Video Transcript
So you're running a home service business, and there are a million different marketing metrics that you could be focusing on, but you're wondering what are the top metrics that are actually gonna give you a good bang for your buck that are actually gonna make a difference for you to pay attention to. So in this video, we're gonna talk about the seven top marketing metrics for HVAC business owners to look at. And the first one we're gonna look at is cost per lead or CPL. Cost per lead is just a really good basic metric to track across your different lead sources.
Some lead sources are gonna be better quality. Some are gonna be worse quality. And the cost per lead doesn't always make sense with the lead quality that you're getting from those lead sources. So tracking cost per lead in addition to the other items we're gonna talk about is super important.
and number two is the set rate. Now set rate is the number of your raw leads that are turning from leads into set appointments. Because if you just get somebody's basic information, but you're never able to set an appointment and get in the home with that homeowner, it's not really gonna do you much good. So how do you actually practically use this metric to apply to your marketing and get better ROI?
Two things you're gonna compare set rate by CSR, so the person taking the call or making the call out to the lead, and you're also gonna compare set rate by lead source. Looking at the set rate by CSR, you might find that some CSRs are booking thirty percent of your leads, and some CSRs are booking thirty eight percent of your leads on average. And it'll just give you a better idea of who's really performing in your call center, and it gives you something to track so that you can work on improving that metric over time for all your lead sources. Then you also wanna compare the set rate by lead source because lead source A, you might get really cheap leads and then find that your set rate is only about ten percent, where lead source B, you might get more expensive leads, but they might be a lot higher quality, and you might book, you know, forty five percent of those leads.
So comparing by lead source just helps give you a little bit of a gauge of how high quality those leads are. Close rate is just saying we got, you know, three appointments on the calendar. We closed one of them into a sale. That means we have a thirty three percent close rate.
And then similarly with set rate, you wanna track the close rate by the representative that's going out there so you can see who's performing well, who's not. And then also, you want to compare that by the different lead sources so you can see who's getting you the best lead quality. Next, you're gonna look at cost per acquisition or CPA. So if you spent, let's say, four grand on a marketing source over the period of a couple months and you sold, you know, let's say ten jobs out of that, then your cost per acquisition for all those sold jobs would be four hundred dollars each.
This is important to know so that you can work your cost per acquisition into your pricing model to make sure that your business can sustain itself and sustain its own marketing while still being profitable. Number five is the upsell rate. Now upsell rate is when you have a customer that initially calls you out for a tune up or repair, then they end up going with a full system replacement. A lot of the repair calls or maintenance calls that your technicians are gonna run are just gonna be a better, more cost effective deal for the customer to get a replacement than to do that repair.
So knowing what that upsell percentage is can help you make much smarter marketing decisions, and here's why. So you might find that your repair leads are coming in for twenty dollars apiece, and your replacement leads are coming in for about one hundred dollars apiece. Alright? And on those repair leads, you know, you might sell, let's say, one out of every ten, you know, opt in for a full replacement.
Right? So that means that your cost per acquisition is only two hundred dollars when you're buying repair leads.
However, your replacement leads, you might find that you book fifty percent of those, so you're at two hundred dollars per appointment. Maybe you close, you know, every three of those. So that would be a six hundred dollars cost per acquisition. So what you can do then, if you know those numbers and you're confident in the math, then what you can do is put all your money on repair leads so that you kind of have a backdoor and a competitive edge in your market versus only spending money on the replacements.
Number six is ROI or return on investment. So ROI is pretty simple. Basically, let's say you spend one dollar on marketing and you get ten dollars in revenue on average, that means you have a ten times return on investment. Marketing spend is how much of your revenue you decide to spend on marketing.
So if you're doing a million bucks a year and you spend a hundred k in marketing, that would be a ten percent marketing spend. Now on the bat, it sounds like the exact same thing, but it is completely different. As your business grows, you're gonna get a lot of revenue coming in from your referrals, from just kind of your brand awareness, from just people starting to recognize you everywhere, and you'll kind of build this book of business of loyal customers. So this is from your book of business, and then on top of that, you might spend some money on marketing, and that's the return on investment you got for your marketing.
So in this example, let's say seven hundred k was from your book of business and referrals and stuff like that, and three hundred ks was from your marketing. And let's say you spend about fifty k for your marketing. So to spend fifty k to make that million dollars, that means that you had a marketing spend of five. Percent.
However, the actual revenue that was generated from that marketing spend was only three hundred thousand dollars, so you actually had a six times ROI on the marketing spend. Now the reason it's so important to make that distinction is because a lot of professionals will recommend, oh, you wanna have a five percent or a ten percent marketing spend for growth. So contractors get stuck because they think a five percent marketing spend means a twenty times ROI, and then they'll keep looking around for marketing sources that can provide a twenty times ROI, which is really, really difficult. Which
in reality, like what you just saw with a six times ROI, if your book of business was, you know, seven hundred k on top of that, then you would still be at a five percent marketing spend even though it's only a six times ROI. And a lot of times, even with a smaller marketing ROI, a lot of those people will turn into extra referrals and extra growth and extra brand recognition for your business over time. So that stable, steady book of business also starts to grow over time. And then lastly, we have average ticket.
Average ticket is just on the average call that your technician runs or the average replacement job that you do, what is the average amount of revenue that you generate per customer. Average ticket is really nice for making marketing projections. So if you are signing on with a new lead source, and they say, hey, we can get you, you know, two hundred leads a month at sixty bucks per lead, something like that. If you go back and you look at your average ticket, you look at your typical set rate, you look at your, you know, typical cost per lead, then you can do the math.
You can say, alright, two hundred leads times, you know, thirty percent set rate times such and such close rate, and this is my average ticket, so this should result in about this amount of revenue. And you can also play with the numbers a little bit and give yourself a range, but knowing your average ticket per replacement job or per repair job is really good so that you can plan your marketing accordingly and make a really good educated guess on how profitable a new marketing source is gonna be for you. So there you have it. Those are my seven recommended KPIs for HVAC contractors to track.
I hope you got something from this video, and if you did, please like, comment, and subscribe. There's gonna be a lot more coming. Thank you.
Resources Mentioned
- N/A
