I recently read a blog post on social media ROI for law firms that concluded, “Measure the ROI of social media in a real and meaningful way. Base it on developing relationships and trust.”
That’s certainly an admirable sentiment, and it might be good enough if you’re engaged in social media for personal fulfillment and growth, but it’s not a useful business development metric. If you’re engaged in social media to build your practice in a systematic and rigorous way, you can’t be content with collecting potential referral sources and building your e-mail and “let’s have lunch” lists.
You cannot control what you do not measure. In other words, trust, but verify.
Unless you track how productive current and potential referral sources are and adjust your engagement strategy accordingly, you’re wasting time and money that could be spent on acquiring and cultivating active promoters for your practice.
Here’s how family law blogger Lee Rosen recently described his epiphany about long-term nurturing of potential referral relationships:
“I’ve been having lunch with this guy, on and off, for four years. We’ve probably been to lunch eight times, met for coffee twice, talked on the phone a dozen times, and e-mailed back and forth every few months. He is, theoretically at least, a referral source. He’s an accountant with a pretty good practice.
“I say he’s “theoretically” a referral source because, a few weeks ago, I realized he’s never referred a case to us. He’s a good guy, and I like him. He acts like he’s going to refer, but still—no referrals.
“Sadly, I’ve learned a hard lesson here. Unfortunately, not every referral source refers.”
3 Tips for Measuring Return on Relationships
Conversion rate – The total number of referrals from a source is not as significant as how many of them convert into billable matters. Divide the number of billable matters from a specific source by the total number of referrals from that source, and you get the conversion rate. A source that sends you a lot of leads that go nowhere is far less valuable than a source that sends very few, but most of them convert into business.
Net referrals – Referrals are a two-way street. You can’t expect a referral source to become/stay motivated if you don’t reciprocate. Ideally you’d be at parity — you’re referring as many opportunities to each contact has he/she is to you. Lunches, bar tabs and event tickets are nice pump primers and expressions of gratitude, but nothing nourishes your incoming referral ecosystem like your outgoing referral stream. Conversely, if you’re giving more referrals than you get, don’t be bashful about dialing back significantly. They’ll get the message.
Opportunity aging – Create a timeline and assign milestones for converting potential referral sources into actual ones. Decrease the frequency of contacts and “rewards” as time goes on. If you’ve not received at least one inquiry directly attributable to the source within three of four months, your probability of future referrals is quite low. A clear litmus test of where you stand with a contact is how they handle a request from you for an introduction to someone in their network (online or offline).
What’s your process for nurturing your referral pipeline?
- Social Media ROI Measurement for Law Firms, Part 1: A Starter Kit
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- Facebook for Law Firms Part 2: Building a Niche