Because it’s worth it: Proving marketing is an investment, not a cost

While marketers berate their perceived lack of worth within law firms, many still fail to properly communicate their strategies to partners. David Wallace, marketing director at Shepherd & Wedderburn, assesses the problems, and explains how marketing departments can ensure they are recognised as integral to their firm’s success.

How did marketing get itself into the sorry state it is in today, where it is close to the bottom of opinion polls on trustworthy and respected careers, and absent from the boardroom of so many businesses? It is often seen as a costly overhead and becomes one of the first budgets to be cut when the going gets tough. And it is even worse for professional-services marketing, where so many professionals see marketing staff as unqualified, non-fee-earning support, existing to perform low-level tasks, such as organising dinners, choosing the colour scheme for the website or jazzing up copy for the corporate brochure.

Essentially, it is marketing’s own fault that it finds itself in this position. As a profession, it has generally failed to prove its worth. Excellently conceived and executed marketing too often falls at the last hurdle – measuring and reporting its true impact. If it is marketing’s job to identify, anticipate and satisfy customer requirements profitably, it has to prove it with hard facts and figures rather than the fluffy statements that it currently does so well.

The starting point is for marketing to develop, document and communicate a marketing plan for the business at the start of every financial year, setting out the firm’s marketing objectives. It should be fully aligned to the firm’s business strategy and should indicate how the plan will be measured and achieved. There are four steps to developing an effective plan:

Review the current position of the firm. After all, how will we be able to tell whether we have achieved anything if we do not know where we started from?
Set goals and objectives;
Agree the activities and methods to achieve the goals and objectives;
Determine how success will be measured.

Professional-services marketers often fail to develop and control a marketing plan because the industry norm is to react to what partners want when they want it, rather than to develop a planned approach. Too often we go straight to the third stage of agreeing activities and methods (for instance, when ‘instructed’ by a partner to organise a seminar), without first going through the crucial previous two stages or completing the essential final measurement stage. We find ourselves churning out marketing activities, without really knowing how worthwhile they are. Even more seriously, the partners do not know their worth because we have not taken them through the necessary process or communicated properly with them. The only way to prove that marketing has real value is by stopping being reactive to partner demands and starting to be proactive in developing a planned and measured approach to marketing.

Identifying and developing relevant and convincing metrics

When setting out our objectives in our plan, we need to explain what metrics we are going to employ to demonstrate success or otherwise. Objectives are frequently framed in woolly statements, which cannot be measured, for example, increasing awareness of the brand, without knowing what level of brand awareness the firm has now and no process or system in place to measure how much has changed. The metrics must be quantitative measures, backed up by explanatory text. Text alone tends not to be sufficiently meaningful. Numbers rule. More than ever, we need to produce hard, tangible data on how marketing’s efforts can increase income or the bottom line.

London Business School’s Tim Ambler, Patrick Barwise and Chris Higson1 set out in 2001 to research the marketing metrics employed by quoted companies in the UK. They examined how large UK companies report on marketing, their successful management of brand equity through the medium of annual reports, and they made recommendations for best practice. They argue that today’s companies increasingly depend on intangible assets (knowledge, systems, data, intellectual property, brands and market relationships) to create value. This is even more the case for professional-services firms. Our finance colleagues may add up the value of our property, desks, chairs, and so on, but their value pales into insignificance when compared with the value of all of the different components of the brand.

The authors of the London Business School (LBS) research state that it is important to put metrics in context and for them to be consistent over time. So, they should be compared with the prior relevant period and, if the definition of the metric changes, that prior period should be restated on the new basis. Sector context is also important. For example, 100 new warm leads from a direct-mail campaign is probably a good result for a 50-partner law firm, but less so for a major fast-moving consumer-goods (FMCG) producer.

At Shepherd and Wedderburn, we have found that it is important to choose metrics that are easy to understand, or at least to make an effort to explain what they mean. We once boasted about how we had managed to increase e-mail marketing permissions by ten per cent, thanks to a direct-mail campaign to 1,000 clients. We did not realise that no-one in the firm, apart from us and the media and technology team, knew what e-mail marketing permissions were, because we had not provided a definition. On another occasion, we proudly announced 12 new warm leads from a marketing campaign targeting a sector with only about 100 key buyers, but we failed to explain the market size – so no-one knew that this was in fact a successful campaign.

We also need to ensure that we analyse the real worth of the measure. Is a campaign that wins ten pieces of medium-sized work, worth £100,000 each, more successful than one that wins one major piece of work worth £1m? In many firms, the smaller pieces of work go largely untrumpeted, while the big wins make it to the top of the work-won list and get their own dedicated news release. We would prefer the ten smaller pieces of work, spreading the risk involved in losing any one of them.

The LBS report goes on to say that all metrics used should be reliable, properly sourced and capable of being audited. All measures should be explicit and precise. Lawyers love verification, so it is important to ensure that your metrics can be independently audited. At Shepherd and Wedderburn, the marketing team works closely with the finance team to produce numbers that are accurate and stand up to scrutiny.

We also always use an independent-research agency when measuring some of the softer metrics, such as client satisfaction, thus eliminating any possible bias. This can be difficult because undertaking client research in professional services means the professionals personally putting themselves up for public scrutiny. This can be understandably difficult and worrying for them, leading many firms to avoid doing it for fear of the results.

With limited budgets, many marketing professionals are also reluctant to spend some of it purely measuring the effect of marketing. One way round this is to use research primarily to provide information that will be useful in deciding how to drive the business forward, and testing satisfaction issues as a by-product. This way the business still gets something it can actually use.

LBS’s report recommends companies use a set of core metrics, with trend information, to provide the best summary of marketing performance. Most of these are applicable to professional-services firms:

Fee income (absolute and growth);
Market definition and size (by value, but also possible to provide volume for certain areas, such as corporate finance);
Market share (by value);
Marketing investment (the expenditure on marketing intended to build brand equity);
Relative client satisfaction (the satisfaction with your firm’s services, graded against satisfaction with competitors’ services) – leading research firms such as Newcastle-based Acritas have industry benchmarks against which you can measure your own client-satisfaction levels;
Relative price;
Perceived quality (as perceived by clients);
Client loyalty/retention (for example, percentage of start-of-year clients still active at year-end);
Income from new clients (as a percentage of income);
Share of income represented by services launched in past three years.

We have introduced all of these metrics at Shepherd and Wedderburn in the past few years. By doing so, we have found that marketing’s credibility has been enhanced, it’s worth is now better understood, the level of trust the partnership has in marketing has increased and the level of frustration we feel has decreased. Beforehand, we were judged on partners’ perceptions of how well we had organised a dinner or designed a brochure, which was purely subjective and did not recognise the real value of marketing.

Measuring marketing in professional-services firms requires all the staff in the business to participate and provide relevant feedback information. For example, if a partner wins a piece of work on the back of a marketing campaign or activity, they need to let the marketing team know. This is not so that they can praise the marketing team – it is to let them know what is and isn’t working, so that they can do more of what works and less of what doesn’t. Marketing therefore needs to build in incentives (such as providing information about partners’ involvement in marketing for their annual appraisal).

Another very useful model that we have employed at Shepherd and Wedderburn to measure marketing performance is branding guru David Aaker’s brand-equity framework. Table one shows how the Shepherd & Wedderburn brand measures up in terms of this model. It is these components that combine to deliver brand equity.

Table one: Measuring up the Shepherd & Wedderburn brand

1. Brand awareness

Numerous high-profile campaigns across all the firm’s practice areas have ensured continuous promotional activity to achieve a consistently high brand profile, so that it is ‘top of mind’ when work arises. Other firms’ promotional activity is sporadic, leading to brief spells of awareness;
Large number of new clients attracted to the firm – over 1,000 since the new brand was introduced;
More invites to tender (marketing team has experienced a doubling in requests for assistance on tenders);
Targets now very positive – all targets in recent research were aware of the firm (in 2000, half were unaware of the firm);
Marketing director voted ‘Marketing director of the year’ by clients, targets, suppliers and other contacts in inbrief’s LEMAS awards 2004;
Invited to speak on branding and marketing at various events: Marketing Week’s ‘B2B brand forum 2004’ in London; Institute of Chartered Accountants of Scotland annual conference in Nice; Managing Partner magazine’s ‘Strategic marketing for the legal profession’ conference; and the Scottish marketing awards dinner 2004.

2. Perceived quality

8.5/10, which is the highest ever recorded by the agency for a law-firm client. It is above the agency’s legal-industry benchmark;
Ahead of legal-industry benchmark and local competitors on all but one of the satisfaction factors;
Costs perceived by only 11 per cent of clients as a weakness, that is, 89 per cent perceived high value for money.

3. Brand associations

All brand values scoring above 7.5/10, proving that they are being consistently delivered to clients;
Actively leveraging the equity of other brands for Shepherd & Wedderburn’s benefit through negotiating a very wide range of marketing partnerships. For example, in the past year, we have partnered with CBI, IoD, CIPD, Scottish Leadership Foundation, Barnardo’s, ENABLE, SportScotland, National Museums of Scotland and the Chartered Institute of Marketing. We have also been involved in sponsorships, for example, Connect, Marketing Society, RICS, Young Company Finance, Scottish Renewables Forum, Edinburgh Festival Fringe, Scottish Hockey and the In-House Lawyers’ Group.

4. Brand loyalty

High client retention, with 50 per cent of clients billed last year having been with the firm since at least 2000;
Cross-selling ratios have significantly improved. For example, among the top-100 clients the number of legal divisions used has increased from 2.9 to 4.2 (out of a possible seven);
73 per cent of clients and 75 per cent of targets would recommend Shepherd & Wedderburn;
Marketing costs steadily reducing as percentage of total income – achieving more with less.

5. Brand extensions

Extended the brand into new geographic markets: new office in London so successful that we are moving to premises three times as big in September 2004; and we have a new Aberdeen office opening as a result of client demand in the region;
Extended the brand into new sectors – established a new sports business group, which broke even in its first year.

Utilising quantitative and qualitative measures to convince your partnership

All partners should be made aware of the metrics being used to measure performance, and equally important, those that are not. One law firm used to provide data on how many dinners and events partners had attended to evaluate their involvement in marketing. This firm now uses more sensible metrics (for example, revenue and client satisfaction per partner), thus saving the waists of several partners.

At Shepherd and Wedderburn we prepare a comprehensive marketing plan at firm level, taking account of all the practice groups’ business plans, present it to the board for approval, then communicate it to all the practice-group heads (who cascade it to partners and staff within the group), then hold quarterly-review meetings with them to demonstrate that we are on schedule or show what we are going to do if there are any deviations. The effort put into this ongoing communication pays off in the form of more buy-in and less interference. Each project or campaign and the overall annual marketing plan is evaluated using one or more of the relevant metrics mentioned, and the success or otherwise is communicated to the board and the wider partnership. Only by employing such a transparent, open and objective process can we persuade the partners and other stakeholders of the relevance and value of marketing. It is not easy, but it is worth it.

Reference

Market Metrics: What should we tell the shareholders? A Report by Tim Ambler, Patrick Barwise and Chris Higson, London Business School

David Wallace is marketing director at Shepherd & Wedderburn. He can be contacted at: david.wallace@shepwedd.co.uk.