Let’s take a typical injury law firm that signs up 1000 clients per year (not impossible with the right marketing, by the way). If 250 clients are unhappy but they only hear from 5% of that 250, which is approximately 13, that may sound good until they realize that the 237 quiet ones are likely to tell 2,844 people (237 x 12 = 2,844). Conversely, if a client is completely satisfied, he might tell 1 to 3 people or an average of 2. My statistics showed me early on that there were three major categories of referral services in my firm, and they broke down as follows: 421 cases or 41% were from TV. 140 cases or 14% were from digital ads. 340 cases or 33% were from personal referrals. Now let me tell you the cost of getting those referrals. TV costs approximately $1,500 per client in real dollars. Digital ads cost approximately $2,000 per case to get clients in the door. Personal referrals cost absolutely nothing. Which type of referral do you think I want? It’s important to note that of the 340 personal referrals we signed up, we only had 823 referral leads, which means we had a 41% success rate in signing up personal referrals whereas in TV advertising, we had 2,333 calls and signed up 421 new cases. This was a conversion rate of 18%. The Digital ads yielded 1,268 calls and only 140 signups, which was only an 11% conversion rate. You can clearly see that the personal referrals are already sold on our services and are seeking us out and not just shopping around for attorneys or trying to find out information. They come to us wanting our services. This also costs the firm and you less time and money when converting these calls into actual cases. Which do you think is the most cost-effective form of advertising and also yields the greatest conversion rate? The answer is clear – personal referrals from our past clients and people we do business with . Now let’s go to the actual dollar cost for an unhappy client. As I stated earlier, out of 1000 clients, if we go by the national average, we have approximately 250 clients of which 95% never say a word but just never refer clients to us or come back. Thus, we have 237 people who could have talked to at least 474 people and referred us, which on average could have yielded 41% or 196 clients. In actual costs, just look at the following: If we replaced these clients with TV advertisements, the cost would be $176,400. But better yet, let’s think of the lost income. If we average $10,000 a fee, and we lose 196 potential clients, then we have lost approximately 3.2 million dollars in revenue for the year.
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