5 Reasons Why Referred Clients Are the Best Clients for Your Law Practice

August 23, 2018
Daniel Decker

This article was originally written by Daniel Decker for our client exclusive Spotlight Quarterly publication. Daniel is the co-founder of Spotlight Branding.

Smart marketing starts by focusing on your existing assets and resources. What do you already have in place that you can do a better job of leveraging?

For most lawyers, the first item on that list is their network – their relationships. Your network of current clients, past clients, colleagues, supportive family and friends, and others is a valuable asset that holds the potential for significant growth.

But when you talk to most marketing companies – especially internet marketers – you won’t hear a word about leveraging relationships. Instead, the focus is on “cold” lead generation – often through SEO or Pay-Per-Click advertising.

Don’t get me wrong, there can be a time and place for that type of advertising. But it doesn’t make sense to spend thousands of dollars on a new, speculative campaign when you have existing resources at your disposal that aren’t being leveraged to the fullest.

Start with the low-hanging fruit. Start by maximizing your existing network to drive referrals and repeat business.

Referred clients are generally superior to new clients from other sources for a handful of significant reasons. So it makes sense to focus your marketing on referrals first. Here are five reasons why this is the case:

1 – Low Cost of Acquisition. Referrals are far less expensive to generate than any other type of client. There’s often no direct cost, and even when you factor in referral-generating tools such as an email newsletter and social media marketing, the cost-per-client for referrals is typically much less than a client-generated through other forms of advertising. This is true for us internally at Spotlight Branding and it’s true for many of the lawyers I’ve spoken to. It’s logical when you think it through – it takes much less “momentum” to leverage an existing relationship than it does to create new leads out of thin air. If you’ve never run the numbers for your firm, take some time now to do so. I can all but guarantee that your cost of acquisition for referrals will be significantly lower than your other lead sources. Lower CoA = higher margins for your practice and more take-home pay for you!

2 – Instant Trust. One of the hardest tasks for every business is persuading the client or customer to take the “leap of faith” – to pull out their wallet, sign on the dotted line, and move forward. It’s particularly difficult in the legal field because the stakes are higher and the dollar amounts are significant. Not to mention, lawyers often face a “trust deficit” due to an unflattering portrayal in the media. This isn’t theoretical, it’s a documented reality: a recent ABA study found that a full 69% of consumers surveyed believe that “Lawyers are more interested in making money than in serving their clients.” Obviously, we know that’s not accurate, but that’s the perception. Building your practice through referrals helps you circumvent this – because when a trusted friend or colleague makes a referral to you, their trust and credibility is transferred to you. You don’t have to start from scratch because someone has already vouched for you. This shows up in the form of higher conversion rates. I was talking to a lawyer here in Charlotte last month and he told me that his conversion rate for referrals is approximately 70% – compared to about 25% for all other sources of business. Again, if you haven’t run those numbers in your firm, do it. You may be surprised by how much better-referred prospects convert into clients as compared to “cold” leads.

3 – Avoid “Sticker Shock.” There’s nothing more frustrating than having a great conversation with a prospective client, feeling like you’re aligned and that there’s a great opportunity, only to have them freak out when they find out how much your services are going to cost. Referred clients generally know what to expect with regard to your rates, and they typically won’t reach out to you if they can’t afford you. Today’s crowded legal marketplace makes this an even more significant issue – there are more than 1.3 million lawyers in the United States and you have plenty of them in your city or town. But that’s only the tip of the iceberg when it comes to the competition you’re facing. Websites like LegalZoom provide document creation services for dirt-cheap prices. For example, pricing for a Last Will and Testament starts at $69. As a result, many prospective clients have unrealistically low expectations when it comes to price. Presumably, you’re not a “bargain basement” firm, and clients that come to you through a referral will know this ahead of time.

4 – Mutual Respect. We’ve all dealt with nightmare clients. Clients who abuse our time and abuse our staff. Or who simply have unrealistic expectations and become frustrated when the engagement doesn’t play out the way they expected it to. A client who is referred to you is less likely to go in this direction. There’s a preexisting relationship because of the mutual relationship you have with the individual who made the referral. If you look back at it, I bet you’ll find that most of the time, referred clients are easier to work with than clients who came to you through other sources. Don’t underestimate how big of a deal it is to work with clients that you and your staff genuinely enjoy working with. In particular, I’ve seen a big difference in clients who come through referral as compared to clients who find you via a Google search. Google traffic tends to be much more transactionally-focused. You’ll experience this most directly with regards to your pricing, but it often bleeds into the relationship as a whole.

5 –  More Likely to Refer in the Future. Finally, clients who have been referred to you are statistically more likely to make referrals in the future, creating the possibility for an endless chain of referrals. There have been a variety of studies on this topic, but the best breakdown I’ve seen comes from a book entitled the No B.S. Guide to Maximum Referrals and Customer Retention, by Dan Kennedy and Shaun Buck. It was a transformational book for my team and me, and I highly recommend that you check it out.

Do you see where I’m going with this?

Referrals are easier and less expensive to generate than “cold leads.” They tend to convert at a much higher rate. They’re less price sensitive, more pleasant to work with, and more likely to make referrals of their own in the future. Referrals truly are the low-hanging fruit when it comes to growing your law firm. Focus on maximizing your referrals before you spend money on speculative marketing and advertising to the outside world.

At the end of the day, make sure you have the mechanisms in place that make a big difference. Social media, video, and your email newsletter are powerful tools for referral generation. But there’s no substitute for getting out in your community, creating relationships, and demonstrating your credibility. Two of the best ways to do this: (1) Pursue speaking opportunities that get you in front of potential clients and referral sources. (2) Host networking events of your own – even something as simple as a monthly lunch-n-learn or networking breakfast. Both of these strategies work well to raise your profile, increase visibility, and position you as the “obvious choice” for referrals. And of course, make sure that you capture contact information at every opportunity so that they can be plugged into your e-newsletter distribution list. That’s how you keep them engaged and “primed” to send you referrals whenever the opportunity arises!

If you’d like to learn more about how we help solo & small law firms grow their practice, schedule your FREE consultation with us one of our Brand Strategists.

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Daniel Decker

Daniel Decker is a co-founder and Partner at Spotlight Branding. In addition to helping lawyers stand out from the crowd, he spends his time writing, dreaming up new marketing strategies, and coming up with catchy subject lines. In his spare time, Daniel enjoys playing sports, guitar, politics, and Minnesota sports.