5 Things to Get Right Before You Scale Your Marketing
Does this sound familiar?
You're a growing HVAC and/or Plumbing company. You're looking for a good partner to do your marketing. Anyone who can generate leads really. But it seems like no matter who you go with, you end up wasting a lot of time and money. The leads are no good and you don't recover your marketing investment.
I talk to so many HVAC & plumbing contractors who run into this exact problem! And guess what? Most of the blame should be on the marketing companies. But not for the reasons you might think.
The reason I say most of the blame should be on the marketing companies is because of how they sell you.
Almost every marketing company out there claims to have the best mouse trap. "Yes, we do SEO and PPC, but ours is better for the following reasons..."
But don't worry - there's hope!
In the rest of this article I'm going to show you exactly how to get your marketing to work for you without wasting another dime!
So don't get me wrong - some marketing companies are truly better than others. But to know with certainty what's working best for you, there's a few things you need to get right first. And if you pull it off, you'll completely transform the way you do business.
Let's start by looking at two fictional HVAC companies that use the same fictional marketing company; Company A & Company B.
And let's look at the metrics on these two companies for their marketed sales leads (not leads that come in through referrals.)
Monthly Marketing Spend: $2000
Avg. CPL: $100
Avg. Booking Rate: 17%
Avg. Close Rate on Marketed Leads: 20%
Avg. Changeout Ticket: $6200
Avg. Flat Rate per Changeout: $500
Avg. Equipment Cost: $2400
Avg. Sales Commission (7.5%): $465
Avg. Financing Fees (3%): $186
Avg. Gross Profit Per Changeout: $2649
Avg. Referral Rate: 10%
Here is what an annual projection looks like for Company A based on those numbers (as an average, not accounting for seasonality:)
Not too good! Company A is losing money every month on marketing and only getting a new change out about once every two months.
Now let's look at Company B:
Monthly Marketing Spend: $2000
Avg. CPL: $100
Avg. Booking Rate: 43%
Avg. Close Rate on Marketed Leads: 27%
Avg. Changeout Ticket: $9100
Avg. Flat Rate per Changeout: $600
Avg. Equipment Cost: $3300
Avg. Sales Commission (10%): $910
Avg. Financing Fees (3%): $273
Avg. Gross Profit Per Changeout: $4017
Avg. Referral Rate: 30%
Company B is performing far better than Company A, adding about $250k in sales in a year with $24k in marketing.
If you're like me, and you hear that you're supposed to get 10X revenue to marketing dollars spent, the first thing you'll do is go and look for a marketing company who can go get you those returns. I mean switching your marketing company is the easiest thing to do. However, when you look at the numbers, you can see that the marketing company (while an important factor) is only about 1/4th of the whole story.
You'll also notice that Company B pay their techs more. Paying your techs more allows you to find better quality workers, and that's part of the reason why Company A has about 1-2 referrals per year while Company B has 8-9.
Just for fun, let's see what happens when Company B starts spending more on marketing.
Now Company B is adding $1mil every 12 months from their advertising, profitably, while they build up their database of loyal customers!
(side note: see how Russell's added over $1mil in sales from directly tracked 7XDirect leads in 8 months here)
With all that in consideration, the 5 things to get right before you scale your marketing are:
1. Make Sure Your Expectations Are Right. If you're a newer HVAC company, you probably shouldn't expect to be able to scale your marketing and get a 10X return. While it's possible, realize that until you get your booking rate, closing rate, average ticket, and referral rates up, you won't be able to get the same returns from marketing as other companies. Even if you work with a GREAT marketing partner.
2. Understand What 10X Return Means. I worked with a small contractor once who was expecting to get a 20X return on his marketing dollars. The mistake he was making was dividing TOTAL REVENUE (from referrals and all) by his current marketing spend and arriving at 5%.
That makes no sense, and here's why (to use an extreme example); imagine having $25k/mo in recurring revenue from a loyal customer base, and then deciding to spend $250 on marketing per month. You wouldn't say "Oh! My marketing is 1% of my revenue, so I should expect to get 100X returns on any marketing I do."
To contrast, bigger companies who know their numbers know how to get a 5X return on their marketing and still be profitable. They fully understand their metrics and know how many referrals, maintenance agreements, additional services, etc. they will get from those new customers. And they price their jobs to allow for this.
Know your numbers!
3. Fix Your Booking Process. Marketed leads from Home Advisor, Networx, marketing agencies etc. require a LOT of follow up. Maybe it's not your fault; you've probably heard over and over again from someone "if they don't pick up after 2 or 3 calls, they aren't interested." That's simply not true and here's how I know that: I see about 25% of our clients leads get booked through TEXT. Even after multiple repeated calls.
To stay competitive and book as many leads as possible, you've got to follow up FAST, follow up OFTEN, and follow up EVERYWHERE.
FAST means within 2-5 minutes.
OFTEN means 10 contacts, minimum.
EVERYWHERE means calls, emails AND texts.
Read more HERE about improving your booking rates:
4. Fix Your Average Ticket. So crucial. If you're making less than $1000 in gross profit on a new install, you may be able to survive as a one-man show, but you will never be able to scale with marketing.
If that made you mad, let me just tell you I get it. I understand. You're probably like one of the many contractors I've talked to who started their own business because of how dishonorable and deplorable the BIG company they worked for was. And that big company also had high prices. So I applaud you for wanting to be different.
But let me ask you a question...
You believe your business is BETTER, right?
You believe your business treats your customers better?
Treats your employees better?
Doesn't use high pressure sales?
Doesn't use deceptive and dishonorable tactics?
If that's true, why in the world should you feel guilty about charging more?
Because if you're doing good things, you SHOULD want to compete with the bad companies! You should want to survive and you should want to grow.
Also, as some huge side bonuses...
- Charging more allows you to pay more for better techs
- Charging more allows you to deliver better customer service
- Charging more allows you to offer warranties for your customer's peace of mind
And the list goes on.
If you go back and look at the first projection spreadsheet, you'll see that having a higher ticket price fixes the return on marketing investment IMMEDIATELY.
5. Get Better at Closing. Stop emailing customers the quote several days later. That might work with referrals, but NOT with marketed leads. Get a tablet, and do the quote, do the financing, do everything right their on the spot.
Before you even go out to the call, ask that both husband and wife will be home and ask permission to ask for the sale the same day.
And for goodness sake... pick up a copy of Consistency Selling by Weldon Long so you can fix this process forever.
I know it's a lot. At 7X, we work with you on these things in more depth and deliver fresh replacement leads every week at the same time. You can set up a strategy call here.
Alternatively, read more here:
Happy Heating & Cooling!