Lawyer Lead Pricing
I saw a question on a forum about how to price leads to customers, which got me thinking about all the factors and misconception that goes into pricing.
Misconception 1: Leads for lawyers are expensive! They will pay $80 just to click on Mesothelioma ads and $25/click for DUI ads! Certainly the price for an actual customer lead must be a significant multiple of that.
Well, no, it’s not quite that simple. Those extreme cases at the high end of the market are not representative of most lawyer leads.
All lawyer leads are not created equal. While some leads are incredibly valuable, since they can lead to 5 and 6 figure cases, like mesothelioma, serious personal injury, and medical malpractice, the majority of leads are for more mundane, lower level cases. Hiring a lawyer for bankruptcies and traffic ticket cases may only lead to legal fees from a couple thousand down to a few hundred dollars.
I am also skeptical that most firms can actually turn a profit on $25/click DUI ads. Converting 20% of clicks to leads would be extremely good, which would make it $125/lead. Then converting 10% of leads into clients is probably average, making the cost per client acquisition $1250.
A DUI case can run for anywhere from $1000-$5000. Maybe more for a multiple offense felony trial, but most DUI cases are pleas, and are on the low end of that fee range. So unless a law firm has very high close rates at high fees, I don’t believe they can make a profit paying $25 a click or more.
Misconception 2: Lawyer leads are like lead in other industries and verticles.
Not true. In most retail or service industries, the customer lifetime value metric is an important part of the value of the lead. But most legal services are for a one time need, so this does not apply. While getting a customer to your store, or a client for your landscaping company many yield future purchases or years of payments, attorney leads have little value beyond the immediate legal need of the client.
Determining a fair price for leads is a complicated matter. It depends on so many factors, the quality of the leads, the exact type of inquiry, and the average fee of the case closed. There may be significant regional differences, too. The same lead in San Francisco is probably a lot more valuable than one in St. Louis.
One thing that is always true however, is that the clients who are the best at sales will value your leads the most. So working with great partners who work the leads effectively and know how to sell to customers is extremely important.
Finally, maximizing lead prices is not always the best strategy. To keep happy clients, I believe you don’t want to charge a rate too high and too close to their point of pain where they are barely making it work. There will always be occasional bad run of lead closing, and you don’t want the person to doubt whether it is worth it.
There is a lot to be said for working with a client who will be happy to pay for years to come with a minimum of hassle.
If you are a lead vendor, you also want to consider the cost of finding a buyer. Churning clients can be a major problem, depending on how good your sales process is.
For myself, I’d rather make a little less per lead and focus my efforts on generating more leads with a clients who are happy to pay, then to squeeze every last cent out of every lead.
More on what lawyer leads cost.