Marketing KPI’s – What Gets Measured, Gets Improved

There’s a popular phrase going around these days that you may have heard; “Whoever can spend the most to acquire a customer wins.” I mostly agree. What I disagree with is blindly spending money on marketing without measuring its success. I’d actually prefer the phrase, “whoever can responsibly spend the most on marketing wins.” 

Successfully marketing your home service business comes down to three elements. 

1. Brand awareness and the perception of your brand: People that know, like and trust your brand will be more likely to click on your listing.
2. Reviews: Online reviews are the #1 buying signal for most consumers.
3. Ranking: If your business doesn’t show up, there’s nothing for the customer to click on.

Winning online comes down to these three items. Each one is a critical component, independent from the other two with all of them working together to increase traffic, leads and sales. There is a direct correlation between brand awareness, reviews, rankings and conversion rates. After millions of dollars in ad spend managed and impressions analyzed, it is clear that any one of these items will help increase marketing efficiency with all three being the key to truly dominating your competition. 

What is a marketing funnel? Every business may have a slight variation of their funnel depending on your services buying cycle, seasonality, medias you’re advertising, price and customer urgency. 

Your marketing Funnel can be looked at in a few different ways. 

• Hot, warm, cold
• A.I.D.A. (Attention, Interest, Desire, Action)

Cold leads are typically generated from boots on the ground marketing. Some examples are door hangers, clip flyers and  yard signs. These leads are created. The customer isn’t looking for your service specifically, but they see a deal or an offer that excites them and creates the desire to learn more. 

Warm leads are in the middle of your funnel. These are leads from people who are interested in your service but not quite ready to buy. Direct mail is the best example of a warm, middle of funnel lead type. Examples include marriage mailers such as ValPak, RSVP or City Publications. When a homeowner opens coupon mailers, their brains are actively looking for a deal. You’re still creating the demand by being there, but the shopper is actively looking for something they need or want. 

Hot leads are at the bottom of your funnel. These are customers in the desire phase and are ready to buy now. These are Google, Bing, Home Advisor, AngiLeads, Thumbtack, Yelp and every place consumers are actively looking for a service.

When spending your marketing dollars, your goal is to start with the easy wins, the low hanging fruit. This is typically your existing database, key B2B prospects and high ticket prospects. Once you max your spend here, move from the bottom of your funnel up. Since it costs more to create demand than it does to capture it, you want to focus your initial marketing dollars where people are looking. 

Begin by answering these questions for your existing database:

1. When should I be marketing to my existing customers?
2. How should I be marketing to my existing customers? (phone, email, postcard)
3. Do I need to include any offers or promotions in my offers?

Next is your bottom of funnel or hot leads. 

1. Where have I had the most historical success and how much can I “responsibly” spend there? This is typically Google Ads and Local Service Ads, Bing Ads, SEO and your 3rd party lead aggregators (AngiLeads, Yelp, Thumbtack, etc.)
2. Where else are people looking? Ask your local community for suggestions on where they are looking for service providers. If you haven’t tried something, test in the spring when demand is at its peak.
3. Remember to include your management as spend. Management does count when considering the upcoming marketing KPIs

Middle of the funnel: Here is where you start to look at look-alike audiences, pattern disruption marketing and getting more impressions of your brand where your customers are most likely to be shopping and spending their time online.

1. Identify your current customer avatar. Who is your current customer and what are their habits?
2. Run this report: Revenue by zip code & number of jobs completed by zip code. This will tell you where to advertise. 
3. Start with a penetration rate of 5% of qualified households. A qualified household is typically a household with an annual income above $100,000.
4. Ideas for mid funnel marketing: Facebook posts & ads, direct mail, EDDM, Home shows, referral programs.

Finally is the bottom of the funnel which is arguably the most important due the wide variety of low cost options. BOGS marketing or as my friend Patrick Clark with Precision Pro Wash calls it, GOYA (Get Off Your Ass) marketing is something brand new businesses dominate then stop once things get sustainable. Huge mistake! Of course branding and bottom of funnel can cost a ton. Think radio, television commercials, billboards. I don’t know about you, but I’ve never been on my daily commute to the office and said to myself, “man I really hope to see a new plumbing billboard on my way to the office today.”

Top of the funnel’s job is to send people down. The best way to get action on the way down is to raise awareness of your brand. Like I said before, there is a direct correlation between brand awareness and conversions. This is why.

Here we go. The Marketing Metrics that matter most and how to track them.

1. Cost Per Lead (C.P.L.) By Lead Source: This metric may be the most important of all marketing KPIs. Cost Per Lead or CPL is the metric that determines the effectiveness of a media and the offer. As previously mentioned, brand awareness, reviews and impressions are critical components when measuring success. If your brand is know, you have reviews and show up, your conversion rates will be increased. A.K.A. You Will Get More Leads!
2. Cost Per Acquisition (C.P.A.) By Lead Source: CPA and Closing percentage is the same metric. The only difference is one is a ($) amount and the other is a (%) percentage. CPA is the marketing metric due to its ability to calculate how much you’re paying to acquire a customer. With both CPL and CPA, it’s important to segment leads and customers by source. Some medias will absolutely dominate and others will be terrible. Marketing’s job is to know the winners and losers. 
3. Marketing spend to sales ratio.
4. Website conversion rate By Source: A conversion can be any metric you want to measure on your website. The key metrics would be calls and/or form submissions divided by traffic. You divide these by source and overall to know which lead sources are performing the best. From here you can either emphasize the better traffic more to find the point of diminishing returns OR optimize traffic coming from the underperforming sources.
5. Banded search queries: This metric is directly related to your brand awareness and perception. Over the past 10+ years of analyzing home service businesses all over the world, I can say with absolute certainty that there is a direct and significant correlation between brand awareness, searches, impressions and conversion rates. The more people who know, like and trust your brand, the more leads you will get. 
6. % work orders to online reviews: Online reviews paired with brand awareness is the fast lane to dominating conversion rates. When people know your brand and you have reviews, your chances of at least getting the click go up exponentially. 
7. Ranking & impressions by source: If you don’t rank, you can’t get a click. There are several places to rank online. Google Ads, Google Local Service Ads, Google My Business, Organic placement, 3rd party lead aggregators are some examples. You’ve got the play the game if you want to win. Start with the bottom of the funnel / easy wins, build reputation through reviews, then start working your way up the funnel.

Marketing KPIs are one of the most overlooked metrics in most home service businesses. This is due to both lack of marketing spend along with the complexity of segmenting lead sources to know exactly what’s causing a click and a lead. If you ever need help learning the best practices for tracking leads and marketing, fill out our form and schedule a free consultation call. We look forward to helping small business owners wake up and crush it every day.

Comment below if you’d like more information about any of the metrics mentioned and we’ll respond 🙂

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