Our job as an attorney marketing agency is to generate leads for our clients. Our clients then convert these leads into cases which produce meaningful fees. So it stands to reason that the more leads generated, the more cases, and subsequently, increased profits.
But, leads aren’t free – and leads are only part of the equation. Conversion is the other key component and conversion costs typically pale in comparison to lead costs. And nearly every law firm can do some simple, inexpensive things to improve their conversion rate.
What, if instead of always focusing on increasing the number of leads coming into your office, you also focus on increasing the conversion percentage of the leads already generated?
On average, most law firms convert only 20% of their leads into cases. That means that 80% of the leads are not getting converted. Granted, there will always be some leads that can’t be converted, but trust us, that number isn’t 80%! So what happens if we try to improve your law firm’s conversion rate by just a few percentage points? Let’s run some numbers.
The Value of Increasing Lead Conversion by 2%
Bob’s Law Firm generates 400 leads per month at $300 average cost per lead and currently converts 20% of those leads into cases, which carry an average case fee of $10,000.
400 leads x 20% = 80 cases
80 cases x $10,000 average case value = $800,000 gross fees per month
$800,000 x 12 Months = $9,600,000 gross fees annually
What happens if we improve the conversion rate by 2%?
400 leads x 22% = 88 cases
88 cases x $10,000 average case value = $880,000 gross fees per month
$880,000 x 12 Months = $10,560,000 gross fees annually
That small 2% improvement generated an additional $960,000 in annual gross revenues with minimal cost. Who wouldn’t want an extra million in gross fees with minimal investment?
What if We Only Focused on Increasing Leads?
Conversely, if you were to focus on increasing the number of LEADS to generate the same additional gross revenue with the same 20% conversion, you’d need to spend an additional $144,000. Let’s do the math.
To generate an additional $960,000 in revenue, you’d need 96 additional cases.
$10,000 average case value x 96 additional cases = $960,000
To get an additional 96 cases while keeping a 20% conversion rate – you’d need 480 additional leads
96 cases / 20% conversion = 480 additional leads needed
Leads aren’t cheap. By needing an additional 480 leads and keeping in mind a $300 average cost per lead – those leads just cost you and additional $144,000.
The bottom line is this – while it’s important to continue to generate leads, it’s EQUALLY important to continually improve your conversion rate. And improving your conversion rate is often times significantly less expensive than chasing new leads.