Defining ROI.

• Author: Bane, Sunny

I am a dictionary nerd. I love breaking down a particular phrase and looking up each word in the dictionary to get the fuller meaning. So when I was asked to write about ROI for legal marketing, I had to see what Microsoft Encarta said about "return" and "investment."

In this context, return is typically defined as "yield profit" and investment as "money invested." As anyone in the legal marketing sector knows, measuring financial profit on our activities is a big challenge. But what if we dig a little deeper? Profit isn't always financial; Encarta also defines it as an "advantage." In other words, a return is simply yielding an advantage. And my favorite Encarta definition of investment is "a contribution of something such as time, energy or effort to an activity, project or undertaking in the expectation of a benefit." So return on investment could be thought of as deriving a competitive advantage as a result of your time, energy and efforts.

That's nice, but you may be thinking, so what? Sometimes gaining a fresh perspective on what words mean can inspire a more creative approach. Each firm has its own culture--one solution does not fit all--but there are some things that have proven successful at my firm that will illustrate my point.

Events

Let's start with events. Pre-2008 you could get away with simply stating you did "X" number of events last year for "Y" number of registrants. The partners for that practice group (or office) noted it was critical to have their name seen and that everyone had a good time--even better if there was a line of people trying to crash the party. Success equals the number of attendees and buzz at the water cooler--but did you get a return on your investment?

Fast-forward to 2013. Firm management has tightened the belt, and a well-attended party isn't good enough anymore. But how can you measure whether real revenue came as a direct result of this event? Answer: You can't.

What you can do, however, is draw some correlations. For example, be diligent about tracking who attended your events. Identify which were already clients at the time of the event. Then revisit that status every month to see if prospects have now become clients. Look at the number of matters opened and/or money collected for both existing and new clients since the event date. If you are using a CRM system, this can be done without requiring a lot of time and...