Debunking Lead Cost for Maximum Growth

Since 2012, we’ve spent millions of dollars helping contractors across North America generate hundreds of thousands of quality, profitable leads.

So without sounding too full of ourselves, it’s safe to say our team of paid advertising specialists have the ins and outs of lead cost down to a science. And we’re not here to gatekeep.

The differentiating factor of contractors who scale to 8 figures and beyond?

They know their customer acquisition cost.

In order to have the most effective lead generation strategy, you need to know exactly how much it costs for you to acquire a new customer. It will vary across networks, market locations, and service offerings.

Facing your customer acquisition cost may sound intimidating, depending on how your marketing investments are performing. But rest assured, the heaviest hitters in the contracting industry are routinely evaluating their lead price tag.

And your business will be in a much better position to strategize next moves for industry success once you’ve uncovered the true cost of getting a homeowner through the door.

It all starts with knowing your average lead cost.

We’re demystifying the elusive lead cost by sharing just how much companies pay for exclusive leads based on industry and network. Plus, we’ll take a deep dive into everything else that goes on behind the scenes in keeping lead costs under control and profitability high.

In order to generate the highest quality leads for contractors, we concentrate our online advertising efforts on three main networks – Facebook, Google, and Bing.

Online paid ads are a much more measurable and controllable marketing channel. This is crucial for being able to track which networks are bringing your business the best return – easily calculating cost per lead.

Cost per lead (CPL) is the investment required to generate each new lead through our online advertising campaigns.

A friendly reminder that these numbers are based on a variety of different factors, like location and marketing budget, and shouldn’t be interpreted as an ‘ideal’ or ‘perfect’ cost per lead. Rather, these numbers help illustrate how broadly cost per lead can vary throughout the industry.

We recognize that our leads are more expensive than the industry average. For example, some agencies spend $15 -20 dollars to generate roofing leads on Facebook.

But hear us out.

The leads we generate are much higher quality, which tend to have higher closing rates and larger budgets. This enables our clients to scale more consistently and profitably than competitors who acquire leads as cheaply as possible.

Our addition of landing pages also optimizes the caliber of leads, since they persuade users to fill out contact forms in greater detail (ie. full name, phone number, address, project details, etc.). Versus a platform such as Facebook, where auto-fill forms are used and leads can easily submit bogus information.

And bogus leads certainly won’t generate any return on marketing investments.

With some time, experimenting, and campaign optimization, we’re able to work with our clients to deploy targeted paid ads to help reduce costs and generate a consistent influx of leads. Here are some of the ways our campaigns reduce lead cost;

There are also a variety of influencing factors from the contractor’s side of things that will impact lead costs. This includes;

And what many folks don’t know is that CPL isn’t the only metric that impacts your ability to be as profitable as possible.

There are other numbers, when considered in conjunction with cost per lead, that can help your business scale. This includes closing rates, profit margins, and ticket prices.

Your marketing budget will also play a pivotal role in the outcome of lead cost, as it will influence where and how you run your ads.

Needless to say, in order to capture profitable leads, there are other business factors that should be in place to facilitate those cuts in costs. Solely focusing on generating cheap leads won’t build a sustainable lead generation strategy for years to come.

We suggest approaching lead costs with ‘big picture’ thinking to unlock greater growth and revenue potential.

We can’t discuss lead cost without talking lead aggregators. After all, they’re a powerful source of leads for lots of folks in the industry. In a nutshell, lead aggregators act as middle man between homeowners and contractors, bridging the lead generation gap.

Homeowners visit a lead aggregator website looking for home remodelers/contractors in their area. They enter some classifying information such as project, location, budget, timeline, and most importantly, contact details. The lead aggregator then populates a list of local service providers who may be a good fit for the job.

Simultaneously, the lead aggregator also sells those same leads to paying contractors.

First glance, it’s a pretty straightforward and stress free process. Rather than investing and overseeing various marketing campaigns, contractors simply pay the lead aggregators for qualified leads, and that’s it. Transaction, complete.

However, upon closer inspection, there are a few drawbacks when taking the lead aggregator route. Most notably, leads sourced from an aggregator aren’t exclusive to your business.

Infact, one lead may be sold upwards to 12 times to vying contractors.

Oftentimes, this results in homeowners being bombarded via call, text, and email. As a result, shifting the power dynamic and giving homeowners the upper hand – usually selecting the winning contractor based on the cheapest price tag.

Good news for the homeowner, definitely. For your long term growth? Not quite. Lead aggregators will likely cost more time and more dollars than you ever anticipated in the first place.

Lead aggregators may be appropriate for where your business is today, but they shouldn’t be used as a long term solution. How do they stack up to paid ads?

For starters, paid ads generate leads for your business and your business only. Plus, they help you foster brand awareness and build a name for yourself in the local market. This results in dividends over time as people see your name, your team, even your trucks – so they’re much more likely to think of you when they need your services.

These are positive influences on closing rates and customer acquisition costs, which will have a direct impact on your CPL and ability to scale as profitably as possible. Unfortunately, the same can’t be said for lead aggregators.

Lead cost is important, but it’s just one piece of a much larger puzzle.

Infact, we have some customers who operate in uber competitive markets where they pay upwards to $400 for their leads. They compensate for their high lead cost with increased closing rates, higher ticket prices, upselling, referrals, and repeat business.

It’s all about tracking the right things and making sure the math works – not obsessing over lead cost.

Rather than solely focusing on acquiring the cheapest leads possible, the most successful home remodelers accept that generating profitable leads comes at an upfront cost. Once those higher quality leads are generated, however, contractors can build upon that momentum and leverage a proven system to unlock game changing potential.