Owning a plumbing or HVAC business can be exceedingly rewarding, but it also comes with its share of frustrations.
You’re spending money on marketing. Your phone’s ringing. But are those leads actually making you money? In this guide, I’ll show you how to calculate the true value of each HVAC or plumbing lead—and how to make smarter decisions that boost your ROI.
I’ve spent enough time with shops like yours to know that marketing is usually near the top of the “stuff I wish I didn’t have to deal with” list. But, as you know, it’s a necessary evil:
Although there are lots of “ifs” that come with that logic, no one argues with it.
Assuming you have all of those “ifs” under control, what you find yourself arguing over is what it costs to set it all in motion .
It’s perfectly reasonable to raise an eyebrow at pricey marketing suggestions. After all, if you’re spending a trillion dollars on marketing and only bringing in a billion dollars in work, that’s problematic. The trick is to have a marketing budget that fits your business . That’s easier said than done. But it’s do-able. And it starts with a focus on your leads.
Determining the cost of your HVAC and plumbing leads is easy—if you have a way to keep track of your leads, anyway. Assuming you do, divide your total marketing spend for a particular time period by the total number of leads you got over that same time period. So, if you spent $25,000 on marketing last year and you got 250 leads, your cost per lead is $100.
But here’s the thing: How much leads cost is a different question from how much leads are worth . Sure, your cost per lead might be $100, but the worth, the value, of that lead is many times that amount.
Unfortunately, it’s often difficult to look past the immediate cha-ching of a PPC ad campaign to see the value that investment brings. So let’s take a look at that.
If you want to grow a sustainable HVAC or plumbing business, you’ll have to not only track data but also respond to that data. There are a ton of numbers to deal with and math to do, and while I realize that’s no fun at all, it’s also no fun at all to waste money.Incidentally, if you just can’t imagine spending your time on this, hit that Request Info button on the top right. I enjoy helping plumbing and HVAC contractors make more money, and I do this kind of analysis every day.
Let’s figure the value of your leads for the past six months:
Let me pause right here. If you don’t have a way to collect that data, you’ll need to start there. Every time your phone rings, and every time you leave someone’s home, you should ask, “How’d you hear about us?” There’s simply no other way to know which marketing strategy is working for you.
Here’s the math:
So, why does it matter how much each of your leads is worth? Is it really necessary to keep track of all that data and do all that math?
Absolutely.
By giving sufficient attention to what your leads are worth, you’ll have a much better idea of where to cap certain elements of your marketing strategy. For example, Google Local Services is pay-per-lead. As long as you’re spending less per lead than those leads are worth, that’s a good option for you. But if your per-lead cost is $500 (using our example), you should definitely re-think that approach.
But again, “How much should my leads cost?” is the wrong question. At best, it’s an incomplete question. The most important metric here is how much your leads are worth.
Okay, here’s another way to think about this: Worth is the same thing as profit potential. Let’s say you spend $1000 on stock that’s going to make you $1000. There’s zero profit potential there—zero worth—so the hassle’s unnecessary. If you spend $1000 on stock that’s going to make you $800, that’s definitely not worth it. That’s called going bankrupt in a hurry. I don’t want that to happen to you.
But so many HVAC and plumbing shops are doing just that: spending ridiculous amounts of money for leads that simply aren’t worth it. Let me be specific: Don’t pay for leads to replace thermostats and don’t pay for leads to pull matchbox cars out of toilets.
That said, don’t get too mired in the details. If you’re looking at the value of your Google Ads leads compared to the value of your Angie’s List leads compared to the value of your social media leads, for example, you’re likely going to make less profitable decisions. Here’s why: Worth has a relative value that’s dependent on how much a particular sale brings in. If you’re focusing only on the leads with the absolute highest potential value, you may slash your marketing budget too dramatically on more middle-of-the-road opportunities. Over time, that simply won’t be sustainable.
You probably don’t get nearly as many high-dollar install jobs as you do run-of-the-mill repair jobs, right? So figure out what your tried-and-true, bread-and-butter jobs are, and finagle your lead acquisition strategy to fetch you more of those.
An effective HVAC or plumber marketing strategy narrows the lead cost-worth gap and keeps an eye on your most important key performance indicator (KPI): Customer Acquisition Cost (CAC) or Cost of Acquisition (COA).
Determining your CAC requires significantly less math than figuring the worth of your leads—and it provides more important data than trying to hash out what to spend per lead:
The goal is to keep your CAC as low as possible, and you can do that in a number of ways:
Having a hard time wrapping your head around cost vs. worth? Or do you get that part, but you’re not sure how to implement these ideas to grow your business? You’re not alone. Most HVAC and plumbing contractors feel confused when it comes to marketing, and they feel ripped off when they think about how much money they’ve spent—and how little they have to show for it.
At KickCharge, we’ve developed a proven marketing process to get you the leads, jobs, and revenue you deserve. I’d love to chat more.
Ryan Redding