I was just on a call with one of the top traffic experts in the country and he made several great points that we can all learn from and use to improve our businesses.
With the heavy growth of internet marketing and all the tools and sites available to market your business it has actually become harder in a lot of ways to know what metrics to pay attention to when marketing your remodeling business. All of these so called "gurus" and agenices and "seo experts" would all have you believe that you need to pay attention to rankings, traffic, "LIKES", shares, and all this stuff. This couldn't be further from the truth and believe me, I have fallen into this trap before with clients.
I am not advocating that you ignore all of those metrics above but they are not even close to the most important metrics you should be measuring.
There are only TWO marketing metrics that YOU should be paying attention to. And I emphasized YOU because if you are the owner of your business or President and/or CEO, you absolutely need to know this. You can have others help you determine what this is but YOU have to know what these TWO metrics are every month.
Here Are the TWO Most Important Marketing Metrics YOU Need to Know:
1) ALCV – Average Lifetime Client Value:
I am not knocking my current clients but 95% do not know what this is even after being asked many many times to help us determine what this is. This is by far and away the most important metric to measure. You need to know what this is and you need to find ways to increase it.
Here are some simple ways to increase your ALCV:
- Retention Marketing – Get a Print Newsletter done and sent every month.
- 20 Point Home Systems Audit® strategy (get back in the home and in front of the homeowner by offering tons of value. Offering my 20 Point Home Systems Audit® is a perfect way to increase your ALCV).
- Ongoing offers to people who have already bought from you – stay in touch, continue to offer value, and upsell whenever and wherever you can.
- Referrals – are a big part of getting a huge boost to ALCV and getting more out of each customer.
Very few businesses do any of this well. These simple strategies are a gamechanger and with dramatically boost your ALCV. This is where 1-1 consulting with me comes in as I help you figure out your ALCV and craft campaigns with the right offers to your existing client base and more.
2) CPA – Cost Per Acquisition:
Average cost per lead and average cost to acquire one new client is crucial to figure out in your business. One quick and dirty way to determine your overal CPA is to take the number of new projects you did this year divided by your total marketing spend. $100,000 Marketing / 50 Clients = $2,000 CPA
For example, for this exercise just focus on your customers that paid more than $5,000. All repair work and small jobs, lets not factor those in right now. So if you did 50 projects this year over $5,000/per project, take your 50 projects and divide by your marketing investment. If you ended up investing $100,000 in marketing and generate 50 new projects from this, your CPA = $2,000
At PME 360, we have been tracking some CPA numbers for a few clients (with their help) and it is not cheap to drive a new remodeling client from cold traffic sources. For our roofing contractor in Indianapolis, we were able to determine that the average CPA for ONE NEW roofing client using online marketing was coming in at around $1,000.
What this means is that to generate one new roofing customer online, he needed to invest a minimum of $1,000 in marketing to acquire that new client. Some markets are more expensive where other smaller cities and towns it can take less. But this is a good number to help you set proper expectations with your marketing.
I see so many remodeling companies with very unrealistic expectations from existing marketing campaigns. I hear it all the time where remodelers are trying to drive lots of new customers each month from a measly $500/month marketing investment.
They have never taken the time to really understand what their CPA is, or should be, and don't realize that it could take 2 months of marketing at $500/month to land ONE new customer. You can also continue down this road and figure out your Average Cost Per Lead and determine how many leads you actually need each and every month to then land X number of new customers/projects. Without knowing these numbers you are going to struggle.
You Have to Know Your Numbers
The moral of this story is pretty simple – you have to know your numbers. And not just any numbers, the right ones. Your assignment, if you choose to accept this, is to go right now and figure out your ALCV and your CPA. From there you can quickly come up with a plan of attack to determine how much you can actually invest in your marketing with a specific goal to generate X number of leads that turn into X number of clients that you can Upsell X number of additional services to long term that also turn into X number of referrals that you can then sell.