In law firm marketing, your cost per lead is the key indicator of your campaign’s effectiveness. Tracking and analyzing cost per lead will help you maximize your firm’s marketing budget.
Understanding how to calculate cost per lead for law firm marketing is essential your firm’s advertising success. Tracking measurable results is the only way you can create an effective and evolving marketing strategy. Knowing exactly how each of your campaigns performed, and why, allows you to make effective and efficient adjustments.
With traditional means of advertising—like Yellow Pages or billboards—becoming less effective, lawyers need to expand into new marketing forms in order to reach potential clients. Knowing how to calculate cost per lead for law firm marketing distinctly separates the law firms experiencing growth from those experiencing stagnation.
What Is Cost Per Lead, Exactly?
Cost per lead is the total amount of money it takes for you to acquire a new lead. To calculate cost per lead, you need to have data on two variables:
- Your marketing budget. You will need an accounting of all the money spent on marketing within a specified timeframe—usually per month or per quarter. For improved accuracy, you can include the value of time spent by in-house staff on the marketing campaign in your budget.
- New leads acquired. The next number you will need is an accurate count of the number of new leads that are acquired during your chosen timeframe.
Now that you have your numbers, let’s do some math! The equation for cost per lead is:
Marketing Budget / New Leads = Cost per Lead
If you spent $15,000 on your newest law firm marketing campaign and it garnered 15 leads:
$15,000/15 = $1000
So, your cost per lead is $1000.
Understanding how to leverage Big Data for law firm marketing will improve your ability to analyze specific channels and create micro-level strategies. Provided you have a system in place that indicates where each of your leads comes from, you can determine your cost per lead separately for TV ads, social media platforms, radio, billboards, print advertising, and your website.
Just take the marketing budget that was allocated to any specific marketing channel, along with the new leads it acquired, and apply those numbers to the equation!
How Cost Per Lead Affects Your Conversion Ratio
Leads are the life source of your business, which is why learning how to calculate cost per lead is so important in law firm marketing. However, you only see a return on your marketing investment once your leads become conversions—actual clients.
The conversion ratio describes the percentage of leads that become paying clients. The equation for conversion ratio is:
Conversions / New Leads = Conversion Ratio (%)
If your law firm brought in 15 new leads and 3 of them became new clients, your conversion ratio would be 20%.
3 / 15 = 0.20 x 100 (20%)
Understanding your conversion ratio helps you determine the quality of leads being generated by your marketing campaign. A campaign that generates 100 leads per day but has a conversion rate of less than 1% needs to be revised.
Likewise, if your conversion rate is extremely high, but your cost per lead rockets upward, you will need to make adjustments. The sweet spot in law firm marketing advertising is low cost per lead with a high conversion ratio, working in tandem.
To learn more about how to calculate cost per lead for law firm marketing, contact Kirkpatrick Creative at 501-663-6364 to speak with one of our experienced law firm marketing consultants.