What seems obvious isn’t always right
If you ask owners of other home services businesses how much they’re spending on pay-per-click advertising, the immediate answer you’re likely to receive is “too much!” It’s hard to disagree, especially given the fact that PPC costs for many of the keywords that matter most have been going through the proverbial roof and are headed skyward. As each lead received from your PPC efforts gets more costly, the pressure on your margins increases.
It’s now about how much you spend …
… it’s how you spend it. Before you can determine whether your company is buying the PPC that represents your best investment in growing your business, you need to have a clear picture of how much every lead you’re generating costs you. It’s impossible to make the most cost-effective marketing choices if you don’t have a realistic understanding of the costs.
Do you know the right search terms?
Because the competition for the most obvious search terms is intense, the PPC costs for those terms is increasing the most. For example, a plumbing contractor might choose to bid on “plumber near me” or “Springfield plumber,” both of which are likely to be extremely costly because of the demand. A phrase like “sewer repair near me” will likely be cheaper because it may not produce as many leads – but more of those leads are likely to become appointments, with a bigger ticket.
Conversion is the key
You see, raw numbers of leads are less important than high conversion numbers. You can pay to have thousands of leads arrive every month, but if your customer service representatives (CSRs) or whoever answers your phone only manage to turn a tiny fraction into booked appointments, most of those leads will be wasted – along with the money you spent to obtain them. Yet far too many of your peers are focused on accumulating as many leads as they can and ignoring what happens when they come in the door. By choosing search terms more carefully and improving your rate of conversion, you can spend less money on leads while generating more business.
Here’s a real-world example
Take an HVAC contractor who receives 1,254 leads to service customer equipment. Historically, the contractor’s CSRs have been able to turn 65% of the service leads into booked calls, with a completed job rate of 95% and an average repair ticket of $564. That gives the contractor 774 service jobs for $436,731 in revenue. The CSRs are less successful with equipment leads, booking just 55% with a 75% completion rate producing 142 completed jobs at an average of $12,874. Total overall revenue is just about $2.3 million.
If the CSRs receive training that bumps their service booking rate up just five percentage points to 70% and equipment up to 65%, total revenue jumps to $2.6 million. In other words, a small increase in conversion adds a big $366,709 to the bottom line.
So how do you choose?
The better you track the four key performance indicators (KPIs) that are crucial to success in the home service industry – the actual cost of leads, the percentage you’re able to convert into booked calls, the percentage of those calls customers cancel, and your average revenue per job – the more precise your investment in PPC will become. We help our clients concentrate PPC investments to generate more potentially high-profit leads.
Your forecasting will also improve
Those same KPIs will dramatically improve your ability to forecast future business, so you can staff and budget with greater confidence. You’ll be able to predict sales growth and identify how many hires you’ll need to handle the new level of business. You’ll have solid evidence of which of your employees contributes the most to your company’s profitability and which may need some extra lessons in customer service and cross-selling.
Just sharing what we know
Knowledge and proven strategies like these are how Cornerstone has helped home services companies throughout the U.S. and Canada achieve growth their owners didn’t believe was possible. We’ve shared this and 11 other critical questions to help you determine whether your marketing is an effective investment or a frustrating expense in our white paper: “12 questions to assess your marketing’s efficiency … with answers that can supercharge your marketing ROI.” You can access it here.