At the end of June, No.10's new cost of living tsar David Buttress asked business leaders for their ideas on "how to help" tackle the cost-of-living crisis. The government is launching a campaign to “amplify and channel” the efforts of brands looking to curb rising costs amid the rising cost of living.
One of the ideas proposed was for businesses to cut their prices to consumers, using money they would otherwise use on marketing.
This makes zero sense to me. Marketing is a proven lever of growth. Law firms need to invest in marketing. The UK needs a strong, vibrant legal sector with strong, powerful firms that support a growth in jobs.
Sure, some consumers will ‘shop around’ for a better price, but even with the moves made in recent years by the SRA to encourage transparency of pricing, I suspect that many consumers are still not ‘shopping around’ for lower prices. And the driver for this is that when you are making important life decisions, which anything that involves a lawyer usually is, price is a secondary consideration to the quality of service and the outcomes required.
With recessionary pressures still looming in the UK economy, we are still not (technically) in a recession. The UK economy grew by 0.5% in May 2022 after a decline of 0.2% in April, according to the latest figures from the Office for National Statistics (ONS).
Law firm marketing spend in the 2008-2010 recession
Conscious was in existence back in 2008 - 2010 during the last major recession (yes, I am ignoring the ‘technical recession due to COVID’) and what we saw successful law firms do then was increase their investment in marketing, not decrease it and not reduce prices.
I accept that we possibly did not have the cost-of-living crisis as we do now e.g. enormous pressure on gas prices and the price of fuel. But nevertheless, money was tight in households all over the UK in those years.
We also saw some law firms invest in increased marketing spending during the early COVID period.
As a business owner myself, marketing is the last thing I would choose to cut when times are tight (apologies to our training budget, which would probably go first!).
Is price cutting the right strategy for a law firm?
When the SRA introduced the first phase of their pricing transparency mandate we spoke to many law firms who predicted a ‘race to the bottom’ regarding pricing. What we have seen is the opposite. At worst we have seen a race to the middle! We can check prices across hundreds of websites that we manage and have seen prices rise more often than reduce.
It's a brave firm (outside of high-volume work firms) that would go down a price-cutting strategy unless you have a slick marketing machine in place.
Our advice has not changed in years. Law firms should be investing 4-5% of revenue in marketing, not the 2-3% that most firms spend. The majority of that spend should be in digital. I know, I know, a digital marketing agency WOULD say that, wouldn’t we! But we genuinely believe that the measurability of spend on digital marketing means that you can be much clearer on the return on investment of that spend.
If you need any help with what your digital marketing strategy should be, then do please get in touch.