• Too often contractors use “gut feelings” to make business decisions when their own data is all they need to determine what marketing initiatives are making them money. To know how successful your marketing efforts are, it’s important to track your home improvement return on investment — that is, how much you make vs. how much you spend.
  • To calculate your marketing cost, add your own data into this formula:
  • Now let’s see that same formula with example data:

  • There is no “right” marketing cost number — try a variety of tactics to get an idea of what a good marketing cost is for you. However, if you have a marketing cost that is greater than 25%, then you should re-evaluate your marketing strategy.
  • Agents often incorrectly focus purely on closing ratio and contact ratio. While these metrics do demonstrate the relative quality of leads, it does not take into consideration the cost of obtaining those Home Improvement Leads in the first place. A higher closing ratio definitely helps and saves you time, but the chart below demonstrates a scenario where a lower closing rate lead can actually out-perform when viewing marketing cost as your metric for success:
  • That being said, contractors are also making a mistake if they only consider price when choosing an online lead company. Price is only part of the equation when determining whether or not leads are profitable. After all, it’s no good to get a lot of cheap leads if not enough are converting into sales. Price AND quality AND return (commissions) work together to determine the best value.
  • Don’t get discouraged because your initial leads didn’t convert — look at at the big picture! Before calculating your marketing cost you need to have statistically significant data. We recommend at least 100 leads to really get an accurate presentation of how a company’s leads will work for you.

What do you think about this tip? Do you have one to add? Email your comments and suggestions to: support@homeimprovementleads.com