The Cost of Acquiring New Clients
How much are you spending to acquire new clients for your law practice? In a professionally managed AdWords account, your client acquisition cost could be as low as a few hundred dollars per retained client.
"Client acquisition cost" naturally refers to how much you are paying to bring in new clients. If you haven't already done so, think about how much you spend on advertising.
For example, you may be spending $1,000 per month on your Yellow Pages listing, another $500 per month to be in various lawyer directories or paying thousands of dollars each year to online legal matching services, plus whatever else you are doing to get clients.
Take that monthly spend and divide it by the number of clients you acquire each month from those sources, excluding from the equation all of your word-of-mouth referrals from colleagues.
This figure is your client acquisition cost and gives you a sense of how much it takes to get someone into your office and to hire you. If you do this calculation for each referral source, then you see how expensive each advertising method is.
This chart shows the cost per client acquisition costs for a lawyer referral service with which we are closely connected:
In this particular AdWords account, the advertiser is paying Google approximately $174 per open case and finds the cases of comparable or higher quality as other referral sources shown in the chart.
The following chart, from the same advertiser, shows the raw number of open cases from its two largest advertising sources, Yellow Pages and Google, for the last six months of 2006:
What does all this mean for your law office?
That whatever you are spending in the Yellow Pages or elsewhere, even if you still show a positive return on investment, you are not making the most of limited advertising dollars if your current client acquisition cost is greater than a few hundred dollars per client and you're not doing everything you can to make your law office visible in the top search engines.
But getting noticed in Google and getting a large number of highly targeted, inexpensive visitors to your website is only part of it.
You still need to convert those clients into paying customers.