If you just market to the people who are already in your tribe, it is cheaper and more effective.
In this episode Jim and Tyson talk about the advantages of thinking long term and transforming one happy client into many.
Stop thinking about just having 1 business transaction with clients and think through the long term prospects of how you might do further business with this person and the people that they know.
Think long term. How many referrals will I get from a particular client down the road, or how many more times will this person is going to hire me if I do a good job.
Cost Per Acquisition Of a Client: if your lifetime value of your client is less than your acquisition cost, then you are doing something wrong.
Calculate your cost per acquisition of clients =
How much do you spend every month/year in your marketing
_________________________________________________
Clients that you acquire that month/year (You can do the same with leads instead of acquired clients)
How much is worth you to get a new client… As long as you get out more than you are putting in, then it’s OK, right?
Once you figured out what the value of a client is for one case, then the next step is to figure out how can you increase the number of transactions you do with this client and how can you orchestrate referrals down the road and transform 1 client into 5. In other words, increase the lifetime value of this client. Therefore you are going to be willing to spend more money to get those leads.
Follow up! If you take that extra step and you create things and stay in touch with your former clients, that makes a big difference.
Hacking’s Hack: A book, and it’s a little bit dated in the marketing message: it’s pre internet, but all the same principles apply.
It’s fantastic, it’ll give lots of ideas.
Tyson’s Tip: Actually, a tip! The “if when, then principle”. If you wanna stop doing something, or if you wanna achieve something in your life, one of the most effective ways of doing it is getting in the mind set where when something happens, then you do something that is healthier, better, or improves you in some way.
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Transcript: Lifetime Client Value
Jim Hacking
If you’re just looking at this as a transaction, if you’re just looking at, you know, client interactions as a transaction and not trying to build a relationship, then that’s what you’re gonna get, you’re gonna get clients that are viewed the same way. And they’re not going to look at what you do as anything special.
Tyson Mutrux
You just can’t get in front of your clients, you got to educate them the you got to get them to know like, and trust you. You know, that’s, that’s a part of it. Joe Polish always talks about that. I know he didn’t come up with that, but he’s always repeating that. So if people know like and trust you, they’re going to be more likely to refer you cases.
Unknown Speaker
Run your law firm the right way. This is the maximum liar podcast via podcast. Your hosts, Jim hacking and Tyson nutrix. Let’s partner up and maximize your firm.
Jim Hacking
Welcome to the show. You’re back on the maximum lawyer podcast. I’m your host, Jim hacking.
Tyson Mutrux
And I’m tasting matrix. What’s going on Jamie?
Jim Hacking
Oh, good weekend, we went to my daughter’s soccer game. And she scored not one, not two. But three goals. Yesterday was a lot of fun.
Tyson Mutrux
She’s one of the athletes in the family, the other ones Amani, but you and the boys? I’m not so sure
Jim Hacking
you’re exactly right. In fact, with those three goals, she now has five on the season. And that’s five more than any other male member of our family has ever had. Wow.
Tyson Mutrux
And she’s the youngest.
Jim Hacking
Yeah, she’s the youngest. She’s great. All right. So welcome back to the show. I’m excited about today’s topic, we’re going to be talking about lifetime client value, lifetime client value and about how lawyers need to stop thinking about just having one business transaction with people that call their firm and sort of thinking through the long term prospects of how you might do further business with this person and people that they know,
Tyson Mutrux
I was kind of thinking of how we could best you know, sum this up for someone. And the way to look at it as whenever you’re dealing with a client don’t think about handling their specific case for them. Think about how many referrals am I going to get from this person down the road? Or how many more times is this person going to hire me down the road, if I do a really good job. I think if you think about it that way, I think it’s a better way of looking at client lifetime value. I was thinking of lifetime value of a customer just marketing school, but we call them clients, you know. But I think that’s a better way of looking at it. But obviously, there’s other things you have to do to really assess or analyze the lifetime value of a client. Something that I wanted to bring up very beginning is just cost per acquisition of a client. Because that factors in and the reason why I want to talk about that is if your lifetime value of your client is less than your acquisition cost, you’re doing something wrong, or you shouldn’t have that client, you know, I’m not sure. And
Jim Hacking
so you we got to do the math. And that’s exactly what I wanted to start off the show with doing. And so I think we need explain to people how we calculate what it costs to acquire a client. And in my mind, you just do sort of some rough numbers and look at how much do you spend every month or every year on marketing all of your marketing efforts, all of your costs. We talked a little bit about this in the last podcast that we did solo, and then you divide it by the number of people that actually pick up the phone and contact your firm or contact you on the web, right?
Tyson Mutrux
Yeah, well, sort of I divided by the number of actual new clients. I mean, I think you can do the calculation of the people that call your firm. But that doesn’t tell you the true acquisition costs. Because if you’ve not acquired them, then that doesn’t, it doesn’t count.
Jim Hacking
Yeah, well, I think you just have two different numbers, you have a cost per lead and a cost per client. But it’s the same math, just divided by different numbers. And I
Tyson Mutrux
think that what we’re talking about what sounds like you and I are splitting hairs, but we’re really not because I think it’s very important to notice the acquisition costs versus the lead costs. Because if you get a huge gap there, there’s an there’s a conversion problem. And so that’s why it’s important to track these numbers that you know these things. So you’re right that you take total spend divided by either total leads, or divided by total new clients,
Jim Hacking
obviously, your total number of new clients is going to be less than your total number of leads. So then your cost per client is going to be higher than your cost per lead. Absolutely. I think a lot of people don’t even spend much time thinking about this. But you have to know those numbers, because then like you said, you’re going to know how much it’s worth it to you to spend to get a new client. And then if you figure out that it costs you $150 to get a new client that’s almost always going to get you a $2,500 or $5,000 legal fee. You would spend that money every day and twice on Sunday, because you’re gonna get you know, every time you put money in, you’re gonna get a lot more money out.
Tyson Mutrux
It’s kind of like whenever Dean Jackson was interviewing you on his was it more cheese, less whiskers podcast? It’s like putting the money into an ATM and then getting money out. It’s a great deal for you. Actually, he
Jim Hacking
calls it a vending machine, but that’s right. As long as you get
Tyson Mutrux
in more than you’re putting in then it’s okay. Right? I mean, you obviously want more coming out and substantially more coming out than you put in but that’s the idea you put money in you get more out
Jim Hacking
right and so now we’re talking about you know, once you figure out what the value of a client is for one case, And then the next step is to figure out well, how can I increase the number of transactions I do with this client? And how can I orchestrate referrals down the road as an opportunity to get five cases, not just one. And so therefore, your lifetime value of that client is a lot higher, and therefore going to be willing to spend more money to get those leads, and whoever spends the most money on leads effectively, is going to do the best.
Tyson Mutrux
Absolutely. And so you and I have substantially different practices where I believe and I may be wrong, you can upsell in a way, your clients, right, you can take an immigration client, once they get to a certain point, you can upsell them to other things, right?
Jim Hacking
Yeah, when caught up, sell so much, but it’s more of an opportunity for repeat business. So if we help someone get a work visa, then we might help them get a green card, then we might help them get their citizenship. And then once they get their citizenship, they might sponsor their parents, and then the parents sponsor their kids. And then it’s sort of a virtuous cycle, we call it here at the hacking law practice, right?
Tyson Mutrux
So you can calculate, like that, I don’t want to glaze right over what you just said. But you can calculate some what some of your automatic what I call upsells, you call them other things, but into that lifetime value of the client. Mine I would say is a little bit more difficult. And people have to do things like me employment case and stuff like that the more contingency, it is more difficult for us to calculate that, however, get estimate, because most people are only in one on wax in their entire life, you know, they will never get injured again. But the way I had to look at it is that means referrals are substantially more important. And I’m not saying they’re not important to your type of work. But it makes those referrals substantially more important. So we had to orchestrate those referrals, like you were saying you have to find a way to orchestrate those referrals. And we you talked about what you mean by that.
Jim Hacking
Okay, so once we established that a new case for you, let’s take your criminal case, how much is an average criminal case worth you, let’s say not a felony, you know, a Class A misdemeanor, something like that. 20 to 50. Okay, so that’s perfect, because that’s sort of similar to, you know, on most spouse cases where 2750 over here. So, you know, right out of the box, that if you could spend $500, to get a 2250, or we’ll just say 2500 cents, it’s halfway between both of us, if you could spend $500, to get one new case, you would spend that money all day long, right? And $500 for a lead or a case, that’s a lot of money to spend to get that leader case, and I’m sure that neither of us are spending nearly that much to get a lead or a case.
Tyson Mutrux
Not at all, but we would I mean, the idea is that we would spend that to get that money. Yeah, cuz you’re gonna get
Jim Hacking
back five times as much as you put in. Okay, so then let’s just say hypothetically, that right now, you’re not doing anything that your baseline is zero, that your baseline is, you know, one client, and one case per client, that’s all I’m ever gonna get out of the clients that they come to see me. Right, right. So let’s say that we could just boost that to two. Oh, if you double that, that’s going to double your income over the year. Right. Absolutely. Or over time, you know, and so, I think that the reason we’re going through this is to think about, you know, how valuable it is to go through this exercise and to think through, you know, why am I spending so much time and energy on getting new clients instead of building relationships at the beginning of the relationship all the way through to really solidify them so that if they have any kind of legal issue, they think of you first?
Tyson Mutrux
Absolutely. And what I thought was really great about the interview with Dean Jackson, with you and him was the fact that he took it a step further, right, whenever he was talking with you, where you don’t just look at that, but where are those coming from? Gap come up with your top 200? Is that what it is 200 refers
Jim Hacking
he had 150. But I went through my entire list last Sunday of my 6600 contacts and, and I kept narrowing it narrowing, narrowing it. And there’s 200 people that I’ve now tagged as champions in Infusionsoft as people who really often refer me things who’ve sent me multiple pieces of business. And I’ll just give you one example. And this, again, is not to be braggy. It’s just something and this is all serendipitous. This is not something that I orchestrated like Dean, and we are encouraging people to do so one of my first spouse cases overseas was for a fellow from this little village in Iraq called Zacco. It’s in the Kurdish northern part of Iraq, and we got his wife here, and we got her her citizenship, she’s now currently applying for her parents. So you know, right out of the box, that’s, you know, one green card case, one citizenship case, and now two green card cases. So just from him alone, in his immediate family, we’ve gotten four cases out of that initial contact. But more importantly, this fellow has literally referred me 10 cases of people all from the same village, all bringing a spouse to the United States. And this is something that sort of, if I could replicate this with everybody, I wouldn’t really have to do much more new client marketing. It could be really dedicated headed towards people like Madison, that’s his name, who have really been good referral sources. And I don’t say that, that I really had much to do with it. Other than that we did a pretty good job for him. And he’s been happy with us, and he sort of likes us. So then we have to ask ourselves, well, how can we replicate that? How do we tap into that? How do we do that with, you know, potentially every client that comes in?
Tyson Mutrux
Well, and let’s talk about what you’re doing to do that? I mean, because you are doing things to do that. Now. I’m going to set your newsletter aside your Monday newsletter, which I think is great, but what are you doing cuz you were basically targeting your 200 people, right, but you’re not ignoring everyone else, because you’re sending out the newsletter every Monday, which last time we talked, it’s a lot of people are watching it, reading it, which is really good. But what are you going to do with those 200 people to help orchestrate those leads.
Jim Hacking
So what we’re going to do is we’re going to have a monthly postcard campaign. So it’s 200 postcards, as let’s say, 50 cents a pop. So that’s 100 bucks to each of our champions, and we’re just going to remind them of different free offerings, we have that, you know, if they know someone who is talking about going back to the home country to get married, that there’s a special report we have about that, if they know someone who’s gonna apply for asylum, we have a special report about that, and just sort of, you know, see where it goes, I think that we’re probably also going to have a client champion referral night, like, we’re, I think I’m gonna rent a movie theater, and have a movie for people in their kids, maybe to let them all get together and just have something sort of fun to thank them for all the great referrals they’ve given us,
Tyson Mutrux
you’re gonna want to look at one of my campaigns, and I’ve got built out because I’ve built out exactly what you’re talking about. I’m not using it because of the reason of the cost. And so since you and I have been talking, I’m going to change it and send it out to my referral partners. I’ve picked out specific dates for every month. So one date a month, and I picked unique dates like unique holidays, I didn’t choose like the traditional ones. There’s a couple reasons for that. But one is so that your people are getting my stuff on non holidays. For example, I’m not sending out Christmas, once we send out Christmas cards for the firm, but I’m sending out picking different dates, so that people are surprised by them. And I didn’t want to send them out because the just sending a postcard out to every freaking person gets expensive, but I’m going to steal your idea and send them off to the top 150 I’m probably not gonna go to 200. But I’ll show you my campaign. And what it does, it sends out an email on that day. But it also sends the postcard out much like the birthday campaign. 10 days prior to the birthday, the person’s birthday card goes out and same thing with the holiday. So I’ll show my show that to you. And maybe you and Kelsey can adopt a lot of what we do. I think it’s pretty cool. I haven’t been using it.
Jim Hacking
Yeah, I’d like to see that. And, you know, one problem that I had sort of overall early on was, I sort of overshot it. I don’t do you remember when I used to have my physical newsletter?
Tyson Mutrux
I do. Yeah. And it’s really expensive. It was really expensive.
Jim Hacking
And I was sending it out to way too many people, it wasn’t focused enough. And it was very expensive. It was like $3,000 a month. So I think this is much more manageable and much more targeted. And I think it’s really aimed at sort of keeping that connection with people because I really have come to believe that if we just market to the people who are already in our tribe, a it’s cheaper and be it’s more effective.
Tyson Mutrux
I think there’s a reason why your newsletters, I won’t say it sucked. But it wasn’t as good as it should have been, is because you hired a company to do it. And they did the majority of it. But if you compare yours to John Fisher, who John Fisher is going to be on the podcast in a few weeks. His is more targeted, it’s very specific to his audience. He doesn’t himself, he may have someone else prepare it, but he prepares the content. If I remember correctly, a lot of your content wasn’t created by you, right? You hired a company and they they filled in a bunch of gaps.
Jim Hacking
It was about 5050. But back then I wasn’t creating as much content as I create. Now I got plenty of content that I could use. But you’re right. But it’s interesting the other day yesterday, I was working on my Monday newsletter for today. And Amani said to me, can’t you outsource that? Can’t you have someone else do that? And I said, that’s really the one thing that I can do. That’s my voice. That’s that’s sort of all comes from me. And it sort of portrays my worldview when it comes to immigration. And I think that if I gave it to somebody else, it would just be bland and boring.
Tyson Mutrux
Oh, absolutely. Because a lot of what you see you send in your newsletters are personal things, you send pictures your family you send whenever one of your kids has something good that maybe this week, you’ll have something about the three goals. I don’t know. I don’t know what you put in it yet, but I don’t think you’ve sent it out yet. But usually some something more personal. And if you have someone else do that they’re not going to know this stuff.
Jim Hacking
Right. And that just comes through and it does get just sort of boring and bland. So I think we’ve made our points about this topic. I think it’s an important one that we should explore some more I think a lot of people just look at as a simple transaction when somebody calls I think that you know like someone like Steve Bartel who has a divorce practice or someone like you with a one time car Shouldn’t I think that’s a little bit harder. But I do think then therefore, that what you need to be doing is sort of orchestrating those referrals. And what the postcards are intended to do is to keep you top of mind. And just one other way. I also think that there’s something to be said for just saying thank you to people when they refer you stuff that just that in and of itself, it’s so interesting, I honestly believe Tyson that the kinds of things that you and I are talking about on this podcast, are really meat and potatoes, they’re real down to earth practical things. That sounds simple, but that a lot of people just aren’t doing and that if you can just do these basic blocking and tackling if you just do the these things in your practice that you’ll just be so much further ahead than everybody else that a lot of the successful, just follow
Tyson Mutrux
it think it is simple, but in your ideas, meat, potatoes, but I think the thing is, is that you have to get out of the mindset people in the people have the mindset, I handle this one case, I move on to the next case, I handled that case, and we were on the next case. But the big part of what we’re talking about is the follow up that the aftercare, the contacts with your former clients, usually what happens is people help someone out, and then they’re done. They’re forgotten forever, right? I think if you taken that extra step, and you create things that you’re staying in touch, you’re staying in front of your former clients, that makes a huge difference. And I really think that’s all we’re talking about here, for the most part is taking care of your current client. But also, after that case is over with, you’re still staying in front of them. That’s so crucial. And it’s a part that most people leave out
Jim Hacking
Tyson, I would almost guarantee that you’ve had this experience. But I know that I haven’t including recently, and that is that we’ve had a couple of consults in the last month or so where people had an immigration attorney previously. And I’d say it’s probably happened four times this month. And in two of them, the people honestly couldn’t remember the name of their attorney who handled their case before. Now it was four or five years ago. And then the other two were just sort of dissatisfied or thought that the person had just sort of done an okay job. And so if you’re just looking at this as a transaction, if you’re just looking at, you know, client interactions as a transaction and trying to build a relationship, then that’s what you’re gonna get, you’re gonna get clients that are viewed the same way. And they’re not going to look at what you do as anything special. It is
Tyson Mutrux
really funny to say like it does, I get those calls quite a bit, especially with the bigger personal injury firms, because they don’t know who the hell they’re calling. They’re just calling him big, basically call center. But it’s really fun where I rent you probably a couple times a week someone comes into the front desk, and they say I’m looking for my attorney and like who’s your attorney, and they never go with the attorney. It cracks me up every time I hear it. Because it’s just like, how have you not let your client know what your name is? That’s just crazy to me. But yeah, you just gotta get in front of your clients. You got to educate them the you got to get them to know like and trust you. You know, that’s that’s a part of it. Joe Polish always talks about that. I know he didn’t come up with that. But he’s always repeating that. So you people know like and trust you and they’re going to be more likely to refer you cases.
Jim Hacking
Yeah, I was on an immigration on Monday and there was another couple they’re getting ready for their interview. And the attorney came in and shook their hand and said, Hi, I’m and then she said her name like she was meeting them right then at the end of the whole transaction. It seemed very strange to me.
Tyson Mutrux
That is strange. Now, with criminal stuff. It’s not uncommon for you to I’m not saying it’s common, but it’s not uncommon to first meet your client the day of court because I’ve been retained the night before. And then I’m just walking into court and meet my clients. So that’s that does happen. But if it’s at the end of the immigration, it’s like me walking into a guilty place saying, Hey, nice to meet you. You deal with that’s kind of crazy. All right,
Jim Hacking
we gotta wrap this sucker up was a good show. I
Tyson Mutrux
think anybody wants to contact us. Do you mind if people email you? Oh, no, we’ve gotten some great emails lately. Yeah. Mike Tyson. matrix.com. And here’s Jim at hacking law practice.
Jim Hacking
right.com. Yep. All right. Give us a hack of the week. All right. So I reconnected with one of my favorite marketers and smart people Jay Abraham, through a podcast of his that I found and one of his books that I really, really enjoyed has a super long title. But I really highly recommended it’s an older book. So it’s a little bit dated in the marketing message only in the fact that it’s sort of pre internet. But all the same principles apply in every chapter, how we talk about Chet Holmes is the Ultimate Sales Machine as being one of these practical books that you could really implement. The name of this book is getting everything you can out of all you’ve got 21 ways you can out think outperform and out earn the competition. The books about 15 years old, but it’s fantastic. And every time I read it, I get good ideas for things that we can use right now.
Tyson Mutrux
It’s got a suggestion I’ve never read that you said it’s about 15 years. It’s 15 years
Jim Hacking
old. You can get it in paperback, I found an old hardback copy, which I enjoyed reading and I’m about halfway through it.
Tyson Mutrux
Fantastic. I guess now I have another frickin book I’ve got to buy and read, which is it never ends. But it’s fun. It’s part of the process. So my tip of the week, it actually is a tip and it’s actually from I know I teased pre suasion from Robert Cialdini last week, but But there’s a tip in there that I think that everyone can use, I think I want to share, if you don’t read the book, I want to share this at least, then you’ll probably remember this from the book, Jimmy. But it’s the if when then principle, where he talks about stopping doing things or trying to do things for, and I’ll use his example for weight loss. So if you get hungry, then you have a cup of tea or something like that something healthy. So if you want to stop doing something, or if you want to achieve something in your life, one of the most effective ways of doing it is getting in the mindset where when something happens, then you do something that’s healthier, or that’s better, or that that improves you in some way. And so I think that that’s a really good tip. And it’s scientifically backed. I mean, that’s one of the things where he gives you examples, and he tells you that listen, this is going to work because we’ve we’ve done test after test after test on it. And so it’s something I’m going to try and implement into my life where if when something happens that I want to either remove or improve upon, then I’m going to do something else. I think that’s a great way and I’m going to test it out. I’ll let you know in a few weeks how it’s working. Sounds good brother. All right, man. Well, appreciate. We’ve got a couple of great guests coming up, which is going to be awesome. We’re expanding into bigger and better names, not to say that the people we’ve had aren’t great already, but we’re getting into the people that I think a lot of people know in the future. So we’re pretty excited about that. All right, we’ll talk to you soon. Thanks, Jamie.
