Many people consider pay per click to be the silver bullet for rapid home improvement business growth.
As a marketing agency that specializes in running Google & Facebook ads for contractors, even we’re guilty of it at times.
And while it definitely can be a huge driver of growth for your business (read how this roofing company gets 300+ leads per month with PPC), the truth is you’ll only deem PPC successful if it meets your expectations.
In order for that to happen, you need to have the right expectations to begin with. So in this post, I’m going to spill the truth about PPC and let you in on the things you need to be thinking about before getting started.
By the end, you’ll know without a doubt if it’s the right marketing strategy for your business, or if you’re better off investing your budget elsewhere.
The secret to getting PPC results you’re happy with
When speaking with prospects to try and determine if they’re a good fit for pay per click, we always figure out what their expectations are first.
What are they looking to achieve with their marketing? What’s their end goal?
Do they want 10 new leads per week? Is it 20? Is it 50?
Do they want us to send them enough leads to book 10 new jobs per month? 20 jobs?
Do they want enough leads to allow them to double their revenues from $5 Million to $10 Million in the next 2 years?
All of these expectations are different, and while some may seem more difficult than others (ie: doubling revenue from $5 million to $10 million versus 10 new leads per week), it’s impossible to say which is tougher to achieve without having the complete picture.
For example, the business looking to double their yearly revenue might have a high five-figure monthly marketing budget, a perfected sales process, and a high average sale price which would make it fairly easy to achieve.
On the other hand, if the business that wants 20 new leads per week has a monthly marketing budget of $200, it’s not going to happen.
The amount of times we’ve had contractors tell us they want a certain outcome but have nowhere near the marketing budget, sales process, or team to make it happen is just too damn high!
If you want to double your yearly revenue, you need to set aside a marketing budget that is big enough to make that happen.
And if you just want 10 leads per week,you still need a marketing budget that is big enough to make that happen!
It’s all about aligning your actions with your expectations, and that starts with knowing the underlying math behind contractor PPC and how it all works.
Let’s look at a quick example…
The math behind successful PPC campaigns for contractors
For simplicity’s sake, I’ve left profit out of the equation, but you can get a more complete picture in my blog post that goes in depth on pay per click for contractors.
Say a roofing contractor wants to increase revenue by $1,000,000 over a certain period of time, and that the average sale he makes generates $10,000 in revenue.
That means he needs to take on 100 additional jobs ($10,000 * 100 = $1,000,000).
From experience, he knows he needs to speak to 5 prospects in order to close one job.
Note: Many contractors overestimate their sales closing rate because they’re used to referral and word of mouth leads, which usually close at a higher rate. Always be conservative when estimating your closing rate from online leads. Our average customer closes 15-20% of their PPC leads, with a select few that have mastered their sales process closing 40%+. Read up on contractor sales tips here if you struggle with converting leads into sales.
Therefore, he’ll need 500 leads to close 100 new jobs (5 * 100).
Armed with this knowledge, all he needs to do is determine what ONE lead will cost him on average, which can easily be done by running a few test campaigns on Google over a month or so.
From there, he can simply multiply his cost per lead by 500 to see how much it would cost him to generate all the leads he needs to book 100 new jobs, and thus increase his revenue by $1,000,000.
That magic number—his cost per lead multiplied by 500—is his required marketing budget to meet his expectations of adding $1,000,000 in new revenue.
If he spends less than that amount, he’ll probably fall short of his goal to book 100 new jobs.
If he spends more than that amount, he’ll likely exceed his expectations.
Over time, he can also do things to reduce his cost per lead, like:
- Improve click-through rates and quality scores to lower cost per clicks
- Test different landing pages to improve conversion rates
- Mix in retargeting on Google Display, YouTube, and Facebook to convert a higher percentage of website traffic into new leads
On the other hand, he can also work on his sales and lead nurturing process to bump up his closing rate, which can have a significant impact on his overall results.
Unless he aligns his actions (ie: his marketing budget, sales process, etc.) to his expectations (ie: booking 100 new jobs and generating $1,000,000 in new revenue), then he’ll most likely be disappointed!
A quick rant on marketing budgets
Hopefully this is making sense so far.
No matter who you hire to run your PPC campaigns, the results they generate for you are directly related to the amount of advertising budget you allow them to spend.
Yes, their job is to generate the best results possible by manipulating things like cost per click, click-through rate, landing page conversion rate, etc.
But in the end, your marketing budget really is the fuel to your fire.
The question becomes, how big a fire do you want?
When setting their PPC budgets, many home improvement businesses use some arbitrary rule where they invest X% of their revenue into marketing for the year.
If you do it that way, that’s cool. Just remember that if you’re currently at $10 million per year in revenue and want to get to $20 million per year, you need to invest like a $20 million business, not a $10 million business.
In other words, what got you here won’t get you there.
Besides, if the numbers make sense, then it makes sense to continue adding fuel to your fire.
So there you have it…
The key to seeing success with pay per click as a contractor really comes down to expectations.
If you know your important metrics like average selling price, cost per lead, closing rate, and essentially your cost to acquire a new customer, you can easily determine how much budget you need to hit your revenue goals.
Invest too little with respect to your revenue goal, and you’ll fall short.
Invest too much, and you might have trouble delivering on all the work.
But if there’s one thing we’ve learned from working with contractors over the years, it’s that they rather have too much business to handle than crews stuck twiddling their thumbs.
Looking to grow your home improvement business this year? Book a 15-minute demo of our contractor marketing system to learn more about how we can help you hit your revenue goals.