Launch a Referral Marketing Strategy for Your Law Firm
On this page:
The legal industry is experiencing a boom, with small practices and boutique law firms emerging to fill an increasing demand for legal services in technology, healthcare, and environmental regulatory oversight. The owners and leadership of these new small firms are focused on cementing their credibility and growing their practice. While traditional digital marketing strategies are effective tools for lead generation and growth, referral marketing has emerged as an extremely popular and potent marketing strategy for law firms.
Referral marketing can be a complex and tricky marketing strategy to implement without the right digital tools. It’s important for small law firm owners to understand how essential a well-rounded referral marketing program is, and how the right tools can help the firm best execute a strategy that supports long-term growth and visibility.
Referral marketing for law firms is a strategy focused on building out a firm’s client base through the trust and personal relationships established with existing clients, vendors, and peers. Lawyers rely upon referral marketing to leverage the trust and reputation of their firm in order to create a referral network through which business can be passed and received. Referral marketing software platforms can help identify and manage relationships and establish programs that incentivize members of a network to make referrals to the firm.
There are several different ways that referrals can reach your firm, depending on how you’ve structured your inbound marketing channels. Through each of these channels, you can incentivize your contacts to make referrals with various rewards or discounts to your services for both the referral and the referring client.
1. Social media referrals
For law firms, social media platforms are perfect places to partner with local businesses you represent and businesses that operate in the niches you provide legal services in. On these platforms, you can work with local advocates with established brands that can share your services with their own audiences and receive business through the referral links used in social posts.
2. Online reviews and feedback
Leverage the social proof benefits of inviting your existing customers to leave reviews for their experience with your firm, as 79% of consumers give equal weight to reviews as they do to personal recommendations. [1] Reviews encourage customers to engage with your brand, and if properly curated, can boost the credibility of your firm and increase the trust of existing clients enough to bring business to your team.
3. Email referrals
Once you’ve provided services, you can engage with clients as a community via email newsletters that help to communicate news about cases being handled by the firm, changes in services or personnel, and details about your referral program. This becomes an important engagement tool that encourages your existing community of clients to bring in their own network of contacts.
4. Direct referrals
Asking your clients outright for referrals by asking them to help spread your messaging via word-of-mouth is an extremely cost-effective marketing strategy that can help expand the reach of your brand.
Success in referral marketing depends both on how you’ve structured your program and how you’ve implemented it with your team. An effective referral marketing strategy should take into account several considerations to ensure your community of clients will be comfortable referring business back to your team.
Create strong service-focused programs that attract leads likely to convert
Your firm should have very clearly defined services and your marketing team should have performed sufficient market research to understand your ideal client and their needs. From this strong base, you can create a referral program with transparent messaging reflective of your firm’s mission and values. Outreach along the four referral channels outlined above should include a sharable link and an invitation to your contact sphere to distribute that link to anyone they feel might benefit from your legal services.
Budget appropriately to support your incentive program
Before you decide what to give away, you need to know a few of your key performance indicators and metrics related to your customer acquisition workflow. For example, what’s your customer acquisition cost, and what’s the value of a referral to your bottom line? How much can you afford to dig into that profit line in order to draw in additional business and still remain profitable enough to achieve your revenue goals? Don’t forget to take into consideration the tax implications of rewards as you build out the program.
Are you incentivizing new customers, existing clients, or both?
When building your referral program, you should decide which side of the referral to incentivize.
-
Will you incentivize your existing clients to make referrals?
-
Are you incentivizing referrals to become customers?
-
Are you going to incentivize both parties?
Double-sided referral programs that incentivize both the referring party and those referred are more likely to generate leads, have higher conversion rates, and are more likely to be shared across communication channels. However, multi-channel incentive programs might be a more complicated and expensive starting point. Consider instead building out a program that only incentivizes one channel of referrals at first, keeping your program manageable and allowing you to grow your business in ways that will support more robust referral programs down the line.
Regardless of which side of the referral you’re incentivizing, make sure you establish clear guidelines as to what triggers the incentive. For example, are you incentivizing the lead only or does a lead have to convert for either party to be rewarded?
Choose the right incentives
Once you determine which parties will be incentivized in the referral process, you can determine ethically-appropriate methods for rewarding those who send you referrals and those who come to you as referrals willing to convert into paying customers.
-
Provide discounts on legal services or other perks to existing customers. For new customers, discounts on first-time services can allow them to limit their risk while testing out your services or products.
-
If internal discounts or products don’t resonate with your target audience, consider cash gifts or other global rewards, such as gift cards, that they can use as they need. Research shows that cash and Amazon gift cards result in the highest conversion rates of all incentives tracked. [2]
-
With 72% of consumers believing that companies have a legal responsibility to protect and support their community and environment, charitable donations can be a powerful incentive to offer to existing clients and new leads. [3]
-
Somewhat less effective on its own, gifts of branded swag can work well as an incentive when paired with other methods.
-
Collaborating with other local businesses in order to provide co-branded incentives programs accessible by shared customers can be a great way to build exclusivity into your incentive program.
Structure the incentives to properly motivate referral partners
Once you’ve decided how you’re going to incentivize referrals, you have to determine how to structure those incentives.
-
You can offer a straightforward commission, which often comes in the form of a payout equal to a percentage of the anticipated value of the referral. Commissions are often paid to a referrer, and are a favored incentive used to motivate affiliate marketing partners.
-
If you provide your legal services as a subscription or on a monthly contractual basis, you can payout commissions at a smaller percentage on a recurring basis.
-
You can tier or stack your incentives according to certain milestones. While a single referral might result in a $25 gift card, bringing three new clients might gain the referrer a $100 gift card. Structuring referral incentives in this way inspires referral partners to bring more referrals in a shorter period of time.
-
The easiest approach is to offer a set amount per referral.
Referral marketing is an essential business driver for small businesses, with 82% of SMBs claiming referrals as their main source of new business. [4] This sheer volume of inbound potential business is enough to make it an essential piece of any firm’s marketing strategy, but there are additional benefits to incorporating a well-designed referral program.
Increased loyalty leads to higher retention and customer lifetime value
Rewarding your clients for helping you grow your business allows them to share in your law firm’s success, and in sharing in that success, they become more invested in your business. This driver of loyalty will increase your customer retention and over time, the amount that they spend on services will increase their overall customer lifetime value.
Improved customer engagement enhances brand awareness and boosts referrals
As you’ll be working to improve the visibility of your referral marketing program, you’ll be engaging with your customer more often along digital channels and direct outreach. Improving your engagement will in turn keep awareness of your brand and messaging top of mind. Because your outreach to invite referrals keeps your brand relevant in their minds, your law firm is more likely to come up in relevant conversations.
Improved brand awareness helps to create a larger customer base and increases your ROI
Your incentive program will by its nature be something that clients will share across their own communications channels, social media platforms, and marketing campaigns. Through their own efforts to make referrals to your firm, they’ll be increasing awareness of your firm to a wider potential audience and their referrals that do convert will in turn increase your customer base. As you’ve already spent the initial costs to convert existing customers, every subsequent referral they bring in is an increase in the ROI in your referral program.
The efficacy of your referral marketing program can be measured according to key performance indicators (KPIs) that can be tracked and analyzed with the right software tools.
Sharing rates
At the top end of your referral program KPIs, you should be using links specifically tailored to each customer or referral codes to track how many of them are sharing your referral program with their own network. A high sharing rate shows that your clients are invested in gaining the incentives you have to offer.
Referral visits
Referral visits are made possible by the tracking links you have distributed to your clients to share your referral program. Referral visits are calculated based on how many referred leads click on the link and visit your website or a landing page dedicated to your referral program. If your visits are low despite a high sharing rate, you might consider restructuring your messaging, improving your incentive offerings, or make your program more personalized for each user.
Referral conversion rate
Once a referral has reached your site or landing page, it’s important to track the effectiveness of your sales team and marketing messaging by keeping track of how many referred visitors actually convert. However, it’s important to measure the conversion rate as a rate of sales relative to the number of referral shares, not the number of referral visits. A high referral conversion rate means referred customers are becoming paying customers.
Referral rate
Often expressed as a rate tied to a specific sales period, such as monthly, quarterly, or annual rates, referral rates are calculated by dividing purchases resulting from referrals by the total purchases during that period. You can get a fair measure of how referrals are impacting your overall sales volume by keeping track of your referral rate. A strong referral program will show that referrals are having a significant impact on your overall sales and growth.
Revenue lift
While conversions during a specific referral program might be high, leading to a high referral rate, it’s important to make sure that the program is also profitable. The lift to your revenue generated by a referral campaign is calculated by finding the difference between the overall revenue during the campaign and the baseline revenue that was generated by channels outside of the referral program, divided by the baseline revenue. Negative lift in revenue means a program is costing you more to execute than you’re making from it.
Cost per acquisition
Alongside the lift in revenue, the cost per acquisition figures into the overall profitability of your referral program by helping your team understand how much it costs to convert a lead from the referral program. This is a measure of efficiency and often can reveal where you can better budget time and resources to improve the overall performance of your referral efforts.
Return on investment (ROI)
The ROI of your referral program must take into account the costs of running the program, including the marketing costs and costs of your program’s incentives. You must subtract these costs from the total revenue, and then divide by the program costs. Any positive value indicates a profit, but a low or negative value indicates a program that is costing as much or more to execute than it is generating in return.
As a new law firm, growing your client base through tactics that increase your visibility and reputation are essential to your long-term success. Referral marketing is a powerful tool that not only grows your client base but also helps strengthen the relationships you have with your existing clients.
Take a look at referral marketing software to structure and launch your own referral marketing program in a way that supports your overall digital marketing strategy.
