Marketing Survey - Cost Per Lead/Source/Win Rates

Nathan

Marketing Survey

These questions have all been asked before but since were getting ready to enter 2005 I thought I would ask them again.

Source: Where do your leads come from?
Cost per Lead: What is the average cost per leadfor your company?
Win Rates: What are your average win rates?

Please break down the list if possible.

Yellow Pages 5%
Newspaper 70%
Direct Mail 5%
Referrals 10%
Road Sings 5%
Other 5%

Our average cost per lead is $23

Our average win rate is 25%

We are a very new company.
We just started using direct mail and I'm going to be using it a lot more in 2005. We are also tripling our Newspaper advertising in 2005.
I'm hoping to bring our win rate up to 30-33% and our cost per lead will probably increase to $30-35.


Anyone Else?

__________________
Nathan

"He is no fool who gives what he cannot keep to gain that which he cannot lose." - Jim Elliot

Mike Finley

Yellow Pages - 0 - coming out in March
Newspaper 100% service directoy advertising
Direct Mail - 0 - Starting targeting new homeowners first part of the year
Referrals - 0
Road Signs- 0
Other - 0 - Starting door hangers first part of the year

Cost per Lead: What is the average cost per lead for your company? $20.00
Win Rates: What are your average win rates? 15%

Grumpy

I've got allt he numbers in my database but I have to create a report so I will have to get back to you guys in the next few months when I have time. Things are really too busy right now to worry about anything other than the essentials.

I posted my incoming lead numbers recently. i didn't break them down by lead source but I do remember I was closing 36%.

Grumpy

Ok Nate you peaked my interest and I got bored of staring at quickbooks.

I had 106 inquares total. Of those inquaries, I wrote 70 contracts. Of those contracts I sold 30. If you previously remember, my total inquaries was nowhere near 106 just 3 week ago. Alot of crappy inquaries have come in this month... inquaries that I just have no interest in or the customer just isn't serious. That teaches me to cut December Advertising in the future It's flooded with friggin morons.

Tracking all inquaries (mid September through December 10th):
1 from manufacturer referrals
45 from referral services (service magic etc...)
35 from website traffic.
10 were referrals or signs.
The rest unknown.

I haven't computed win rates per referral source yet.

Teetorbilt

Grumpy, don't discount your Decembers. You will need an aggregate of Decembers to gain a profile. December is decidedly a bad month because many people spend a lot of money on Christmas and related holidays....now if you could convince them that a new roof is the perfect present, you'd be walking in tall cotton. P.T. Barnum could have done it.
Back to topic.
Referrals 72%
Directed mail 28% to date.
I have to stress that all are actively managed to appeal to the clientele with which I want to deal.
If given only one option, it would be referrals. Nothing will beat a lead from someone in your own social-economic group.

Mike Finley

Tettorbilt, you suck, I hate you!



Actually I want to be just like you. How much would you charge for me to follow you around for a week?

Grumpy

Teetor, I can't even get in the door, so to speak. Many of these leads die before I can even get a return phone call... It's just absolute crap! I've never experienced anything like this before, then again I also have never tracked each inquiry like I do now. Previously Itracked only confirmed leads.

Mike, the trick to 72% referrals is to wear hawian shirts

Teetorbilt

Mike, There is really nothing to it, all that you have to be is perfect every time. Growing up with my father's level of perfection actually makes it quite easy for me because I can get away with a FEW booboo's in this day and age.
You have to pay for this, about 95% of everything that I do is 'in house' which gives me total control of the finished product.
My guys know what I expect from them and know that I will tear it out if they screw it up, this also affects bonuses which I am pretty liberal with and spiffs which can happen any time that I'm happy with the way that a job is progressing. My guys work hard at making me happy and that make the client happy.
Give your guys enough shirts that they can change them at noon, at least they look clean twice a day.

trekr

Grumpy, How are you generating your web referrals? How much of the traffic that gets to your site is generated by traditional ads (bus. cards etc) and how much is via online searches? Those are pretty impressive online numbers-- congrats!

Grumpy

Search engines, search engines, search engines. Most of my incoming hits can be accounted for meaning they come from a link on another site, which means websites, directories, and search engines. Also meaning very little is from traditional ads (bus cards, flyers etc...)

My whole plan is to be mostly online advertising. I am going to place a small small add next year in the yellow pages, but only so people can find me if they open the book looking for me. I am also going to start direct mail campaigns.

Mike Finley

Grumpy what is your win rate based on every contact? What percentage do you get if you compute it based on every single incoming contact divided by jobs completed?

Grumpy

Last I counted it was 36% sales closing not based by inquaries but based by written estimates. I will not base my closring ratio by inquaries because that would be ludacrise.

Some incoming inquaries have sent e-mails but never return my phone call when I want to set an appoiintment. Some want stucco or some other service I don;t offer. Some are out of my service area.

Mike Finley

I know what you are saying, but I would be interested to know that number if it is easy for you to come up with. My win rate of 15% is based on that type of calculation because at this point I want to know exactly what my advertising is doing. That's the fun of this marketing stuff, you can slice and dice it anyway you want to find out what is really going on. If you can come up with that number I would like to see it, it you can't that is okay.

Grumpy

Mike I posted the numbers http://www.contractortalk.com/showpo...69&postcount=4. Total inquaries, total estimates, total sold. Feel free to computer the math and let me know

Mike Finley

Okay, but the numbers don't add up to what you posted here. That's why I didn't do it already.
I get a gross win rate percentage of 30 solds / 106 total inquires = 28%

Win rate based on estimates 30/70 = 42%

What are the sold win rates out of the individual inquires?
1 from manufacturer referrals
45 from referral services (service magic etc...)
35 from website traffic.
10 were referrals or signs

That is the really powerful info to find out. If you sold for instance 1 out of the 35 website generated leads (2%) and 20 from the 45 referral service leads (44%) that would be good to know.

Grumpy

I agree it would be good to know the break down of each referral source but I have too much on my plate and truthfully at this point can care less. The data is corrupt IMO. Why? Because it is only based on 3 months. This not a full year's cycle. After that point I will have the correct data.

That means lets have this conversation one year from today.

Seriously though I store all my data in a database and next year I intend to have reports spit at me based on a more detailed break down than I posted above. For example I use multiple lead referral services, and I intend to find out which gives me the best bang for my buck. At that point each lead source will be it's own lead source. As it is now I have grouped things for convenience.

ContractorMike

We are certainly looking for other avenues, but at this point we're only using Internet marketing.

We've found that pay-for-performance marketing is the only way to do it. With newspapers, TV and radio, tracking our cost-per-customer and the nested closing rates and all that is a nightmare. I think traditional media provides some good regional targeting, but it can all be accomplished with the internet marketing stuff we're doing, and there are so many more benefits.

Mike Finley

I respectfully would have to say that you are tremendously over-stating the reach of internet based marketing, even if you lump online lead services into it. Out of 100 remodeling jobs that are purchased by homeowners this December how many of them do you think were closed that were purely internet based lead marketing? 5%? Maybe 10% max? That leaves 90% of the customers you could be reaching out of your reach if all you do is Internet based marketing.

I think Internet marketing is easy to do which is the appeal of course that all the lead services use to sell you on them, just sign-up and we will send you the business. However I do not see it as the end all best use of marketing dollars, especially long term, ZERO BRANDING is being done with clicking accept on an internet lead. I see it as the easy use of marketing dollars, but if you have the ability to market in a more traditional way I think you are going to see much bigger benefits, especially right now while the newbies and lazy contractors are using lead services and leaving traditional methods, which is thinning the crowd.

As far as tracking marketing effectiveness, it is as difficult as asking everyone who contacts you how they found you. I can do that and I think just about anybody else can do it too if they are really interested in tracking their marketing.

One thing that is rarely talked about, and I'm not sure if it is because we are scared to bring it to light, or if most using lead services just have no other standard to measure against is the quality of the customers they are generating from the internet. Not all customers are equal in quality and I am generally leaning towards believing that an unusual percentage of internet based customers have negative characteristics in regard to profits, ease of dealing with and a few other things. How far off is it to categorize an internet lead as being someone with the tendency to want to push a button and get 30 contractors to bid on their project, much like the Ditec commercials where they show "Lenders compete for your business" with images of crowds of lenders line up in your kitchen so you can pick and choose...

Grumpy

Internet leads are my bread and butter. Infact I do 100% insternet marketing at this point.

Having said that I intend to keep the internet marketing as my backbone, but I am going to put a small add in the yellow pages incase anyone goes looking for us we are easy to find. I am also going to start doing adds in the local newspapers for branding more than anything. Third is direct mail, which I plan to build as my second largest advertising source, after the internet stuff.

Mike I totally disagree with your last statement(paragraph). The reason being I have found that most of my customers are saavy and intelligent people. Yes there are price shoppers, but there are price shoppers no matter what. I am not the cheapest, and when I am I usually made a mistake but I am making good money with my internet leads... and I am not just talking lead services. I get a fair share of requests coming through my websiteS.

Mike Finley

Grumpy, my last statement is based on past experience with Internet vs traditional leads and considering it logical to believe it should hold true across the board on more than one industry. Whether it does or not, time will tell, because like I said most people using Internet leads services heavily, don't use traditional marketing methods or even consider the differences in the lead quality. You are a perfect example of this, you don't use traditional marketing so you have no way to compare other than your gut feelings towards your customers which are 100% internet based. You don't have the other customers to compare to.

Someone being savvy and intelligent has nothing to do with what I said, that might make them nice people but it doesn't measure the difference between a internet lead and a traditional lead. When you do get up and running using both types of marketing I would be excited to see what you find out.

You know that all all leads are not identical and how they are generated plays a big part in segmenting them.

There is a difference in quality of leads generated in local service directory ads - they tend to be smaller projects, service work and a bit of price shoppers.

Yellow page leads tend to be a bit price shoppery, but that can depend on ad sizes that generated them, small ads versus medium vs full page.

Referals tend to be the least price shoppers...

People coming in with a coupon are totally price sensitive.

People coming in off an architects referral are more quality sensitive.

The variations go on and on. It is only logical to consider that internet based leads will generate some sort of trends if looked at as a whole. Of course that can change too over time.

In the beginning Internet shoppers were considered early adopters of technology, now 5 years later that is no longer the case as everybody up to your grandmother is on the internet. That may cause what I have seen 3-4 years ago to not be as heavily weighted now as the internet demographic has clearly changed to reflect more of the population as a whole.

However, the whole Ditec reference I believe is perfectly valid. If lead services are advertising with the ploy of attracting consumers because consumers have an advantage because contractors will compete for their business, that is going to attract a much different lead, then if they market under the ploy of using our service gives you access to the best quality contractors on the market, those 2 leads will be of completely different mindsets, wouldn't you agree?