According to the survey, the typical practice spent US$1 on marketing to bring in US$1.20 in new client revenue, for a marketing efficiency metric of 1.2. While it was just 0.8 for practices with revenues of US$1.5 million or more, marketing efficiency was 2.5 for practices with less than US$250,000 in revenue.
The Kitces Research reveals dependence on strategies that are difficult to scale results in rising expenses and declining efficiency as practices expand, either because of the time advisors must devote to clients or the limited options for such strategies offer.
“These results highlight the importance of evolving marketing tactics as the practice grows,” the study said.
The study discovered that many counselors might not fully comprehend a tactic’s costs and results. While SEO produced the highest return in new client revenue versus cost to implement among all the tactics studied, just 29% of practices said they deployed SEO. The second most efficient tactic, drip marketing was used by only 20% of practices. In contrast, 93% of practices said they rely on client referrals, even though the tactic doesn’t scale well, eats into an advisor’s valuable time, and can only be relied on so many times as each client will only refer an acquaintance so often.
