. You can start a feedback folder to house information, which can be used to compile a report on the success of the firm s branding initiatives for the year. Business Development Marketers are often behind the scenes making the world go round as attorneys are bringing in the business. Solo marketers have an important role acting as business development coaches, so it is imperative that a tracking system is established to make your efforts known. If you coach someone, document the process, keep track of what you are coaching them on and report on improvements and milestones. You can track new case memos, conflict checks, market research pulled for pitches and requests for proposals. If you have a CRM system, use it to track and report on individual business development efforts. If you do not have a CRM system, an Outlook calendar can serve as a way to track business development efforts. Business of Law Marketers should have a good sense of the business of law and industry trends. You can set monthly or quarterly meetings with key partners to discuss how the market trends are affecting your clients. You should be reading all of the publications your firm s clients are reading. Even if the attorneys cannot tell you what their clients are reading, you can ask your clients whenever you see them in the office.
17 Part of understanding the business of law is to know your firm s clientele. The best way to gauge how the business is doing is to work with your accounting department to research trends during the last five years. Important considerations include what type of work is most profitable and who the top clients are. After you gather this information, make a spreadsheet to document trends such as how much revenue is coming in from each client on an annual basis, as well as what type of work we have been doing for the last five years. Ask whether that work has started to change and what we need to do to adapt. We can also track trends in this data that lead back to the core competency of competitive intelligence. You and your partners might discover that you need to switch your approach to a specific client based on your five-year analysis. By providing facts on spreadsheets related to key firm clients, you are creating tangible documentation of your efforts to increase firm profitability. Career Development As a marketer in any size firm, you should develop KPIs for yourself. You can keep track of the continuing education you have received through seminars, webinars, focus groups, conferences and so forth. You will always get bonus points at your firm for implementing something you have learned from an educational offering. Public Relations Often, marketers at small firms are responsible for the firm s PR with a small budget to seek outside professionals on an asneeded basis or, on a rare occasion, have an outside PR firm on retainer. Regardless of your individual situation, you will most likely be scored on the number of times the firm s name appears in a print or online publication. You should internally promote successes in the news by sending announcements for media quotes and articles, as well as publicizing on your website and social media streams. Communications The LMA defines communications as effective messaging and powerful correspondence in all formats of delivery. It involves connecting in a way that inspires action, growth and change. This means that all firm messaging, both internal and external, should be cohesive. In a small firm, it is common that marketers will proactively aid in rolling out uniform KPIs regarding the look and feel of firm correspondence and messaging. For example, you can set universal standards for the look and feel of correspondence going out of your firm by setting KPIs by auditing outgoing correspondence (font size, font type, margin space for letters, RFP guidelines, letter guidelines, etc.). Event Management Events allow you to be creative and make a big impact at your firm. Whether you are on a small budget and do a morning breakfast series or on a larger budget and host a conference to showcase a practice group, be creative and make your events memorable by adding a twist. Your attorneys will remember that you were the mastermind behind such great ideas. Before and after the event, set your KPIs around attendance, content, presentation and follow-up. Research Most marketers in small firms do not have the budget for a competitive intelligence database or a full-time librarian. That being said, you sure can find out a lot about a person or a company by Googling them. If your attorney is going to meet with a potential client, be proactive and ask if you can pull some information for their meeting. This free research will help you save the firm money and you can document how many times you have helped with your free competitive intelligence. Strategic Planning Always align your strategic goals with the firm s goals by adding KPIs to a firm marketing business plan. The strategic plan should include all the previously noted Core Competencies. There are tangible, objective systems a marketer can put in place to demonstrate their value in a law firm. If you measure you and your firm s marketing goals within the Core Competencies, you will have a winning strategy every year. And remember, if you see something or do something, say something or else no one will ever know! Aria K. Vaida, director of marketing at Bernkopf Goodman LLP in Boston, serves on the LMA s National Education Committee, is a member-at-large for the New England Chapter of LMA and is on the board of the Boston chapter of the Law Firm Media Professionals Group. Vaida can be reached at GW ONLINE WITH SHORT-TERM RESIDENCIES Master of Professional Studies and Graduate Certificate Law Firm Management Online Information Sessions Tuesday, September 27, 1:00 pm ET Tuesday, October 18, 1:00 pm ET RSVP Today! JOIN.GWU nearyou.gwu.edu/lawfirm THE GEORGE WASHINGTON UNIVERSITY IS AN EQUAL OPPORTUNITY/ AFFIRMATIVE ACTION INSTITUTION CERTIFIED TO OPERATE IN VA BY SCHEV. Strategies: The Journal of Legal Marketing, September 2011, V13.N06 15
18 Not All KPIs Are Equal Understanding the Interacting Role of KPIs Through the Use of a Mapping Sentence By Paul M.W. Hackett, PhD, and Yulia S. Sovenkova How should we position ourselves to our potential clients to reflect our vision? How should we position ourselves to our stakeholders to succeed financially? What did we learn from our failures and how should we improve? During their daily operations, organizations from various industries face these and many other questions. Key performance indicators (KPIs) are ubiquitous 21st century management tools to measure various types of organizational performance within the company and its market position. lustrate how this balanced scorecard would look for law firm specific KPIs: KPIs are applicable to all businesses, including the law firm and its marketing processes. To develop and implement a comprehensive combination of specific indicators relevant to your law firm, focus on your strategy. Senior law firm management needs data that shows whether the practice area or department spend resources that focus on the right priorities and generate value. Daily monitoring of the results and processes that initiated them is critical. To maximize success, it is crucial to understand how the KPIs are interacting in the system. Is there a static structure that provides the background of successful operations or is it an ongoing interaction between those dashboard indicators? The essential task KPIs perform adds value while demonstrating performance. They achieve this through the development of a four-dimensional understanding of business performance. Marketing functions of law firms utilize the same quadrants of the corporate framework as other industries: customer service, service levels, impact on clients and efficiency. KPIs A Set of Law Firm Values KPIs for law firms should: be universal across industries not just exclusive to legal services; be easy to control and allow benchmarking with other corporations, even those in other economic sectors; and feature strategically measurable values. Keeping these criteria in mind, we took the eight KPIs suggested for the legal profession 1 divided into four key corporate components (that we will call facets) with subcomponents (that we call elements). These represent a definitive set of marketing metrics for the legal firm to consider. Let us il- 1 Stock, R.G. (2005) Key Performance Indicators for the Law Department, Lexpert, March 2005, p 87 Figure 1. Four key law firm law firm performance based metrics Service Level Accessibility: Relates to the ease with which customers are able to readily reach legal counsel at the time they have this need Turnaround: Relates to the speed at which customers receive all forms of legal counsel Teamwork and Morale: A measure of legal services employees overall satisfaction with work life Customer Service Results: A measure of the extent to which legal counsel attains their planned results Overall Satisfaction: Customer satisfaction with legal services from inside and outside counsel Impact on Clients The extent of contribution on pre-selected strategic projects, i.e., the relationship between the firm s vision/strategy and its influence on client base (potential and actual) Efficiency Cost of Legal Services: Total legal spend for each primary corporate indicator before charge backs and recoveries including inside and outside counsel costs and disbursements
19 Budget Performance: A measure of how much approved budgets for total legal spending are met. result in clients attaining their planned results that firms assess through the positive or negative cost to the firm. Measuring Performance These indicators are often measured using a set of scales specific to a given indicator. For example, overall customer satisfaction often is measured on a five-point scale whereas cost of legal services may be measured on a three-point scale, and many times teamwork and morale are assessed qualitatively. While these metrics have differences, all are attempting to gauge how positive an activity is. To better understand the interaction of these KPIs, we suggest a five-point scale of positive to negative effects. Strategy Mapping Through Combining KPIs KPIs for the marketing and management functions of the law firm address many different organizational, professional and staff and client performance aspects of law firm marketing. KPIs rarely exist in isolation within the marketing function of a law firm. KPI literature frequently shows the combination of KPIs by dividing them into organizational and client KPIs. Organizational KPIs are then further subdivided into input, process and output aspects of the organizational process. The client is seen as a target goal for organizational procedures. Given the wide variety of KPIs that a law firm may use, KPIs may be combined in different ways to model what may be complex operational areas of interest to the law firm. Mapping Sentences Facet theory can help develop understanding of complex behavior by simultaneously combining meaningful variables. The main tool for achieving such combined understanding is the mapping sentence. In its broadest sense, facet theory is a way of thinking about complex situations within real-world contexts. It achieves success in requiring conceptualizations to proceed through the breaking down of complex situations into their major components or facets, which influence or determine the situation that is being considered. Facets themselves are also broken down into mutually exclusive subdivisions called elements. Once the important facets and elements are established and combined in a sentence format, the mapping sentence (see Figure 2) represents the structure of the complex situation of interest. To illustrate how this approach works, let us consider the legal KPIs we discussed before, written in the form of a mapping sentence for legal professions. The mapping sentence forms a statement of legal marketing activities that suggests the relationships between the facets. Once a mapping sentence that incorporates all important legal marketing KPIs has been developed, this theoretical statement needs to be modified to fit a specific context. Taking the mapping sentence in Figure 2, it is possible to select one specific element from each facet and combine these in a sentence. The following situation is an example of this: The law firm assesses the speed at which the client receives its services within the context of the firm s strategy that Figure 2. Mapping Sentence for Legal Key Performance Indicators The combination of KPIs results in a measure that reflects the real-world combination of KPIs within the legal marketing context. This metric supplements, rather than replaces, the measure of individual KPIs and gives more information to the legal firm management team regarding the successfulness of their marketing operations. But why make the extra effort to use a mapping sentence to evaluate your law firm s marketing activities? The use of isolated KPIs will often meet your firm s needs. However, legal marketing is a complex process, and the various components of this process will interact with each other. One aspect of marketing procedure will directly impact others. For example, measuring customer satisfaction may be influenced by whether the client is an existing client or by the timeliness of the service, which itself is influenced by its cost implications to the firm. The mapping sentence provides a broader picture using a single outcome metric. A meaningful set of KPIs provides your law firm with not only a measuring system, but also a management system. The interactivity aspects of these indicators are just another way of revealing the combined nature of an organization s operations Continued on page 21 Strategies: The Journal of Legal Marketing, September 2011, V13.N06 17
20 Quant or Qual? KPIs Require Both By Donald E. Aronson Before addressing the topic of KPIs, let me first introduce myself. I was a math major and a certified public accountant. Back in those days, my kind was affectionately referred to as number-crunchers. In today s parlance, I would probably have been called a quant. So I should be an ideal candidate to address something as reliant on metrics as KPIs. But I have to confess that somewhere along the way I had an epiphany and became a full-fledged qual. Too much exposure to poorly planned, poorly fielded and/or poorly interpreted market research was partly responsible for that conversion. That s not to say that I hadn t experienced excellent market research and benefited from its results. It s just that there had been a preponderance of the other with its inherent fudging of the facts or figures to reach what often appeared to be preconceived conclusions. But all that s in the past. Now I m just a schizophrenic agnostic who becomes a quant when it appears appropriate or a qual when it doesn t, and vice versa. One reason for this is the wealth of information so readily available to us now and how it s being used. For example, in the recent April 23 edition of The New York Times, Alina Tugend s article titled In a Debt-Heavy Society, Being Defined by the Numbers quoted the journalist Jonah Lehrer as saying, Numbers make intangibles tangible. They give the illusion of control. We want to quantify everything, to ground a decision in fact, instead of asking whether that variable matters. Lehrer concluded, The obsession with numbers means we don t trust or even look for the intangibles that can t be measured, like wisdom, judgment and expertise. In an apparent contradiction, the very next day s issue of that same newspaper ran an article by Steve Lohr titled When There s No Such Thing as Too Much Information. Lohr referred to as-yet unpublished research, which concludes that companies that rely heavily on data analysis are likely to outperform others and [this] has huge implications for competitiveness and growth. Qual v. Quant Where, then, does that leave me with regard to KPIs and why? For the past 16 years, my firm has devoted a substantial continued on page 20 So it s not really metrics per se that a KPI analyst should be concerned with but, rather, the ability to first define the attributes that determine success or failure for a law firm before measuring... them.