One thing that we know estate planning attorneys are hearing all the time in advertising is that “It’s time to automate your law firm!”. While this sounds great on paper – automation brings all sorts of implications to mind, such as less work required for you and your employees and more clients that you can take on without getting too busy – it’s actually much harder than you think it is, and it’s not necessarily something our legal marketing agency recommends for our attorney clients.
In this blog, we’re going to explain why we believe it’s better to systematize than to automate. We’ll use a few examples to illustrate this point and back our recommendation up with sales and revenue generation data.
Our history with automation
Before we bought a legal specific company, Erik and I worked in the insurance industry. We used to market for the biggest carriers out there – Aetna, AAA, Humana, all the big players in the game. We worked in the Medicare space. And in that niche, it was everybody’s dream to be able to sell a Medicare policy online…that was the frontier. Not to brag, but we ended up being the first agency to ever accomplish that. Companies were so into this concept that they would spend millions of dollars trying to automate this sales process and sell policies to consumers online. Ultimately, though, it didn’t really work out. It could be done, but the cost per acquisition was too high. There wasn’t enough profit left on the table after all the marketing and technology that had to go into selling that product online. Agent sales still rule that space – automation lost.
Think of automation from your client’s shoes in terms that may be more familiar to you – have you ever bought a car entirely online? Most people haven’t, nor would they want to. There are a handful of people out there, early adopters, who would do that, but the vast majority of the population needs to be at the dealership. They want to talk to somebody, try to bargain, feel the car, test drive the car, etc. It makes sense; buying a car is a big investment. So is paying a lawyer for an estate plan! Most people have a lot of questions when it comes to their will and trust and other documents. They want to pick a lawyer’s brain and truly understand the product. Trying to sell an estate plan entirely online presents an issue in the same way that trying to sell a car entirely online presents an issue.
Traditional (systematized) numbers vs. e-commerce (automation) numbers
It’s one thing to say automation might not work for estate planning firms, but do we have any proof? Let’s crunch some numbers to illustrate this point further. Take one month of marketing in a traditional selling capacity.
Imagine that our agency has generated 100 unique clicks to your website or landing page or funnel – that’s 100 unique visitors – and it cost $8 to bring each of those people in. (That’s the average rate – a pretty safe assumption in the U.S. between Google & Facebook advertising). Imagine that 25% turn into a lead, meaning that they’re going to fill out a form or call your firm. That means out of 100 people, 25 of them have essentially raised their hands and said “I want more information” or “I want to schedule a consult”. Now, not every single one of those 25 people is actually going to book a consult, even if they indicated they were going to. For the sake of this scenario, let’s assume a 70% booking rate, which again, is the average rate. That means you’ll get 18 appointments on your calendar when those numbers play out. Out of those 18 people, let’s assume, again, a 70% showrate – 12 people are going to actually show up to your consultation to hear how you can help them. Let’s assume a closing rate of 30% – out of the 12 people you speak with, 4 are going to hire you and pay your legal fees.
Suppose you charge $3,500 for your service that they hired you for (a trust, or probate guidance, let’s say). You’re going to get $14,000 in revenue from that. And remember, you put about $800 in spend (that came from the original amount that you paid for the initial clicks). That’s a lot of math, but those numbers are realistic – we know that because the attorneys we’re working with currently are seeing those types of numbers.
Now, let’s take one month of marketing in an e-commerce, or automated online, capacity.
When someone is buying something entirely online, conversion (success) rates are much lower. Google reports that the average e-commerce conversion rate is 2.63%. Now, when they give this number, they’re generally talking about conversion rates for selling lower-ticket items, like shoes, t-shirts, toys, etc. Higher ticket items have an even lower conversion rate, for the reasons we discussed at the beginning of this blog post; it’s tough to sell something as complex and expensive as an estate plan without actually talking to the client.
Take the exact same scenario that we mentioned above, where our agency has generated 100 unique clicks to your website or landing page or funnel that cost $8 per click. Let’s assume our conversion rate is 2%. 2% of 100 is 2 leads. However, you can’t charge $3,500 now, because automation brings the value down. They’re not talking to anyone, they’re not getting the same level of service, and there’s another major company – LegalZoom – that is offering $329 for a living trust and $179 for a will. You can’t be charging too much more than those prices, or the prospective clients are going to see LegalZoom as their clear best choice (and you can’t explain to them why you’re better, as this is all happening online). Let’s say you charge $500 for living trusts, and your 2 leads convert into clients; the total revenue you make would be $1,000. You spent the same $800 acquiring these 2 sales, so you only made $200.
“But how is LegalZoom getting away with charging so little?”, you might be asking, and it’s the obvious question. They’re not doing anything differently to change those numbers and the difficulties of selling online, actually. They’re not using a magic formula and they don’t have a trade secret. Here’s what they have that you don’t – funding. Tons of public funding.
Because LegalZoom is a public company, they can afford to be unprofitable for quite some time. They didn’t need a lot of money coming in from clients when they first started out, or now, because they have enough coming in from other sources. While they were unprofitable, they built a massively popular brand and a massive customer base. They can upsell those customers, crossell them, sell their information to other companies, and make money off of them in a variety of different ways. They knew that when they chose this model. In fact, they’re STILL unprofitable.
LegalZoom’s earning report for the last four quarters is public information. You can see that their net income in September was negative – negative! – $39 million. Talk about unprofitable. In June, they lost $38 million, and in March $9.2 million. This just goes to show you that not even the biggest company who is leading the pack in this industry is making it work for them financially in terms of profitability. They can afford to do that – but most law firms can’t.
What the most profitable law firm does
I want to talk about one last law firm, though they’re not in the estate planning niche – Morgan & Morgan, the biggest personal injury firm in the U.S. (They love talking about it, too….it’s on the top of their website and almost every billboard you see about them).
Morgan & Morgan spends millions and millions of dollars every single month on advertising. They’re in most states now, but especially if you drive around Florida or Georgia, you’ll see big buildings with their name on it. Most of those buildings are call centers. What’s unique about Morgan & Morgan is that they could probably afford to automate some of their processes and sell representation online, but instead they have poured their money into creating systems around their lead intake. They have call centers calling leads day in and day out, ready to respond and follow up. They’re doing the “boring” work and getting amazing results because they’re not trying to automate something that should be systemized. They get a lead – they call the lead – they schedule a consultation – the lead comes in – they talk – boom, they close business. They do that over and over again, the old-fashioned way, and it is extremely profitable for them.
If you have any questions about automation or about the systems that you should have in place, feel free to reach out to me at email@example.com or watch the original video where I discussed this topic! If you want to grow your law firm, you can book a call with me here at https://marketing.empirical360.com/book-your-strategy-call?utm_source=youtube.