Marketing Budget: What Should It Be?
Sooner or later, you’re going to have to think about a budget. Budgets are simply another form of planning. And like other planning tools, we don’t have to do them. But we soon realize that things are better when we do. Today, we are simply talking about a marketing budget. So put aside the seemingly insurmountable notion of tackling an overall budget (for now) and let’s look at a necessary piece of it.
For those who do have budgets, many don’t have marketing as a line item. Marketing is an afterthought or an extravagance reserved for any surplus. But if you want more business or to keep enjoying the success that you have, marketing must have a prominent seat at the table. As we’ve discussed in other blogs, a strategic marketing plan is a must – and it should contain a budget.
If and when you are convinced, your first question is how much? How much should I spend on marketing? How much can I spend on marketing? How am I going to avoid everything else if I spend money on marketing?
First step: Figure out how much you are already spending on marketing. Just because it may not be a line item in your budget or financial reporting does not mean that you aren’t spending money on it.
Get in the weeds or have someone get in the weeds for you and figure out what you are spending on anything and everything remotely related to marketing. Once you’ve assembled that data, review it. Analyze it. It’s likely more than you thought and it’s likely being spent on things that aren’t a good investment. But set those aside for now.
Now look at your work, your cases, files, matters, however, you keep up with them. Divide them into at least three categories.
Great case/client, need more like this;
Meh, we did okay on this, cases/clients like this help pay the bills;
Dogs, please no more.
What is your average return on type 1 and type 2 cases? Think of your marketing in terms of these cases. How likely are you to get another type 1 case? What is it going to take to get one? Based on its profitability, how much makes sense to spend to get one more? Two more? Five more? Do the same for type 2 cases. How did you get the type 3 cases? Make a note not to take them anymore.
How much do other law firms spend on marketing? That number is changing as firm overhead changes. Competition and technology have forced/allowed firms to reduce their fixed cost and their overhead. But you will see studies, surveys, and reports which indicate that large firms spend 2-5% on marketing while small firms spend 5-10% on marketing. More recent studies show that number increasing.[i] But no two firms are the same. You need to do what makes sense for you. Next time we’ll discuss prioritizing your marketing budget.