Latest / UnF*ck Your Legal Marketing / The Secret to Sustainable Growth for Professional Service Firms with Jessica Gonifas
Transcript
- Gary Johnson: Welcome to Un-Fuck Your Legal Marketing, the show where we get brutally honest about marketing, business, and the messy middle of making it all work. I'm Gary Johnson, marketing coach, strategist, and professional BS detector for attorneys and business owners who are tired of doing what everyone else does. Around here, we skip the fluff. We have real conversations, real insights, and maybe a few F-bombs along the way. Let's get into it. make more money long-term, you need to have forward-looking strategies. And we are going to explore this with my guest today, Jessica Gonnefus. Jessica is a fractional CFO and founder of Silver Peak CPA. She helps attorneys use their financial statements as a strategic tool for growth, including, let's say, hiring, pricing, and... Very importantly, marketing, because marketing creates opportunity. Finance determines sustainability and growth requires both. So I'm so happy to welcome Jessica. Welcome to the show. Hey Gary, glad to be here. And I'm excited to talk about marketing and how it fits in with finances because it is probably the number two, one of the top two. issues that I hear from our potential clients. They almost always tell me, I think I'm spending too much money on office supplies, which is funny to me. And the second one is marketing. I have no idea where my marketing money is going. I feel like I'm spending a lot and I have no idea what's going on with it. I'm excited to be here and give any tips and wisdom that I possibly can. All right. Well, so let's jump into it. A lot of firm owners treat marketing and finance in two separate worlds, right? And they're like, ⁓ this is one thing and our marketing is one thing and our financing is completely different. Why do you find that that is such a risky approach of looking at things? Well, typically in professional service firms and law firms, we have two large expenses. The first one is staff. We're almost always spending most of our money on staff. And the second one is marketing. You have to know where those dollars are going and the ROI they're giving you. You are spending a lot of money depending on your firm type. Of course, you know, we have all ranges of spend, but it's a huge expense for us and it can go sideways really quickly. And if we feel like we're not making enough money, we're not taking enough money for ourselves out of the firm. That's one of the places we have to look at, right? We have to look at all those and Marketing can be the sexy thing to spend money on, right? Like we love to tell our friends, ⁓ I'm running paid Facebook ads and we're getting so many clients for paid Facebook ads, but how much money are you spending on it? And how many clients are you actually getting? Right? So we love to brag about marketing. We love to brag about our revenue, but at end of the day, How much money are we actually making? So it's a huge, huge piece of our budget and of where our resources go. And it's so true because I agree. Revenue is so sexy. Somebody has said it is an ego metrics. And I'll never forget, I had a really good fraternity brother of my good friend and I was catching up with him and it had been a long time. And I said, ⁓ How's your business? And he's like, yeah, businesses though is okay. And I go, what's your revenue on that? He said $120 million. He's the only owner. And I'm like, good God, this guy is a baller. kidding. And then he said, yeah, it's not all that great. And I go, why? And he goes, I say 120, but I am $50 million in debt. We're not breaking even at all. We're trying to get things back, but it goes to show you think revenue guy's a baller and he's in massive, massive amount of debt, you know? And it's like, what the heck, you know? And he also said, we don't look at our finances that greatly, you know? And we're just like, fire, fire, fire, fire, let's go. And he thinks more revenue will get rid of fire, but it doesn't, does it? Absolutely not. And you know, when it comes to marketing, because Most of us as business owners are type A, we're very driven and some great thing comes in, Like how many sales calls and how many times do marketing people pop up in our LinkedIn and Facebook ads? And they're always promising whatever great thing, right? Like I can get you so many leads and we are very revenue driven, which is good, right? Cause we are building businesses and we're making money, but it gets lost in all the other things that we want to do and everything else that we want to advance in our businesses. So, and you know, I think one of the big things for your friend is the hundred million. That's great. But what I hear a lot is I want to get to a million, right? And then I want to get to five million and I've seen tons of million dollar plus firms and owners making zero or very little profit. They're working, maybe taking 50,000 a year out of the business, right? But we are seven figures and we have a seven figure business and ⁓ we're spending money on Facebook ads and billboards. go to PI attorneys most of the time because I love PI attorneys. PI attorneys are PI attorneys for a reason, right? But we have the billboards, we have all the TV commercials and all the things, but we are running at a zero profit margin. So unbelievable. Yeah. That's usually the vanity expense, I guess, is marketing and revenue is a vanity metric that we like to break door. ⁓ my God. Totally true. Now, when you're working with clients, do you, you know, they all know the revenue number. Well, hopefully they'll know the revenue numbers, but Do you find that they also understand what's driving those revenue numbers? Usually not. So the answer is most frequently no. And if we have clients that have multiple practice areas, gets even more, the waters get even more muddied, right? Because typically they don't know which practice area is profitable and which isn't. But even if they're a single practice area, it's very, very, very rarely that there's any sort of connection between revenue and... And, you know, marketing can be a big lever, but probably what I would say is the biggest lever is staffing. And most firm owners have no idea how productive and efficient their team members are. And, you know, if your team member is not producing four or five times their salary, you are not making enough money off of them, right? And so that, since that's usually our biggest expense, that's usually where we start the discussions. And depending on. you know, what the owner's gut is telling them about where they may have inefficiencies. Typically marketing is another one that comes up, but you know, we should be looking at ROI on marketing. We should be looking at ROI on our employees. And cause those are our two biggest spend usually. Totally. and listen to one of your podcasts from before. And one of the things that you had said that really hit home was the data tells the truth. Can you talk a little bit more into that? Because I think that is such a powerful thing that typically lawyers want to stay away from. I'm not an accountant, so I want to stay away from the data. I want to stay away from the numbers, but the numbers do tell the truth. I always say numbers don't lie, people do. People will lie the ass off, but you can't get away from the numbers, right? And usually as a business owner, again, we're very forward thinking. We're very excited. We love trying new things. We have new ideas and we don't make the connection between the two, right? You know, I might start Facebook ads and maybe I'm spending $5,000 and my marketing firm is showing me these reports once a week that are showing the leads we're getting. But I don't have any staff internally tracking how much of those are actually booking calls and how many of those are converting to clients. Right. And so if I just look at things on that surface level, I'm like, wow, we're getting 30 leads a week from this marketing spend on Facebook ads. This is amazing. But if we don't have anybody drilling into the next level, we don't know what the actual data, that's not the real data. Right. And you know, I had one client and I don't know why this sticks with me, but I'll never forget on our first call before he hired us, he said, I am spending too much money on food for my kitchen. am not profitable enough and my staff is eating too much food and drinking too much soda. we are spending, he's like, it drives me crazy. And we need to look into this. And he did not have a profitable firm. said, okay, we will figure this out. And he was spending like $300 a month. And he was like a $3 million firm. So they weren't spending very much money. But in his mind, as the firm owner, he saw his staff walking around with their sodas all the time and it just irritated him. So that's a story of where he thought that was a big problem. And it really wasn't. the data, generally he had some sort of feelings about that. Yeah. the data said, yes. you know, he said, well, I guess that's probably okay. So. You know, he continued buying the soda and the snacks for the team. ⁓ that's a example of where he thought he was spending a lot of money and he wasn't. ⁓ when we, when it comes to marketing spend and staff spend, that is very, very eye opening. Usually when you start looking at the ROI and you start looking at the productivity of the staff and it's. as a business owner to look at those numbers because they don't lie exactly like you said and if you have a staff member that you think is performing and they're not and That's a difficult place to be right you have to have a whole nother approach to how you handle this situation but At the end of the day you need to have accurate information to make decisions. Yeah, totally. Have you ever had a Firm where you were looking at all the data and their marketing? was just coming up short. Like they weren't getting a good return on their investment. And because they finally looked at the numbers, they made a change on what they were doing marketing wise, because they're like, we thought because we're spending this and we're getting this, but actually we're getting a ton of business from over here. Not from this, because now we're actually looking at the data. You ever had a situation like that where they're like, we need to cut this marketing agency off or we need to do something different. Yeah, absolutely. That happens all the time. ⁓ you know, when we start digging into the details and looking at the ROI and you know, how, how the marketing is going. I've also had the case where we had a client who had one marketing agency handling mostly everything and he had told them a budget monthly and they just kept exceeding it, exceeding it, exceeding it. There was zero accountability there. And we said, I said, hey, I'm your fractional CFO and you can't keep doing this or you will have no money. If we're going to be profitable, we need to know that if we're putting an extra 5,000 in, we're getting an extra 50,000 or whatever the metric is out of it. And he held those conversations. Now he was able to push back on me and say, well, I have a fractional CFO now. And she said, this is what I have to do. So that took some of the pressure off of him, right? Cause we sometimes we want to be the nice guy with our vendors. Right. And they were doing a good job. It's not that they weren't, but it was sort of this open checkbook and wow, how powerful has that been for him? That's been about a year ago that we had the conversation. He has established more boundaries with the agency. The agency has stepped up even more for him and they have really tightened up their entire working relationship with him. And he's seeing profit in his firm now. He's seeing a much more profitable firm and it's really impacted his mindset of the way he runs his business. And he's the type of guy that doesn't really like having confrontational conversations with folks and he's had a long-term partnership with this agency. But it really has changed the trajectory of his firm by having that conversation and setting those boundaries. So we set boundaries within our budgeting process that he was then able to push forward it and move forward with his vendors as well. love that. And then anybody who's listening, I just get just hit on two things. One is You look at your numbers, you're going to make more confident decisions, but also you're going to understand how to hold people accountable because I don't care who's running your marketing campaigns. If they're not getting the ROI, you need to have just a conversation with them. What are you going to do to change in order to get it? Because like you had said, you got these boundaries and I see too many times. Let's just call it poor marketing agencies take advantage of people who are not looking at the numbers and they just go, yeah, we should expand. you're like, okay, hold on pause. What's our, what's our expected return? Now nobody can guarantee that, you know, and by the way, if there's any marketing agencies that you might be working with that say, ⁓ my God, we'll guarantee this run for the Hills. Absolutely run for the Hills because there's so many different components to getting a client. That they only control one thing, which is get the phone to ring. However, there needs to be quality to that. needs to be quantity to that. And if we spend X, we should expect Y. And if we don't get Y, then we need to ask the question, why? Why are we not getting this? And what can we change? But that accountability that you hit on, I think is such a, such a thing that we are afraid of doing. with some of our vendors, especially the ones that are really impacting our revenue. Don't want to piss them off. Yeah. You're not, shouldn't think that you're going to piss them off. Right. You think that you should have a professional conversation. I'm paying you. You give me like, there is this exchange of value between the two, but if one is giving all the value, I am paying you and you're not getting any, I'm not getting any value from that. That's. That's a really bad situation. and it's one of the surprising things to me is when we go through the expenses and we look at the marketing budget and let's say it looks high to me, right? The first question I ask is, well, what reports are you getting from the marketing agency? You know, how, and they're like, I'm not getting any reports and that right there. Then they're like, ⁓ yeah. Okay. get an email after this call, but it happens nine out of 10 times. So yeah, I'm not getting any reports. So, or. You know, I'm getting them on that reading them or, know, that sort of thing. Yeah. Or I don't know what they mean. Yes. Yes. It's a horrible one. Are you getting reports? Step two, are you reading them? And then step three, do you understand them? So like those are, that's the filter that you have to go through with marketing ROI. So then if we can get those one, two, and three checked off, then we can start looking at, you know, the ROI and digging into it and making decisions about how we want it. Yeah. Now. We talked about tracking numbers, data. What do you recommend listener that is like, okay, they're just starting to get into this and they're starting to look at their financials. What should they be tracking when it comes to their marketing spend? it's really going to be digging into it and looking at typically we have multiple areas we're spending in, right? We may have a agency that's handling Facebook ads or Google ads or local service ads, that sort of thing. So I'm going to always advocate to dig down as far as you possibly can. On your Facebook ads, how many leads are you getting? How many of those are converting? Now kind of the basic stuff, how many of those are converting into calls? And then how many calls are you converting into clients? And that's the super basic 101 of, you know, tracking our marketing by, you know, then dig into each different area that you're spending money on. And you're not going to find this magical bullet, right? You're not going to find like, oh my gosh, this is the thing that's totally screwing me with my money. It's data gives us information to make informed decisions and you have to track it over time. we try this ad campaign with Facebook ads and you know, your marketing agency should be or whoever's running those for you should be looking at the ad level, right? Which ones are hitting, which ones aren't hitting and should be working through all of that. That's not necessarily what you need to be doing, but if they don't know that you're, kind of know what's going on, sometimes things aren't going to happen, right? So I'm a huge fan of keep it simple. So. If you're doing nothing right now, start with those three metrics. How many leads are we getting? How many are converting to calls and how many are converting to clients? And ultimately you can then calculate our cost per lead. You can calculate then your cost per client acquisition, right? So the ones that actually convert. But that. little cycle in itself is going to give you tons of other information that's not financial related, right? So if our leads are booking calls, but then they're not converting to clients, we have a sales problem. That has nothing to do with marketing. that simple little cycle, and you can break that down into tons and tons of pieces from there, but even that simple three step cycle is going to give you a lot of transparency into some things that are happening in your revenue cycle. Yeah. And by the way, all you attorneys that are listening to this right now, and you heard that dirty word of sales, business development, whatever the fuck you want to call it. It's all about conversion. know, they get all this, you can't call it sales. I'm not a sales person. It's like, if nothing is sold, you have no work. No, exactly. don't do anything. So call it business development, call it sales. Like it's all the same thing. Well, we had another client story that I think is pretty cool. He was a defense attorney and he had never really tracked this stuff before. And our kind of goal was to look at his marketing spend, but he started tracking those three pieces and he saw that he was getting leads. People were calling, but they weren't actually booking a call with him because his cycle to see clients was too long. So they would call the office and say, Hey, I want to talk to. John Doe, the attorney, but his calendar was booked and it took them a week to get in with him. Well, he did a lot of DUI defense and they're not going to wait a week to talk to you. And so once that was brought to the forefront of an issue, then he changed the scheduling processes and then he was able to get those calls on his calendar faster. So, you know, our goal was to look at his marketing spend return, but we figured out some sales process things that needed fixed. So. There's always something underneath there, right? There's multiple things that we can accomplish by knowing our numbers, knowing our data. And that's where it really starts is knowing your numbers, because if you don't, the chances of you becoming extremely profitable is low as opposed to... I don't want to put my head in the sand. Like I got to have it out. Let's look at the numbers, you know, try to put our ego aside for a quick second and say, how can I make decisions based on this? when attorneys are hiring somebody like yourself, come in, show them the numbers, show them like, Hey, here's the data. Again, this doesn't lie. ⁓ we need to start making these decisions. When they're hiring somebody like you, are there certain questions that they need to ask? Whether it's a accounting firm or it's a fractional CFO or just a professional who's coming in so that they can understand this person gets my business and they can help me achieve what I want. Are there certain things that they need to do to vet those? people out so they'll give them the right information like you're talking about. of the things that comes to my top of mind actually is you're asking me that, and this is not typically where a lawyer and accountant is going to go, but I think a lot of it is fit. you have to be, there's, I mean, I could, we could do whole episodes on money mindset and money issues and all those things, but you have to have somebody that you feel comfortable being open and transparent with about the situation, right? And that's not even just the situation today, but it could be the situation in six months. just talk to a lawyer friend and he said, know what, last year I went through a divorce and my finances were a mess. It was a dumpster fire. And when your personal finances get out of alignment, As a business owner, it's difficult for it not to leak into the business somehow, right? And he said, I had to talk to my fractional CFO weekly. That's the only way we got through this. you know, he had to take out some loans, but he wanted some strategy help there and he needed that piece. it has to be somebody that you, that the, there's a fit and you feel comfortable having conversations, right? And I have to feel comfortable with you as a client that I can say to you, you know, I don't think that is maybe the best direction for us to go right now. Or I need to feel comfortable that I can challenge your assumptions a little bit, right? And that you're not going to tear my head off. I would say you have to like the person and you have to like talking to them because we're going to talk a lot. We're going to talk about. uncomfortable things. had one client say it was him and his wife run the firm and he said, I feel like I'm in marriage counseling. And I said, well, no, no, no, no, we are not going to go there. But the amount of money your law firm makes impacts what happens at home. Right. So it impacts the legacy that you're building for your family. And in this case, ⁓ I think two of his four kids are going to be lawyers and he is, you know, setting up the firm for them. And so the decisions that he's making today in this law firm are impacting his family tree for generations. We have to have some uncomfortable conversations, right? We've had other situations where solos have been interested in bringing in partners and you have to have a financially well-run firm because you don't want to bring somebody else into your dumpster fire, right? And if things aren't solid. We both need to have that relationship where we can have that conversation and really figure out how to fix things moving forward. like to say there's nothing I haven't seen. There's nothing that shocks me. I don't care what your situation is. I've seen it and not to try to discount it, but at some point it's another number for me and it's another problem for us to fix. So there's no emotions tied to it with me. I'm here to help you move forward, right? So whatever it is that's happening or has happened. Okay, give me the background, but we're going to figure out how to fix it and move forward. yeah, that, you know, a lot of that plays into the money mindset piece. And I think you hit it so right on the head, the fit. you get along with them? Do you like them? Because they're divulging a lot of very intimate information. mean, finances are intimate. mean, in our society, it is what a lot of us put our self worth into. And if we're not profitable and then we're like, Jessica, I really don't want you to think I'm less than, you know, I make it seem like I'm making a gazillion dollars, but I'm broke, you know? And like for anybody who's listening, like put that aside for a quick second, because you need an advocate who's who one understands the numbers and then two can help you make those. one of the things that I've noticed in our conversation here is you constantly say we, and, I love that because you're like a quasi partner with them, right? And, the thing that I love about that is because you care so much about it and helping them get so that they can achieve the goals that they want. We need partners like that. That is like, yeah, but it also, I'm sure allows you to be able to push back. to have really uncomfortable conversations saying, you keep making the same mistake again and again, and you're expecting a different result. That's called insanity. Stop spending on, not gonna, you need to fire those people. We've had those conversations, but that's a, we're in this together as opposed to, I don't know, you're firm, you figure it out. I'll give you the numbers. Not my issue if you're gonna go down in flames and you're going, No, no, no, no, no, no, no, no, no, no, no, no, no, no, fractional CFOs that tell you, I can fix all your problems if we use this formula. Like you're going to have to reduce your staff to one third of your revenue, period. I have seen fractional CFOs do that and it has nearly obliterated businesses. And now I do think that we need to have benchmarks, right? We need to be looking at it we need to have goals. But my philosophy is usually, unless you have a massive dumpster fire in your business, you don't need to blow it up. Right? If you think you're not as profitable as you want to be, you're not making as much money as you want to be, maybe your staff isn't producing to where they need to be. Yeah, we might need to fire some people, but we can turn the ship over a couple years and still get you to where you need to be without, you know, taking a shotgun approach to handling the situation. So that would be sort of my second piece to think about. saw one of my competitors advertise that we will increase your profit by 10 % in six months or you get your money back. And I thought that I can do that. I can have a call with any business today and tell you how to reduce your expenses by 10%. Big deal. can do that. But is that the best thing for that business? Like, is that the best thing for those employees and for that firm owner? is that- just a blanket answer to the problem. It just really made me cringe. so, you know, we're financial people. We, I can tell you to cut anything I want to tell you to cut, but is that in alignment with your values and your vision and where you want to take your business and the life you want to lead at work and outside of work? Yeah. ⁓ my God. So that would be my number two. And then my number three is probably. I would really strongly recommend looking for someone that knows law firms and specializes there. hear a lot of, on a lot of our potential client calls, I hear, well, you know, I hired a firm, they didn't really understand how PI worked and they just kept telling me to cut expenses. Well, okay, I need, we need to make sure expenses are within boundaries and we got a handle on that. Like I just said, anybody can tell you to cut expenses. But in a PI firm, one of the things this one gal told me was they were freaking out about our revenue variances every month. that's just how it is in PI, right? So we know it's up and down and the gold standard is to get it steady, but that is the gold standards. You know, we have to plan and forecast surrounding that sort of. ups and downs that we just have in the industry. So I think having somebody that works with law firms, knows law firms, and really understands the issues that you face as a professional service provider, as a solo business owner or a couple of partners, and just the challenges that we have in this sort of industry. Yeah, it's so true. mean, lawyers are, they're quasi unicorns out there because They have different things, you know, like they have trusts. Yes. The same kind of trust that we're thinking of, like most people are thinking of the lawyers know what they are and they are sacred or protected, you know. ⁓ and there's a lot of times that people do unethical things with that money and that trust and they're manipulating the financials in such a way to be able to line their pockets. But it's almost, it starts to become a. Ponzi scheme, you know, they're taken from this and they're putting it in here and they're moving it around and delaying. it's like, yeah, that could be a disaster, you know? And, and I do, I agree with you. There are certain, there's certain occupations where you really need to know somebody who specializes in that because they are a little different, you know? Yeah. So one of the things that I love about what I do is the fact that I get some competitors that are like, yeah, we can guarantee stuff. you're like, yeah, way to get somebody disbarred really, really quickly, you know, because you don't, you don't know their world, right? And you don't understand you can't do that as an attorney. And there is a lot of things in the code of ethics that prevent them from doing a lot of the marketing and financial aspects. You can do this, you can't do that. And if you don't have an expert who really gets it. You could get yourself into a lot of trouble. And, and also when you have somebody like yourself that really gets it, they can really see things very, very quickly. Like, it. See that. Okay. Let me tell you, let me explain what this line item means. It means this, here's how it affects your profitability. Here's how it affects, we need to make a decision. And they go, thank you. Instead of. four months down the road. God, we should have looked at that, but I didn't know that that that was a big line item for you guys. Cause I've never worked with attorneys before. Right. It's like, ⁓ shit. Recipe for disaster. Yeah. ⁓ God, Jessica, thank you. Like this has been huge. mean, from really understanding people, the data does not lie. It tells the truth. People do lie. We've got to be tracking stuff. I love how you were like, Let's track first and foremost, very simply, what are we spending? How many leads do we get? ⁓ How many are converting to calls? And then how many are converting to clients? That can tell us a big story. If you've got employees, each employee should be about four to five times what you are spending on them. And spending on them is not just salary. There's other things that are put into that. They need to hold their vendors accountable once they get these numbers and making sure that you're utilizing these numbers to make confident decisions with your practice. Because if you're not, and you don't know, you're going to wake up one day and go, this is not the legacy that I wanted. This is, know, I wish I would have. then like you had said, most times it's I just, my ego is getting ahead of me or something like that. And if you are hiring somebody for this, Make sure it's a good fit. Make sure that they're not, yeah, we'll guarantee this or we'll get, or we'll put you in a formula that everybody is, or they've never worked with attorneys. That's the best thing to be like, okay, then when we can look at our marketing spend, we can confidently say we're doing the right things. We're, you know, we're moving so we can spend even more money on it because we know we're going to get a great return on our investment because this stuff works. Right. then obviously it works until it doesn't. So constantly looking at the numbers. We're always testing something else behind the scenes, but we have our main thing, but then we're testing the next thing. Right. Exactly. Yeah. So anybody that's listening, if you want to unfuck your legal marketing, do not, do not put your head in the sand. Look at your fricking numbers, you know, and, and if you don't have somebody highly recommend Jessica. All of her contact information is going to be in the show notes. Look at that. Contact her. She has got a fantastic reputation, which is the reason why I got her on this. Cause I know how brilliant she is. And I just thank you, Jessica. You're just amazing at what you do and what you do for the community. And you're an asset. You're a definite asset. And thank you. Thank you for spending the time to do this. for having me. I do frequently think that. the more people I can help. And we've kind of started saying we make multimillionaires. You know, the more multimillionaires we can help make, the more legacies we can set and just build, build and build and build our entire socioeconomic atmosphere. So I'm a tiny, tiny little piece in that, but I love it when my clients hit multimillion dollar profitability, not just revenue. I can say, We, I looked back through our book of business a few months ago and I was like, wow, this guy now is a multimillionaire in assets. You know, this one's there, this one's there. And that is super, super cool. Super fun. Yeah. That's so, that's, that's life changing. Life changing. Absolutely. It's generation changing, right? That's true. I wish I was a part of their family. I know. I'm putting out application. Like, can I apply to be adopted by you? ⁓ cause you have a pretty amazing financial situation going on. Totally. So that's another thing is if you're one of those and you want either Jessica or I to be a family member, leave it to us. We're very open to that. Yes. We're taking opening our calendars for discussions. That's right. Anytime. So, all right, Jessica. Thank you. Thank you. Thank you. We'll talk soon. All right. That's it for today's episode of Un-Fuck Your Legal Marketing. If you got a spark of inspiration, learned something new, or at least got a good laugh, make sure to follow, rate, and Share this with someone who needs to hear it. Thanks for hanging out with me and remember, the best marketing is the one that actually sounds like you. See you next time.