LFMM 012 Transcript: The 7 Levers of Every Law Firm Business
Hello and welcome to Episode 12 of the Law Firm Marketing Mastery podcast, where we get more clients, make more money step-by-step.
I’m your host, Christopher Small, and this week I’m going to talk to you about the seven levers of business that you can you can use to instantly ramp up your law firm or start your law firm out on the right foot.
And, in the tip of the week, I’m going to talk about something that is really important to think about this time of year.
Week in Review
But before we get to that, let’s talk about my week in review. So, as you all know, this was the first week back after the holidays, which meant a whole week after basically two three day work weeks.
So I spent the better part of the first half of the work week just trying to get back on track, and I think that’s something that we can all fall prey to. And for me, getting past that really just entails putting my head down and making sure that I get to work. It helps that I’ve got a couple of deadlines that I need to meet, and that I’ve got big plans for this year that make me want to get started off on the right track.
But, I’m human just like everyone else, and I have the same problems getting back on track after taking some time off like everyone else. So, you know, I spent a lot of time this week really trying to focus on doing the work that I needed to do and making sure that it got done.
And it was actually doubly and I guess in some ways triply hard this week for me because it was also a big week for me personally. This week happened to be the first week that Blakely, my daughter, went to day care, so that was a relatively dramatic experience for the family, and obviously then her going to day care coincided with my wife going back to work.
So there is a lot of tension in the house, a lot of tension in the house, a lot of tears being shed as my daughter grows up and goes off into the world, even if it is just daycare.
So that made things a little bit more tough this week too. But we got through it, and she’s loving day care, and she’s at a good place, doing fantastic, and it wasn’t too bad.
But that definitely added to some of the difficulty staying on track with work, and I know that’s something I think we all deal with from time to time.
And again, it’s just a matter of trying to focus and do the work that you can when you are there, and then, enjoying your family when you are home.
So I did that on the work front. I’m still, as you guys know, in discussion with these radio people about putting together some ads and I finally put together an ad and sent it over to them, and what I’ve been trying to do now is nail them down on prices, because the way I see it, an ad spot – they should be able to quote me a price on an ad spot, right?
I had them quote me a bunch of prices. I put together a line up for distribution that I thought was good, and then he called me back and he said: “No, that’s not going to work, because the prices that I quoted you require you to pay for some other ads that are more expensive.”
Now, at the end of the day I know they are trying to make money, but I’m trying to pay as little as possible for as much reach as possible. And I told him that straight away, I said: “Look man, I know you guys need to make money off of this but I don’t want to pay more than I have to, and if there are options out there that get me the same amount of reach for less money, then that’s what I want!”
And, just so you know, “reach” in radio speak is just the number of potential people that will hear your ad. That’s the number people that are on the radio at the time. And there all these reporting agencies that put together that information so you can have an idea of how many people will hear your ad.
I’ve been working on that. I had a goal of getting an actual ad put together on the radio by this last week. Obviously that didn’t happen. But we’re still moving forward, and that’s okay.
Otherwise, the rest of the week was great. I’ve got a big project in the works that I’m going to start posting about on the blog this week, so make sure you check that out, lawfirmmarketingmastery.com.
It’s going to be kind of a week by week check in. The plan is to not just report my progress, but to give you a lot of information so that if you want to apply the same things that I’m doing to your own business, you can and you can make more money obviously with your firm, while spending less money than you might if you just hired some marketing help to come and take care of it all for you.
So be on the lookout for that, probably going to post it on Thursday, or Friday.
Check out the blog. And, if you don’t want to have to check in, obviously you can go subscribe to the feed. That’s the little feed burner icon that’s on the right side of the website. Go check that out.
Feature Segment: 7 Levers of Law Firm Business
Let’s talk about the feature segment today, the seven levers of every law firm business.
Obviously, when it comes to seven levers of business, this isn’t necessarily something that I came up with myself, and I’m pretty sure the guys that I heard it from, and I heard it from the guys on Preneurcast, they talk about it a couple of times, I’m not sure they actually created it either.
I think it’s one of those business principles that’s tried and true that just needs to be discussed from time to time, so that you make sure you’re looking at all the seven levers that can drive your business. That way, if one is weaning or one isn’t working correctly, you can fix it, and then obviously ramp your business up.
What I’m going to do is take these levers, these business levers, and then reframe them in the context of a law firm.
Because, that’s what we all want to know. How can we use this business lessons? How can we use social media platforms? How can we use blogs? How can we use our websites? How can we use business cards? How can we use anything in specifically in the law firm context?
Because that’s what we do.
So that’s the idea. And then… so what I’m going to do today is talk about all seven levers. I’m going to talk about them relatively briefly, probably just spend a couple of minutes on each one and then I’m going to break each one down, probably into an individual podcast, and really dive in deep.
And, I’m going to use my own law firm as example and use other hypothetical examples that I make up, maybe talk to some other attorneys in other fields, in other practice areas to get some ideas from them on how they can use this an then give that information to you. Because, again, I want you to be able to, after every one of these episodes, be able to turn it off, put something on your to-do list, and get something done before the next podcast comes out.
The idea is for you to literally make more money from this podcast. And so I know this is something that is going to do that. It’s time to stop monkeying around and stop discussing just random stuff and books, and it’s time to start talking a little bit more about some real business development topics and some real things that can make you more money quickly.
Okay? So let’s dive right in.
These seven levers of business are, like I said, again, they apply to any business that you can think of.
Internet business? Yes.
And the great thing about these is that, because they are levers, you want to imagine it, I’m trying to think of a good example, but, you know, you could, it’s sort of like bathwater. You got the hot water faucet and you’ve got the cold water faucet. If you want the water to be a little hotter, you can either turn the hot water up higher or you can turn the cold water down lower, or both.
These levers, you can use in the same way. You can ramp one up, and kind of turn one down, if you need to. You can try to turn them all up, and you can go from there.
Okay? So, and finally, sorry, I promise we’re going to dive in here, the last thing about these levers is they also kind of go in order of the customer experience. The first lever is the first thing that is going to affect a potential customer. Then lever two. Then number three. And on and on. So just keep that in mind as we talk about these today.
Without further ado, the seven levers of business.
Law Firm Business Lever Number 1: Traffic
Lever number one is traffic.
Traffic is exactly what it sounds like. If it’s a website, it’s people that are visiting your website. If it’s a law firm, it’s people that are calling your law firm, it’s people that are visiting your website, it’s people that are maybe pick up a brochure if you left it at some place that you would leave it, right?
Let’s say you are an estate planning lawyer. You leave a bunch of brochures at an insurance agency or retirement planning agency and someone reads your brochure – that’s traffic.
Traffic is that initial contact with someone, to let them know about your business, to let them know that “hey, we’re out here.” And they are saying “yes, I know you’re there and I want to interact with you.”
Another example like a retail store would be somebody coming inside, obviously. That’s the kind of traffic that you want. Okay?
Law Firm Business Lever Number 2: Opt-In
Lever number 2 is the opt-in.
The opt-in is basically someone showing interest in using your services. So, for my firm, for most firms, it would be calling, calling the firm, to schedule a free consultation.
It would be filling out that email form on your website for a free consultation. It would be someone showing up for a presentation that you do. Those people are saying: “Look, I think that you might have something that you can give me, and I want to learn more.” That’s the opt-in.
And at that point, people are saying: “I’m available. I’m here. Tell me how you can help me.”
That’s really the sales process, right?” So that’s lever number 2.
Law Firm Business Lever Number 3: Conversion
Lever number 3 is conversion.
Conversion, as you might expect, is that act of signing up a new client. Okay?
So, they come in for the free consultation, you do your thing, give them your pitch, and they decide that: “Hey, you know what? You are the right person for me. I want your help. And that is conversion.
Before we go onto the fourth lever, these first three levers are the levers that everyone thinks about. You always think about, “How can I get more traffic? How can I get more people to my website? How can I get more people to call the office? How can I get more people to know about me? How can I get more people to schedule free consultations?”
And, obviously, “how can I get more people to sign up?”
Those are hopefully things that you are always thinking about and always working on. And, like I said, in these next few episodes, we will talk about ways to increase that more. But those are kind of the three that everyone knows about. They make sense, you know?
So when we get to the fourth lever, then we start talking about things that people may not pay as much attention to, but they are still just as important as the other levers, and they can make just as much difference in your business.
Law Firm Business Lever Number 4: Average Sale Value
The fourth lever of business or of your law firm is average sale value. That is basically, how much is the average transaction with your firm?
The more you can make, the more you can increase your average sale value, the more money that you can make. Obviously you can do that by raising your prices. You can do that by adding in more options. There are a couple different ways that you can do that. But average sale price value is a way that you can, is one of the levers of your firm that you move around.
Law Firm Business Lever Number 5: Average Items Per Sale
Lever number 5 is average items per sale.
And, I know, I’m sure a lot of you right now are thinking average items per sale. Like, “I can sell someone two pairs of shoes instead of one. In my firm, if they come in to get a will done, then, they are going to buy a will.”
But, honestly that’s not true.
There are more value adds that we can provide to people that actually count as additional items. You can do a value add as well like I talked about with level four, to increase your average sale value. You can add a free eBook that they get as part of the package that increases the value to them overall, that then allows you to increase the price of your services.
And there are also things that you can add in that are actually additional items that you can then charge for.
And we’ll talk about that in a lot more detail moving forward, but, for example, let’s just say in estate planning, because that’s easy. That’s at the top of my mind tight now for some reason.
At the estate planning level, let’s say someone comes in to buy a will, at the time they buy the will, you can offer them, you know, a yearly check-up, or something like that.
For the small price of one hundred bucks, they can prepay for one year check-up. Or, if they want to have it at that time (the end of one year), it’s going to be two hundred fifty dollars, or something like that.
So you can actually add things like that as you go on. Another thing that you can do for the estate planning average items for sale, you can, say someone wants to do a will, then, also, have them do a, man I can’t remember the name of it is, but it’s kind of like that health care directive or something like that.
There are bunch of other things that go along with a will, for example, you can add in.
Same with traffic tickets. You could do a driver’s records check every year for them for an extra twenty-five bucks or something like that. And even though it’s only twenty-five bucks, that doesn’t seem like a lot.
But let’s say over time you have a thousand, for example, former clients. All of them are paying twenty-five bucks for this records check. You know, you just made yourself twenty-five grand right there.
And, you know, that’s not a big thing for you to do, and you just lined your pocket with some good money, provided them some good value, and set yourself apart from others attorneys too because you are offering a service that they are not offering, okay?
So that is lever number five.
Law Firm Business Lever Number 6: Average Transaction Per Customer Per Period
Lever number six is average transaction per customer per period.
What this is really about is getting people to pay you more often, or to use your services more often. And again, this just comes down to being creative with the services that you are offering and understanding that you can provide value to people more often than when they’re in trouble.
You can be an adviser. You can do check-ups. You can sit down with them every quarter and review whatever it is that you do. You can review with your former clients and make sure everything is still on track.
And, when you do that, then obviously you can charge a little bit of money, and if it’s a premium service you can charge a premium value for that.
So, average transaction per customer per period. The more transactions you can have with each customer, the more money you can make, and that’s a good thing.
Law Firm Business Lever Number 7: Margins
Finally, number seven, the seventh lever, is margins.
Margins basically just means the amount of money that you put in your pocket versus the amount of money that you take in and the amount of money that goes out for expenses.
So, lowering your expenses is a good way to do that. Also, increasing your profit is a good way to do that.
You charge more money, get less expenses, and you just increase your margins. And that’s one way that we can all probably make a fair amount of money is just to look at where all of our money is going and ask yourselves two questions: a) is this something that I need for the firm, or is it something that I think I need, or someone promised results on that’s not really panning out?
And then number two, if it is a service that I need, is there a way to get it cheaper?
Is there a way to get a discount for my current vender because I’ve been there long time and I’m a reliable client?
Is there another competing vendor that would offer a better price and would my current vendor be willing to come down to the competitor’s price?
All these things, and you know, those take literally sometimes five minute phone calls and you can save yourself a lot of money and pull that seventh lever of business.
So those are the seven levers. And when you think about your business from that aspect it really will spark, or should spark, a bunch of new ideas and a bunch of new revenue streams, and a bunch of new ways to really ramp up your business.
And the great thing about these levers is that they work exponentially.
When you help one, you typically will help another. And so you don’t necessarily need to make big gains with your levers. As long as you’re constantly working on opening them up more, then you will continue to see exponential gains.
For example, if you increase your traffic ten percent that is going to affect your opt-ins in a way. Even if you’re often process doesn’t get any better, a ten percent increase in your traffic is going to affect everything else down the line.
And then, if you get a ten percent increase in traffic, and then you also get a ten percent increase in your opt-ins, that has just exponentially raised your opt-in rate.
It doesn’t just go twenty percent, it’s probably something like twenty-five percent. I didn’t actually do the math, and I’m not a math guy, but I hope you can see the point that they actually build on each other, and so just raising all ten percent doesn’t give you a seventy percent raise, it actually probably get you about one hundred twenty-five raise, because they are building on each other.
So that’s important to think about. And, you know, it may be helpful just to tackle one of these a week, or one of these a month, and just say, “this month, I want to raise my traffic by ten percent,” and just focus specifically on that. And then hopefully achieve that goal. And then in month two you can say I want to raise my opt-in rates ten percent.
And then through that month you can do that, and then you get to month seven, and you are looking at your numbers, and then month eight you just start over again. You say, “okay, another ten percent traffic increase,” and you just keep going, over and over again until you’ve got a very well-oiled law firm machine that is making you a ton of money and producing happy clients, producing happy staff, and just giving you a good life.
So those are the seven levers of business. Again, we’re going to break into those a lot more in the next coming weeks and I’m going to implement these levers as well.
I’ve been kind of working on them a little bit half-hazard. I need to focus more, but I hope you do too, and I hope you see some really great results from thinking about your business in terms of these levers.
Okay, so that is the feature segment of the week.
Tip of the Week
Before we get to the tip of the week, I want to thank Josh Johnson of LOJJLOC, The Law Offices of Josh Johnson for leaving me a review on iTunes. Here is what he had to say:
I first became aware of Chris Small’s blog in 2011 when I started researching the feasibility of opening my own law firm, his voice was unique and practical, and his writing contributed toward my growing sense that I could start my own law firm, which I did later that year. I’ve been paying attention to him ever since, and I was happy to see recently that he started a podcast. This is interesting and useful as his writing on the internet was, and as other reviewers have said, the 30 minute format is perfect for listening to during my daily commute. I’ve listened to each episode and I’ve been inspired every time to make a little extra effort to expand my marketing presence. It’s all about making a consistent effort. This podcasts tells me to motivate me to keep doing that, which makes it a very valuable resource.
Thank you very much Josh. I really appreciate you taking the time to leave that review and I hope that inspires other people to do the same. I do whatever I can to give you a great value here on this podcast, and I’m giving it to you for free.
And one of the things that I love for you to do is to give me a review on iTunes, which helps get this show out to more people and also kind of just lets me know that “hey, someone out there is listening, someone out there is getting some value out of what I’m saying, and someone’s enjoying the podcast.”
So thanks Josh, I really appreciate that. And I still appreciate everyone else that is listening, and I really enjoy doing this. So, don’t worry, I’m going to keep it up.
And another reminder to sign up for my newsletter. I have not yet sent out the December, my December numbers, and I haven’t sent out my yearly numbers yet. That’s kind of one of those holiday and getting back into the swing things, so I haven’t done that yet.
If you go to lawfirmmarketingmastery.com and sign up for the newsletter, well that’s one of the things that you’ll get is my monthly income numbers: how much I make; how much I’ve spent. So you can kind of see that I’m not just talking the talk here, I’m also walking the walk.
I’m trying to create and build and keep going a successful law firm, just like you are. So go and sign up for that.
The other thing is, I also haven’t had the monthly webinar yet. It’s actually going to be tomorrow, Thursday, January 15th, 5:00 p.m. pacific time. And on that webinar I’m going to basically break down search engine optimization.
There’s a lot of things that have changed in the last year, there are a lot of ideas out there about what works and what doesn’t, and I’m going to talk about some of those things and hopefully arm you with the ammunition to at least have good discussions with people that are trying to sell you SEO services if you don’t want to be doing them on your own.
So sign up for the webinar. We’ll get you the invite or signing up for the newsletter will get you the invite to that webinar. Otherwise, if you don’t sign up for the newsletter, you don’t get an invite to the webinar. That’s the only way to get it. So go sign up today, lawfirmmarketiingmastery.com. There’s a sign up form on the right side of the page. You can’t miss it.
So, finally, as promised, the tip of the week.
And the tip of the week this week, and it’s timely because it’s the beginning of 2013, and we’ve just ended 2012, so you’ve got taxes for 2012 to think about, you’ve got to get organized, and have everything put together for 2013, so I wanted to talk today about the importance of having a bookkeeper. And a book keeper is someone that for me does something that I don’t like to do – keep the books.
They write down those receipts, put them in the right expense category.
If you buy a desk, they make sure that it gets amortized at the right rate.
If you buy a computer, they make sure it gets put in the right spot.
If you buy something with your credit card, they make sure that it;s expensed right and that when you pay for it it’s credited right.
All that stuff that I don’t want to think about and I don’t want to do is perfect fodder for a book keeper. It’s something that bookkeepers like to do – that’s why they have that job.
So think about hiring a book keeper if you don’t have one already. You can find one out there usually for pretty cheap, and the way I do it is on a monthly basis. So I just pay them for a couple hours of their time. At the end of the month, I give them all the information, they put it together in a handy form and then they spit it out to me.
If you are doing a lot of business already it may be something that you want to see weekly. If you’re ramped up, if you’ve got a ton of employees, and the cash flow from week to week makes a big difference in your decision making process, then maybe you want to have them coming every week to spend an hour on your books, and then you can see what’s been going on for that previous week.
For me, I’m comfortable with a month because for me, although business is good, I don’t have that many employees, I don’t have that many expenses, so I have kind of an intuitive feel of how everything is going for the month.
But seeing that expense sheet at the end of the month and then from month to month it helps you forecast where you’re going in the future. It helps you see like we talked about those seven levers of business, the margins, how you can manipulate that a little bit, and it’s a huge help, and it saves you a lot of time and allows you to do some of the things that you like to do, or that you need do that can actually make you money.
Doing the books is one of those things that is a loss leader, in a kind of a way. When you do your own books, you don’t make yourself any money. It’s not a revenue generating activity.
And at the end of the day, revenue generating activities are what you want to do. That’s the kind of business that you want to be in. And so, get yourself a bookkeeper, spend a couple hundred bucks a month or hundred bucks a month or fifty bucks a month, or whatever you can find, and have someone take that off your plate. It’s going to allow you to do something else: write an article; put together a podcast; do an interview that you wanted to do; work on that case; sign up an extra client. So do that.
Okay, thanks for listening, if you liked the show please follow us on iTunes, and leave us a review.
If you have a question or comment, please leave it at lawfirmmarketingmastery.com and I’d love to hear from you.
If you ever want to say hi, you can do it through email, firstname.lastname@example.org, you can do it on Facebook, facebook.com/lawfirmmarketingmastery, or you can come and say hi to me on twitter – twitter.com/csmall.
So, next week I’m planning on putting on that first interview with Madhu Singh and so be on the lookout for that. Until next time, I’ll talk to you soon.