As professional services firms increase their use of online video the issue of budgeting is coming up with increasing frequency. How should a professional services firm approach the topic?
At Hinge, we find that most firms are open to the topic. They feel that they should be producing video but are not sure of its true value or how to use it effectively — let alone how to budget appropriately.
We’ve recently published an article on the cost of video production which lays out the basics on the cost side. In this post I want to address the benefits side of the equation.
Here are five guidelines for figuring out the benefit side of online video for your firm’s cost benefit analysis:
1. What is the lifetime value of a new client to your firm?
This basic figure is a great place to start. Many firms find that marketing tools that generate new opportunities or get them on the short list have such a financially compelling benefit that their cost is easily justified. What is the average yearly billings for a new client and how long does the average client stay? For many firms, even a single additional client easily justifies a generous video budget.
2. What is the value of a carefully controlled, repeatable message?
Traditionally the only way professional services firms could ensure a consistent message was to write it down. That translated into brochures, qualification packages, emails or websites. But video has proven to be both a more compelling way to tell your story and a medium preferred by more and more purchasers of professional services.
3. What is the value of a referral?
Start by looking at the closing percentage on referrals and the average lifetime value of the resulting client. (See Point #1) If 50% of your referrals turn into new clients that result in $100,000 in new revenue, that referral is worth $50,000 to your firm ($100,000 x 50%)
Once a satisfied client becomes a video case study, they can make many referrals for you with no additional effort. While a video case study may not be as effective as a face-to-face referral, it is accessible 24 hours a day and can be used over and over. That’s efficiency!
4. What is the value of business development time?
Start by calculating the fully loaded cost of a business development person. Then ask yourself how much of what they routinely present could be accomplished in a video presentation. The answer is typically quite a bit. This can be a way to leverage your very best BD people. An analysis by the software as a service firm salesforce.com found that video replaced or extended their business development team by literally dozens of full-time equivalents. Many presentations involve educating prospective clients about the same things. Video not only leverages people, it also results in a more compelling and repeatable presentation.
5. What is the value of a new lead?
Here we are looking at the value of generating additional leads by employing video as part of your marketing mix. Do this calculation by looking at the proportion of new leads that turn into clients. Multiply this by the average lifetime value of a new client. Let’s say 10% of raw leads become clients worth $100,000. That would mean that a new lead would be worth $10,000 in revenue ($100,000 x 10%).
Can video help your firm generate new leads? Indeed it can. For example, emails that link to video are more likely to be opened and have elevated click through rates. Similarly video opens new vistas in content marketing, such as webinars, video case studies, interviews and video blogs. For some firms it also introduces entirely new channels (such as You Tube or other social media) to reach buyers. In short, it both enhances the lead generating capacity of existing channels and opens entirely new ones.
While we have focused on some relatively clear and easy-to-understand benefits, this doesn’t exhaust the possibilities. There can be other more global benefits, including as an enhanced brand image or a more clearly articulated story of your firm.
I hope this list of potential benefits will help you put the cost of video production in context and provide the background information you need to begin calculating a cost benefit analysis for your firm’s video budgeting.