Chapter 5 - Tracking, Stats, and Lead Quality

Questions you will be able to answer at the end of this chapter:

  • How do you evaluate a lead generation service?
  • What is the difference between retention rate and cost-per-retained?
  • How do you know whether your intake staff is performing well?

"When you can measure what you are talking about and express it in numbers, you know something about it.” - Lord William Thomson Kelvin

So, the leads are streaming in and your practice is growing. Congratulations! But before you can pop the champagne and reserve the banquet hall, you soon realize that your bank account is slowly seeping money. Some degree of fiscal leakage is normal, as a couple years sometimes elapse before obtaining a fee on a Social Security case. Nevertheless, presuming that you have built efficient marketing campaigns, you should receive an attractive rate of return on your marketing dollar, though it may take a few years to come to fruition. After all, you must view your practice as a business in which you and your partners are the equity holders. Monitoring your marketing and lead generation campaigns with meticulous and frequent oversight are therefore seminal.

Leads are the lifeblood of any Social Security practice. Without new clients, your revenue stream will slow to a trickle and eventually cease completely. Not to sound histrionic, but keeping this pipeline flowing with leads could be the difference between profitability and insolvency.

The first and most egregious fallacy when evaluating a lead source is to judge its efficacy based on signed rate alone. So many lawyers do this and make poor marketing decisions as a result. Just to be clear: DO NOT DO THIS! Of course, signed rate may offer an indication of lead quality, but it represents a small piece in the lead efficacy puzzle.

Before proceeding, we should define some terms that will be used for quantifying campaign performance.

Contact Rate: The rate, often expressed as a percentage, at which you establish contact with the leads. Once contact takes place, resolution of the lead can occur, usually in the form of rejecting the lead or sending the claimant a fee agreement.

Desired Rate: The rate, often expressed as a percentage, at which you send fee agreements to the leads. Since not all desirable cases become signed cases, it is important to distinguish between the two. Desired cases are those that you wish to pursue, but for which you are awaiting confirmation from the claimant. Such confirmation is furnished through the claimant’s signature of your fee agreement.

Signed Rate: The rate, often expressed as a percentage, at which you receive signed fee agreements from the claimants. Signed cases are those for which you have a signed fee agreement on file.

Cost-Per-Desired Case: The total cost spent of the campaign divided by the number of desired cases.

Cost-Per-Signed Case: The total cost of the campaign divided by the number of signed cases. Cost-per-signed case will most likely be higher than cost-per-desired case, since not all desired clients end up signing the fee agreement.

Let’s ponder a simple hypothetical. Suppose you generate Social Security leads from two sources, television and web. The television leads prove nothing short of amazing in terms of quality, as you sign 50% of the cases. Contrastingly, the web leads are mostly junk, with only 10% of them converting to signed cases. The television campaign delivers leads at $300-per-lead and the web campaign at $20-per-lead. Which is better? Well, it may be obvious, but you will sign cases at a lower cost with web leads. Again, some simple arithmetic will exhibit this.

Television

100 television leads @ $300 per lead = $30000
100 * 0.50 = 50 signed cases
Cost-Per-Signed Case = $30000/50 cases = $600 per case

Web

100 web leads @ $20 per lead = $2000
100 * 0.10 = 10 signed cases
Cost-Per-Signed Case = $2000/10 cases = $200 per case

With this paradigm, purchasing more web leads and scaling back the television campaign would be prudent. Of course, you should consider other factors in the analysis, including staff and overhead costs, lead volume, geographic targeting, and cash flow. Nevertheless, with the web delivering a cost-per-signed case over 60% lower, this would probably be a no-brainer.

As you can see, cost-per-signed case (CPS) is key. Signed rate tells only part of the story, as the previous example elucidates. But you would be amazed at how many lawyers do not track CPS and base their marketing decisions on signed rate alone. It is only after walking them through an obvious hypothetical that the epiphany occurs.

“CPD, CPS, ROI…This is too confusing. How do I know if my practice is profitable?”

With Social Security law, profitability rests in cutting costs and maximizing revenue. Since attorney’s fees are mandated by federal law, not much can be done on that front. But marketing and staffing costs fluctuate profoundly, providing opportunity for the entrepreneur inside you to shine.

Countless forms of Social Security lead generation exist, so selecting the one with the lowest CPS will usually constitute the best use of your marketing dollar. You may witness lower “quality” with web leads in comparison to other forms of lead generation, but the CPS tends to be superior to that of television or print. Also, the web offers an enormous volume potential. Thus, with the right model, web leads should deliver the best combination of attractive CPS and high volume.

The astute readers of the bunch may have already noticed that a desired case is not a signed case. When we talk about “desired” cases, we are referring to a claimant that has been categorized as having winnable case and to whom representation forms (i.e., SSA-1696, etc.) have been sent. Once the paperwork has been signed and returned to your office, it is then deemed a “signed” case. Since not all claimants who originally express interest in retaining legal services end up moving forward with the application process, the cost-per-signed case (CPS) is almost invariably higher than the cost-per-desired case (CPD). Further, a low CPD but high CPS is normally indicative of substandard follow-up with pending fee agreements rather than with low lead quality.

Let’s look again at our previous example. Suppose you buy 100 internet leads at $20 per lead. That would constitute an initial investment of $2000. If you desire 8% of the leads, your CPD would be $250 (i.e., $2000/8 cases). Now suppose that of those 8 desired cases, only 65% of the applicants end up moving forward with your firm. Keep in mind that this percentage is quite conservative, since many local practices frequently report close rates of 70-80%.

Okay, you now have 5 signed cases from the original 100 leads (8 desired cases * 0.65). Your CPS is therefore $2000/5 = $400. Most Social Security attorneys win 65-90% of their cases. Let’s call it 75%. Further, let’s suppose the average attorney’s fee on an SSD case amounts to roughly $3000. Therefore, the investment of $2000 generated approximately $11,250 in revenue.

Not bad, hey? While a CPS of $400 may have originally seemed expensive, your ROI was almost 6:1. Undoubtedly, you must consider the overhead and staffing costs, which consume some of that money, but presuming you are not grossly overstaffed, this model should result in vast profitability.