Measuring and monitoring business performance is critical to the success of your law firm, and there are dozens of K.P.I.s that can be used by marketing professionals.

But first, what is a K.P.I.?

A K.P.I., or Key Performance Indicator, is a piece of quantifiable data used to evaluate business performance success. For example, in marketing, we use K.P.I.s to help us identify areas where we are excelling and areas where our efforts need improvement. This information can then be used to make decisions about how to allocate resources and improve future performance.

Why Are Law Firm Key Performance Indicators Important?

By monitoring K.P.I.s, you can ensure that your law firm is performing at its best and making the most of every business development opportunity. Key metrics like click-through rate and engagement rate can help you identify trends and turn insights into actions to get ahead of the competition.

But how do you know which K.P.I.s to choose for your firm?

• Choose K.P.I.s that align with your goals: The K.P.I.s that you track should be aligned with your firm’s goals. Whether your goal is to set an annual marketing budget, evaluate your firm’s reach, or determine the acquisition cost per client, choose K.P.I.s that will help you measure your progress toward your firm’s goals.
• Collect data regularly: In order to track your K.P.I.s effectively, you need to collect data on a regular basis. This will allow you to track your progress over time and identify any areas where you need to improve.
• Analyze the data: Once you have collected data, you need to analyze it to identify trends and patterns. This will help you understand how your firm is performing and identify areas where you can improve.
• Take action: Once you have identified areas where you need to improve, you need to take action to address them. This could mean tweaking your messaging in your social campaigns, swapping out the CTAs in your emails, or reallocating your resources.

Not sure where to get started? We’ve identified 10 essential law firm K.P.I.s that you should consider adding to your reporting arsenal right now.

1. Return On Investment

Return on Investment (or R.O.I.) is one of the most important metrics for law firm marketing and business development departments because it helps firms determine how and where to spend their marketing budgets.

A high R.O.I. means that the business is making more money from the investment than it cost to make the investment. A low R.O.I. means that the business is making less money from the investment than it cost to make the investment.

R.O.I. tells you the profit or loss of your marketing efforts by following this formula:

R.O.I. = (Net Profit / Cost of Investment) * 100

For example, if a firm invests $100,000 in a new marketing campaign and generates $200,000 in revenue, the R.O.I. would be 100%. This means that the business made twice as much money from the investment as it cost to make the investment.

Your law firm invests a lot of time and money in marketing and business development efforts, and it’s crucial to your business operations to measure loss so that you can properly forecast and budget marketing expenditures in the future.

2. Customer Acquisition Cost

Customer Acquisition Cost (C.A.C.), or Client Acquisition Cost, is how much it costs to acquire a new client. This metric is important for budgeting, optimizing marketing campaigns, calculating R.O.I., ensuring business sustainability, and benchmarking performance. It provides valuable insights into the cost-effectiveness and efficiency of your client acquisition strategies, allowing you to make informed decisions to drive growth and profitability.

To measure your C.A.C., you need to calculate the total cost incurred in acquiring new clients within a specific time period.

First, choose a specific time frame, such as a month, quarter, or year, for which you want to measure the C.A.C.

Next, gather data on all of the costs associated with acquiring clients during that chosen time period. This includes marketing expenses (advertising, pay-per-click campaigns, promotions, etc.), business development costs (employee salaries, how many attorney hours were spent on bringing the potential client through the sales process, etc.), technology or software costs used in client acquisition, agency fees, and any other direct costs related to acquiring new clients.

Then, calculate the number of clients acquired during the chosen time period. This could be net new clients or new matters opened for existing clients.

Finally, calculate your C.A.C. by using this formula:

C.A.C. = Total Marketing and Business Development Costs / Number of New Clients Acquired

For example, if your total acquisition costs for Q1 were $100,000 and you acquired 100 new clients or opened 100 new matters, your C.A.C. is $1,000.

There are many factors that go into determining a C.A.C. in the legal industry, and depending on the practice area, you may be dealing with different marketing tactics and expenditures to measure in your C.A.C. 

In 2023, the average C.A.C. across the legal industry is $749.

3. Customer Lifetime Value

Customer lifetime value (C.L.V.), or client lifetime value, is the total revenue a firm can expect to generate from a client over the course of their relationship. It takes into account the client’s initial matter, any repeat services or additional matters, and the average duration of their relationship with the firm. C.L.V. is an important metric for firms to track because it helps them to understand the value of their clients and make decisions about how to allocate resources to acquire and retain clients.

First, you must determine the average client value, which is the average amount of money a client spends with your firm over their lifetime. Then, identify the average client lifespan or the average number of years a client stays with your firm. 

You measure client lifetime value by using this formula:

C.L.V. = Average Client Value x Average Client Lifespan

By tracking C.L.V., firms can make better decisions about how to acquire and retain clients, which can lead to increased profitability.

3. Referrals In, Referrals Out

Many attorneys work hard to cultivate referrals as a significant source of business. Evaluating the number of referrals that come into your firm versus the number of referrals you sent out to other law firms or related professionals can indicate whether or not your networking efforts are paying off. 

There is no “one size fits all” approach for calculating the number of referrals that should come in or out of your law firm. These numbers will vary not only from firm to firm but also from practice area to practice area or attorney to attorney within the same firm. Some law firms, such as consumer-facing plaintiff firms, may have more referrals in than a corporate M&A firm.

Marketing and business development departments should work together with firm leadership to define a goal for referrals in and referrals out and a way to track whether or not those goals are met. 

For example, if a partner attends 5 bar association networking events to grow their relationships with other attorneys, maybe that partner would set a goal for their practice to receive three referrals in and give two referrals out.

4. Click-Through Rate

Click-through rate (C.T.R.) is the percentage of impressions that result in a click. For example, if your campaign receives 100 impressions and five clicks, your C.T.R. is 5%.

C.T.R. can be used to gauge success in many aspects of digital marketing, including emails, social media, and paid digital ads. C.T.R. tells you what messaging works – and what doesn’t. A higher C.T.R. means that users found your content highly relevant, while a lower C.T.R. means that users found your content to be less so.

There isn’t necessarily a target percentage that you should be hitting with your C.T.R. Instead, use this K.P.I. to compare the performance of your campaigns and learn how to speak to your audience over time. 

5. Engagement Rate

Engagement rate measures the number of interactions your social media content or email campaigns gain relative to how far it reaches your target audience. This can include metrics such as likes, comments, shares, or click-throughs.

There are a few ways to dive into engagement rate. (This article from Hootsuite offers a deeper dive.) To begin, start by looking at engagement rate by reach, which takes into account all the possible engagements (likes, clicks, shares, comments, etc.) relative to the total number of impressions. For example, you may have 100 impressions on a social media post, but 3 comments, 20 likes, 2 shares, and 1 click-through. This means that your engagement rate is 26%. 

The benchmark for your engagement rate will vary depending on the platform, and your engagement rate should be measured individually for each of the firm’s social media channels. To give you an idea of where you should aim, here are the industry-agnostic, average engagement rates for each of the “big four” social media platforms utilized by law firms:

Measuring your engagement rate is important for letting you know how well your content is being received by your audience. Your engagement rate can also help to inform your future content strategy and your messaging.

6. Intake Rate

For law firms, intake rate is the number of new clients that have reached out to your firm via phone, website, email, or chat divided by the number of impressions. For example, if you have 100 impressions or leads, and 30 of them contact the firm, becoming clients, your intake rate is 30%.

There isn’t a benchmark intake rate percentage that your firm should be hitting. Instead, your firm should use this metric to indicate how successfully your overall strategic marketing plan generates leads and drives new business.

Measuring your intake rate can help you understand which initiatives are attracting more leads, which channels are outperforming others, and where you should update your messaging. For example, if you see that your social media initiatives are getting hundreds of impressions and zero qualified leads, but your Google ad campaigns result in the lion’s share of your organic intake rate, you may want to make some changes.

7. Marketing Influenced Customers

Marketing influenced customers (M.I.C.) is the total number of new customers, or clients, who interact with your marketing divided by the total number of new clients within the same period.

If you have 100 new clients in a month, and 70 of them interact with your marketing campaigns, your M.I.C. percentage is 70%.

Much like C.T.R., there isn’t a set benchmark percentage that you should be hitting with your M.I.C. Instead, use this metric to help fine-tune your marketing strategy. 

Since law firm marketing often works interchangeably with business development (or sales), this metric indicates marketing’s influence in the B.D. process. M.I.C. demonstrates how effective your marketing strategy is in nurturing fresh leads and whether the campaigns are getting noticed or failing to create the desired impact.

8. Email Open Rate

Email open rate is the percentage of recipients who open an email campaign. This metric is used to measure the effectiveness of your email marketing campaigns, such as newsletters, client alerts/advisories, or firm announcements.

You calculate email open rate by dividing the number of emails opened by the number of emails sent:

Open Rate = Number of Emails Opened / Number of Emails Sent

A high open rate indicates that your email campaign is successful and that your recipients are interested in the content. Monitoring your open rate over time can help identify trends in your audience and measure which content resonates with them. 

There are many factors that can affect email open rate, including:

• The subject line & preview text
• The sender (display name and email address)
• Time of day
• Content relevance
• Personalization

The average email marketing open rate in the legal industry is 22%. We recommend tweaking the above factors in your email campaigns over time until you are at or around a 22% open rate.

9. Email Bounce Rate

Email bounce rate is the percentage of emails that could not be delivered. While some bounces are “soft” (can be delivered eventually), many email bounces are hard (can never be delivered). Here’s a great article from MailChimp outlining the difference between a soft bounce and a hard bounce.

The benchmark for a reasonable email bounce rate is 2%. So, for example, if you send 100 emails and 2 of those cannot be delivered, your bounce rate is 2%. If your email bounce rate is above 2%, then there may be cause for concern with the integrity of your email list data.

A high rate of hard bounces impacts your overall email send reputation, which indicates your database or C.R.M. needs some clean-up because prospects and clients are not receiving your message. Overtime, a high bounce rate negatively impacts email deliverability, making it more likely for your emails to be flagged as spam or not reach the intended recipients at all, ultimately undermining your communication efforts.

10. Client Retention Rate

This is a K.P.I. that is specific to B2B and B2C companies, which means it’s a great K.P.I. for law firms. 

Client retention rate is a measure of how many clients continue to do business with a company over a specific period of time. You calculate your client retention rate by using this formula:

Client Retention Rate = Number of clients who remain with the firm / total number of clients who started doing business with the firm during that specific period of time

A high client retention rate drives revenue growth, reduces costs, fosters positive brand perception, and strengthens client relationships leading to more word-of-mouth referrals. It serves as an essential indicator of client satisfaction and loyalty, positioning your firm for long-term success in a competitive market.

If your client retention rate is lower than you’d like it to be, consider implementing a client feedback program to gather information and identify areas where you can improve your client service.

How Do You Track Law Firm K.P.I.s?

To track Key Performance Indicators (K.P.I.s) for your law firm, start by defining your business objectives, such as increasing client satisfaction or improving profitability. Then, identify the specific metrics that align with those objectives, such as client retention rate or average revenue per client. Determine the data you need to measure these metrics, whether it’s through case management systems, financial reports, or client surveys. Set targets or benchmarks for each K.P.I. and implement a tracking and reporting system to collect and analyze the data regularly. This will help you evaluate your firm’s performance, identify areas for improvement, and make informed decisions to drive growth and success in your practice.

Tools to Help

Here are just a few examples of tools we recommend to help track your law firm K.P.I.s.

Google Analytics: a free web analytics tool provided by Google that allows website owners and marketers to track and analyze various aspects of website performance. It provides valuable insights into user behavior, website traffic, and conversion metrics. Google Analytics collects data on website traffic including:

• Where visitors are coming from
• What pages they are viewing
• How long they are staying on your website
• What actions they are taking on your website

Google Analytics also allows you to track the performance of your marketing campaigns, such as:

• Pay-per-click (P.P.C.) campaigns
• Email marketing campaigns
• Social media marketing campaigns

Google (Looker) Data Studio: a free, web-based data visualization platform that helps create interactive dashboards and reports. It is a robust tool that can be used to track and analyze data from a variety of sources, including Google Analytics, certain C.R.M. platforms, email marketing/marketing automation platforms, social media channels, and more.

Native, in-platform analytics tools: many marketing automation platforms, C.R.M.s, social media platforms, and advertising tools have built-in analytics reporting functionalities to generate reports with a simple click of a button.

Excel Spreadsheets: If your firm doesn’t have the budget for email marketing, social media, and C.R.M. platforms that provide comprehensive data snapshots, or if the thought of using Google Data Studio is overwhelming, start tracking your data in Excel spreadsheets. HubSpot provides many data tracking templates for marketers reporting on a budget.

Not sure where to begin?

Start with the low-hanging fruit. 

Choose one of the K.P.I.s from this list that aligns with your firm’s strategic goals and objectives, with data that you or your marketing department can easily obtain.