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Key Performance Indicators

As we enter the final half of this year, it’s important to review your numbers from the first part of this year. Are the numbers of leads you are getting up, down or flat? Are your revenues up, down or flat? How are your receivables? Are you hitting the financial goals you had for your firm this year?
These are all known as “Key Performance Indicators” and earlier this year I wrote Part 1 of a series of articles about Key Performance Indicators: Knowing the Numbers That Drive Your Law Firm’s Growth. Since it’s been a few months since Part 1 came out, I think it’s important to quickly review a few critical points:
You must know what the most important numbers are to measure. In my experience, one of the biggest factors holding law firms back is that they do not know what numbers to measure, other than the amount of billable hours they can charge clients or perhaps their net operating income after running a basic profit and loss statement.
You need to appoint a specific person who is responsible for tracking and measuring the data. In most cases, this should not be the attorney or partner. It should be an Office Manager, Bookkeeper or a key person who is completely aligned with the Partner(s).
You must analyze the results of the data. It’s not enough to gather the data. It needs to be analyzed so that wise decisions can be made based on what the data tells you.
The first KPI is tracking the number of leads or contacts per month your firm receives and where those leads come from. In Part 1 of this series we focused on tracking the number of leads or contacts your firm is obtaining each month. It’s very difficult to build a financially successful law firm without knowing how many leads or contacts your firm receives each month. Once you know that number then you can begin to determine your Cost Per Lead (CPL). Here’s an easy way to measure your CPL:

(a) Count how many leads are generated in a given time frame (a month, a quarter, etc.).
(b) Determine how much money the firm invested in marketing during the same time frame. This can include spending on your website, blog, social media, ads, and your marketing staff.
(c) Divide the amount of money you invested by the number of leads generated.
(d) Be sure to compare month to month, quarter to quarter.

KEY PERFORMANCE INDICATOR 2: NUMBER OF APPOINTMENTS SET & KEPT PER MONTH
The next Key Performance Indicator you want to track is the number of appointments set and kept per month. Based on the number of leads or contacts your firm receives you want to determine what percentage of those you and your team were able to connect with, set an appointment with, and to what percent of those appointments did the prospect actually show up. Let me explain how this works so you catch all the details.
Let’s say that through a variety of marketing methods your firm is getting about 50 new contacts or leads per month. Remember, a “lead” meets the following three criteria: (a) someone who has never done business with you before (versus a repeat client); (b) anyone who expresses an interest in your legal services; and (c) everyone who contacts your firm, whether it’s by email, phone, social media, your website, a personal referral, the internet, a legal directory, your ad, by meeting you at a networking event, or attending a seminar you gave.

Once you are tracking this number, the next one to go after is how many of those leads are turning into appointments? You are looking to track your conversion rate of leads into appointments. If your firm is generating an average of 50 new leads per month, setting 20 appointments from those leads, and of those 20 appointments set 10 of them actually show up at your office;,then your conversion rate of leads to appointments is 40% and your conversion rate from appointments set to appointments who show up is 50%. Is that good or bad? Can it be improved? Fifty to seventy percent is a good rule of thumb when it comes to conversion rates. Most firms should be able to consistently achieve a 50-70% conversion rate if they are following best practices. Using that range, your numbers would look like this: an average of 50 new leads should result in 25 to 35 appointments set and 13 to 18 appointments kept. Now some practice areas, like business law, estate planning and litigation, do not have issues with “no shows,” while other practices constantly struggle with them (like bankruptcy and family law). Also, contingency practice areas, like personal injury, are likely to have a much lower lead to appointment set conversion rate because there are many inquiries that don’t result in a legitimate claim.

Lead generation is expensive! In fact, it is often the second most expensive thing you do in your law firm, the number one being paying your staff. If you are going to invest in lead generating activities, then you also need to invest in following best practices in lead conversion strategies. Here are a few of the “best practices” we have learned and taught to our clients at The Rainmaker Institute. When trying to improve your “Lead to Appointment” conversion rate:
• Don’t rely on attorneys to return phone calls. Yes, I know every attorney says (and believes) they are great at returning phone calls and communication, but the simple truth is 95% of them are terrible at it! If all of them are so “responsive” than why is “lack of client communication” the number one reason why attorneys get reported to the state bar every year? Furthermore, if attorneys won’t even return the calls of their clients, how much less can we rely on them to return calls from interested prospects?

• Hire an Appointment Setter. We have seen revenues increase by 20-50% at law firms who do this simple step. Find and train an Appointment Setter whose primary responsibility is to take incoming calls from prospects, call prospects back, set appointments for the Partner, and ensure those appointments show up. This is usually a $10-$12 per hour job and while you may have them doing other things, like filing, their primary focus is to set appointments for the attorneys with interested prospects. If you are consistently getting more than 50 leads per month you really should have a dedicated Appointment Setter. A great one is worth their weight in gold!
• Call prospects at least 4-5 times before giving up. Seriously? Yes, that is not a typo. Here’s the reality: everyone is busy. If they called your office it wasn’t because they were bored and had no one better to talk to! It’s because they have a legal issue and they think you may be able to help them. Just because they don’t immediately call you back after you leave a message for them does not mean they are not interested. You have no idea what’s going on in their life. They might have become sick, gone on vacation, lost your number, become distracted, left a message for a competitor (who won’t call them back), or whatever. A major mistake attorneys and their staff believe is that one return call is sufficient. It rarely is. The best practice is to call back the prospect a minimum of 4-5 times within the next 1-3 weeks before you give up. This is another reason why I never trust attorneys with following up—the most they will do is one call, if we can even get them to do that.

• Contact prospects within 5 minutes after they initiate contact with your firm. In a nationwide survey of over 2 million business to business leads that were generated online, researchers found it only takes an average of 5 minutes for a “hot” internet lead to turn cold. You need to have a system that can reach out and connect with prospects literally within minutes after they fill out a contact form or request a consultation. When minutes count, lawyers are only hours away. If you are a consumer law firm it’s virtually guaranteed that yours is not the only firm that prospect is contacting about their legal issue. More than likely, you are one of several firms and the one who reaches that prospect first will likely secure an appointment with them. The next best thing to having someone on your staff personally and promptly call a lead is to have an automated follow-up system. We have helped a number of law firms set up highly sophisticated follow-up systems that use automated emails to assist in following up with interested prospects. We have found it can double their “lead to appointment” conversion rates within 60-90 days.

• Don’t waste too much time “qualifying” leads over the phone. There are two different models when it comes to “qualifying” leads. The first one I call the “pulse and a paycheck” model—meaning if you call my personal injury office and you tell me you were injured in a car accident, I’m going to try and set an appointment with you. This approach uses very few questions to qualify a lead other than: Do they live in my area? Does it seem like they have a legal issue we can help them with? And will they come in to meet with an attorney?

The other model came about because of attorneys who complain “I only want to meet with ‘qualified’ leads.” When you ask these attorneys how they define a “qualified lead,” they give you this laundry list so that it starts to sound a lot like someone who even a trained monkey could sign up (no offense to trained monkeys everywhere). While I completely understand no one wants to waste their time talking to someone who absolutely can’t afford their services, the highest chance you have of converting someone into a paying client is to meet with them face to face. If you’re trying to grow your practice I recommend qualifying as little as possible over the phone. Get them into your office as soon as possible. Over the years, we have consulted with firms who use the first model and other firms who use the second model. Both models can work, but in general, firms who qualify the least over the phone and push prospects to set appointments grow faster than firms who only set appointments with “highly qualified” prospects.

• Never, ever give prices over the phone! I can only think of one situation when it benefits you to discuss your prices during an initial call with a potential client—when it’s free (or contingency). Here are a few reasons why you should never, ever discuss prices on an initial call.

- When asked about prices on your first call it’s almost always used to disqualify your firm (“that’s too much”). While I understand why consumers want to know your prices, it almost never works out well for you when you tell them your prices over the phone. Ask yourself, when is the last time you heard a prospect say, “Wow, I didn’t expect your prices to be so low!” after you discussed money with them over the phone? It encourages price shopping, which directly impacts your profit margin.
- It encourages you to try and “match” the lower price they tell you some other law firm offered them. You could be walking into a “trap” whereby a client only tells you part of the problem, which leads you to give a lower price, and then tries to hold you to it (or you feel obligated to honor it) when they come into the office and tell you the whole story, which is significantly more complex than what they had initially told you.
- It attracts people who only care about getting the lowest price. Often these are the same people who constantly complain, never say thank you, and don’t pay their bills on time.
- Lastly, it does not give you the chance to prove your value or demonstrate your knowledge and expertise.

If push comes to shove, then you can give them a wide range with lots of caveats, but never a firm quote. Better yet, just make it a rule to never discuss prices over the phone.

 

For additional assistance, please visit:  http://www.RainmakerRetreat.com  or http://www.TheRainmakerInstitute.com .

Stephen Fairley

Stephen Fairley is CEO of The Rainmaker Institute, the nation’s largest law firm marketing company that specializes in helping small and solo law firms generate more referrals and build lifestyle law firms. Over 6,000 attorneys have benefitted from applying their proven Rainmaker Marketing System. For more information visit: http://www.RainmakerRetreat.com or http://www.TheRainmakerInstitute.com or call 888-588-5891.

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Filed Under: Featured StoriesPractice Management

About the Author: Stephen Fairley is CEO of The Rainmaker Institute, the nation’s largest law firm marketing company that specializes in helping small and solo law firms generate more referrals and build lifestyle law firms. Over 6,000 attorneys have benefitted from applying their proven Rainmaker Marketing System. For more information visit: http://www.RainmakerRetreat.com or http://www.TheRainmakerInstitute.com or call 888-588-5891.

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