.webp)
Most home service companies think they're tracking marketing. They're actually tracking the wrong metrics.
In this episode of Owned and Operated, John Wilson and Jack Carr break down how to measure marketing ROI the right way. They explain why cost per lead is often a misleading metric, how to build a marketing scorecard that actually helps you make better decisions, and the attribution systems they use to understand what's driving revenue across a growing home service business.
They also discuss why blended marketing ROI matters more than individual lead costs, how to separate new customer revenue from recurring customers, the importance of clean CRM data, and why every owner—not their agency—is ultimately responsible for marketing performance.
In This Episode:
• Why cost per lead can lead you to the wrong decisions
• The marketing KPIs every home service business should track
• How to measure true ROI across every marketing channel
• Building an attribution system that actually works
• Why clean CRM data is the foundation of good marketing
• How to separate new customer revenue from repeat business
• The pitfalls of using lifetime value (LTV) to justify marketing spend
• Why every owner should own their company's marketing scorecard
————————————————
🔗 CONNECT
————————————————
John Wilson → https://www.linkedin.com/in/johnbwilson1/
Jack Carr → https://www.linkedin.com/in/jack-carr-770b84117/
Breaking $5M Workshop → https://www.ownedandoperated.com/upcoming-events/oao-workshop-breaking-5-million
————————————————
💰 SPONSORS
————————————————
Big Reputation
Get more from your Google Business Profile with Big Reputation. Automate reviews, improve local visibility, and turn more Google searches into inbound calls. Learn more: https://www.bigreputation.ai/oao?utm_source=oao&utm_medium=paid
Service Scalers
Get more high quality leads with marketing built for home service companies. Book a free strategy call with Service Scalers and see what's driving real jobs: https://os.servicescalers.com/go/oao_podcast/referral/podcast
More Ways To Connect with O&O
John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC
📌 Disclaimer: Some links may include UTM parameters or affiliate relationships, meaning we may earn a commission if you make a purchase. Episodes may feature sponsors, but all opinions expressed are our own.
I think what people get stuck on is uh cost of lead. It can get complicated quickly if you're not measuring the right things.
Number of sales from that channel, dollar amount of sales from that channel. That will get you to like your first layer of ROI.
How are you tracking down specific campaigns?
You want to be able to measure like what is your blended ROI across the business.
I love it.
Attribution is a very complicated process. Cost per lead. Like that's not the thing to measure. The thing to measure is like
welcome back to Owned and Operated, a Top 200 Business and Entrepreneurship Podcast. I'm your host, John Wilson, and on this show we talk about how to build home service companies, oftentimes with examples and stories from my own. Today I'm rejoined by my somewhat frequent co-host, Mr. Jack Carr.
I thought you were going to say somewhat friend. That was a hard thing. It hurt my feelings at first second.
I BFF for life, my ride or die or die on the boat.
Let's do this.
Jack Carr. What is up? Dude, uh living it up. Um what? It July 1st, so June ended. June was kind of a funny month.
We um for in what way?
Well, it's so funny for I think a lot of reasons. So like temperatures were so May was tough for most of the industry, like HVAC-wise. It was kind of a bloodbath. And um, I really need to start doing like industry news, like daily podcasts, like five minutes. And today in HVAC, it's a bloodbath. Uh, but yeah, May was kind of tough. And then June, weather didn't cooperate for most people that I know. In the like the first half, it was okay. There was a middle week that was super weird, and then it went gangbusters for the last two days.
Yeah, because we have a jet, we had a giant heat wave that just like absolutely destroyed everything.
But yeah, you know, I have a friend that sold half a million, and he's a 40 million dollar business. So half a million is like more than double his daily budget yesterday.
Yeah.
All I all I have to say though is again, uh like I've been saying, if you've if you're a long-term listener, like we haven't been ready the last four years for summer for like the first big heat wave, and we're finally ready for it. And you guys killed it. It feels as good as you killed it. It feels as good.
I need to like, can I screen share on this?
Oh my god, we blew out our best month by I think like 200k.
Yeah, dude. I we okay. If if you're not watching this on YouTube, I'm pulling up Jack's service titan right now.
This month was better than our whole first year. Yeah, no, this is our entire first year of sales.
You guys, you guys killed it. It's yeah, it's disgusting. I'm screen sharing this right now.
Now we're hunting for a million.
Yeah. All right. So like if you're not watching on YouTube or like Spotify, I think has videos.
Look at that one. That's our daily sales.
Oh, yeah, yeah, yeah. Well, ignore that. Yeah, okay. Ignore that. It's in the morning. Well, no, month today. Okay. See, this is what I this is what I get for trying to navigate last month. Okay. There you go. So yeah, 850 in total sales, dude, so close to a million. Just couldn't get there. But like, look at this freaking chart. Yeah. So if you're if you're not, if if for some reason uh you don't you're not watching this on video, like June was 818,000 of revenue, 850 of sales, and it was almost a double from last year's June. Yeah. Which was uh 428. Um, May was up 40%, April was up 93%, 147 in March. So you've had a crazy year just in general. Uh but like, yeah, June, June was nuts. June was nuts. Your Google Business profiles are either printing money or they're losing it. And that's where big reputation comes in. Big reputation turns your GBP into a true lead machine without adding more work to your plate. It runs in the background with automated posting, review generation, and fast responses so that your reputation compounds over time. And this is huge if you're multi-location. They make it dead simple to manage and scale your reputation across every branch. So every location shows up and wins in the map pack. I'm actually using Big Reputation right now as I grow and scale my newest acquisitions. Plus, you get real insight into what's actually happening. You get to spot gaps with location health monitoring, track reviews and sentiment, and see which zip codes you're winning and which ones you're losing. Better insights, stronger trust, more calls from an asset you already own. Go check it out at bigreputation.ai slash o.
I think when I sent you mid-month June, I sent you a little bit that was like 98%.
You passed May. Mid month. You were like, hey, dude, just pass May.
I was like, fuck yeah. It's fine. It's totally fine. Yeah, it's exciting. It feels good. It feels good to have a team that's that's uh executing and we still have some some opportunities. Um, but overall, it was crazy because I think the the metrics I sent you were up 98% year over year, probably more now that we finished the month out. 98% year over year, and we're up 24% on call volume. But yes, we're up like 68% on call conversion. Like it's crazy from like we locked in on um converting bookings.
Yeah, no, no, you guys are you guys are killing it. It's kind of awesome. Um, but yeah, it was fun. So June, we don't have final numbers yet, which might sound ridiculous, but like we don't actually know what revenue is yet because uh the size of our business, like there's multi-days and like work in process. So usually it takes a couple days to like actually figure out what revenue was, which is kind of annoying because you want to just like open up Service Titan and like you know, hey, what do we do? Uh but I think Service Titan says like 3.35, but we have a brand on House Call Pro, so we have to add that in. All that to say, I think we're at like 3.7. So we didn't we always hit 4 million, but like, dude, so close. And I the funny thing about that is like our first three million dollar month was this year.
Yeah, two months ago.
It was like April, yeah.
So the so like a big celebration, everybody's cheering. We're like, ah we got it for four.
And like, yeah, now we're like knocking down the door at at four. Um, I don't know if we'll hit four in July.
We will.
We will in August, because we have another, we're bringing on another partner at the end of July. Yeah, and that's uh I think they're eight or nine million of revenue. So like we but ideally we hit it right before that. That way we just know we did it.
Yeah, not to mention, I mean, like I said, we starting off July, again, at least in Nashville, but most the South with like, dude, hundred degree weather for the first like foreseeable 10 days forecast. We are booked solid, we're ready to go. So I'm I'm I'm thinking this is the month. This is the month we hit the million. We're gonna hit a million, and then we as the collective are gonna hit four, which will be yeah awesome.
Yeah, no, totally. I think I think the most um I'm I'm holding my breath on this. I don't think it's gonna happen, but I think like what's even cooler, June, I don't think we hit a million Ebita, but I don't think we're far off. Yeah. Which like it's always been interesting to like do an entire month's like we um 3.7 is like that's the amount of revenue I think we did in 2019, or maybe uh might have actually been yeah, I think that's about right. Maybe 2020. Because like so that one month, but what's even but like now it's like okay, so when I first bought the business, we did a million of revenue and we just did that in EBITDA in a month. Yeah, now we're talking.
You know, it's it's it's funny because these are these are all of our vanity metrics, like oh totally. Just want the zeros, man. Just hit the zeros.
Like I want to I want to see two commas on that EBITDA, dude. Like, let's do it.
That is really cool.
Yeah, but I I I don't think uh I don't think we're there. Um, but yeah, we'll like I'll I'll keep you in the loop. I'll keep everybody in the loop. Did we hit it? Did we not? Pat sent preliminary numbers, and I'm like, I think you're just teasing me because I don't think this is real, but it was like it was mid-nines.
That's crazy. That's wild. I know. You just need to find a few adbacks and then we'll call it a day.
Okay, yeah, yeah, yeah. John was tired. That's that's an ad back, right?
Yeah, like his he John was out this month, so like definitely his salary gets all added back.
Like it's good. Yeah, yeah. He didn't, he didn't, he hardly worked. Um, okay, so anyways, that was June. We're excited about July. Uh July, we have a real chance at four.
If you want to join the team, we'll take a second here to say if you want to join the team, reach out to Jack or John. You're right. And help us achieve that goal. It's also a lot of fun if you can tell being uh working with people that you actually like. So um I agree with that. Yeah.
Well, it it is pretty fun. Like we um we have so we have uh uh we've done four partners this year. And we're uh like our fifth is in July, so this month, which that's pretty cool. It's at the end of the month. Um, and then we're like our seventh is already like set, I think. Um and we're really really excited about that one. That one's gonna be a lot of fun. And then like we're starting to talk to number eight, and uh it is definitely wild to watch like watch and feel the momentum. Yeah, it's really interesting. It's interesting to like be building, and I think I honestly think what I was I was talking to somebody about this the other day. I think that this isn't even a pitch, this is just like I'm complimenting you here for a few minutes. So I think what has yeah, like get I think what's been really interesting is like as I think about like how has this year been successful so far, which obviously like we're gonna two and a half times, and we started at around 30 million. So that's not like gonna be easy no matter what way you think about that. Obviously, like we're working really hard this year. Um we are running. But when I think about like who the ideal person is, like it has been you and it has been Jeremy on your team and David and Krissa and like the team. Yeah, and I think that like there's sort of this component of like how do I work with people that I like to work with, which is a really good part, but like how do you work with people that are like smart and driven and like want to kill it together? And like that's been the superpower is you just blew out June in the most ridiculous possible way, like that was crazy, and like we got to partner in on that. And I I just think that was I think that was really cool. And um I don't know, so yeah, that that's been fun for me, and I think that's a been a big part of like how the train has stayed on the track this year is like when we you when we bought most of our businesses over the years, we came in and replaced the leader just because they were so small, they were like two or three million dollar businesses and the guy was retiring. But being able to like partner with you has been like a totally different experience for the better by far.
We've been able to push culture in a way that I didn't expect, and that everybody is all on board the train pushing in the same direction. It's crazy. Like, and if you're guys listening, I I hope he takes this the right way. But like I was giving my my sales guys, my comfort advisors, a bunch of shit about like, hey, you guys got beat by a guy that's been a door sales door knocking guy for the last, you know, he's only been an HVAC for a month. Tyler is a baller. Tyler's a baller. Tyler's a baller. But like they're all chasing this guy that they've never met. They've never seen.
I think he hit second last week or last month. Yeah, he hit second.
My guy, we had two out of five top people in the company, and our third guy was only he only missed by 9k to beat the top five. So we almost had three out of five. That's good. But point being is like the the um like the the culture around having somebody to friendly chase has been fun. It's not like they they don't like like they they they're happy to be a part of like something that is, I don't want to call it gamified, but like there's a gamified experience.
Well, like I literally get a text. Do you get these every day?
Yeah, yeah, yeah, yeah.
We're starting to like roll this out to the whole company. Um we uh yeah, okay, I'm trying to pull this up now. So yeah, so I get this text. I wish I could just like screen share this entire conversation if you're looking at this. I get this text and it's like daily stats for the company. Like we literally, this is an example of something we made with the AI just for funsies. Um, I've talked about it on here. It's huge, it's like which is even funnier. Uh yeah, I bought that like three years ago. I bought that domain a couple years ago, like as a joke. Uh, and my wife has like totally hated it. And I'm like, babe, I found a way to use it.
I'm gonna even be more annoying with it if I'm gonna make a company out of it. But then it has to stay in play.
It's gonna be awesome. Well, it's gonna be huge. Uh so it it reads off like which team won. So, like yesterday, Nashville HVAC won sales, like 72,000. That's actually fucking ridiculous, dude. 72,878 in one day for HVAC's sales team. That's like three dudes like clock in like 80 grand. That's crazy. And then revenue leader was Stowe plumbing. And then there's like an individual leaderboard. And what what I'm excited about is like that was sort of like iteration one. The next iteration is it texts everyone on the team, like where you fit on your team and in the company as a total every day. And I think that like having line of sight of like, hey, this guy's a high producer in this market, like I'm gonna go chase him, never met him. I'm gonna like, you know, yeah, I I think that's been a lot of fun.
Um, what's been interesting too is like I we're talking about this. This I'm people want this, by the way. I mean, I've I've not received like three texts from individuals, like, hey, how do we get Yeah?
We have a wait list. Um, how do you do it? I think you're supposed to email info at owned and operated, and we're slowly starting to like let people into it. And it like aggregates data and like shares uh average ticket, close rate. Um yeah.
Yeah, because I think that part of it, right? You have to be able to get good data. So like you don't just want to let anybody in so that you have a bunch of garbage data.
Yeah, like is your CRM clean? Yeah, yeah. Yeah. But like, yeah, we are opening it up. Um, just if if you email info at owned and operated, I they they're keeping like a wait list and we're slowly starting to add people into it. So if you already contacted, don't mind me. It's like literally, it's called huge. So like that gives you an idea of how seriously I take this, uh, which is very, so we're moving slow at it. Um okay.
Okay.
We were supposed to be talking about marketing ROI. All right, let's do it. So um uh marketing ROI is really interesting. I think what people get stuck on, um, and I suspect it's because it's the fastest number that they can like figure out, is uh cost of lead, which I think is kind of like a weird number to get stuck on. So, like as an example, uh like how much does a thumb check lead cost? Like 20 bucks or 30 bucks or something?
Depending on the industry, but yeah, between 20 and 60.
Yeah. So like 20 to 60, I think Angie's list from what I remember is the same. Um and those are like that's cost of lead. If you go over to LSA, it's like a hundred bucks. And so I think like most people get stuck on this, like, well, what's my cost of lead? And I'm like, well, fucking, I don't know. But like, what's the lead can it provide? And why is LSA worth five times an age lead? Well, it's because someone's calling you to solve that problem right now versus a written lead that gets sent out to three or four people.
Yeah. Because
that's cost per lead. So if it costs me $60 per lead for a new unit, yeah, and that gets out to three people, so I don't get that lead, and it takes me I get maybe one every three leads because my let's just say I'm not using Quick Staffers or a good speed delete service and uh good plug or a good like speed delete service, and um I'm pretty slow to it, and I get one out of three. So now my cost per booking, not even cost per, you know, um uh acquired customer, but just cost per booking jumps to like 180, right? Just 60 times three. And then you get down to like cost per actual revenue, and I think it gets even crazier because you don't sell each one of those because they're getting three bids anyway. So you might get out there, but you have the booking but not the actual revenue generation, cost per job. So it can get complicated quickly if you're not measuring the right things.
Yeah, yeah. And I think so. I I think that's one um that's one I want to flag, it's just like cost per lead is one of the things to measure when you're thinking about like marketing. So it's cost per lead, um cancel rate from that channel, uh, number of sales from that channel, dollar amount of sales from that channel. Uh then there's a few, I mean there's a few more, but like those are probably the big ones, and then you can figure out ROI from there. Like how much did I spend on this channel this month, how much did I make on this channel this month? And I think that that's a good place to start. And I think that will get you to like your first layer of ROI.
Yeah.
Which is is my demand capture marketing productive? And we define productive as like minimum five times ROI.
Yeah, like that's the first thing you need is revenue versus spend. Cost. Yeah. Yeah. Because I mean, yes, again, like I said, the cost per lead matters, but it doesn't matter as much as, hey, I could have, you know, a cost per lead of $600. Yeah. But if I'm driving, you know, $60,000 and running a 10X, then great. Because we do have channels like that where the cost per lead is extremely expensive. Like we might only get three leads, but those three leads generate, you know, just massive amounts of revenue.
Yeah. No, I I agree.
I I think the next layer, um, and this is where it gets a little bit tricky, is most of your demand capture is last click. So you get like last click gets a lot of work or it gets a lot of credit. So, like, hey, my is my Google ads driving the lead, or did my radio ads drive people to Google to look for Wilson and then they clicked on a PVC? I'm sure there are like a tremendous amount of ways to measure this in like a productive way. I think overall the way that I find it to be helpful is what is my marketed, like let me let me step up back up a step. You can divide your revenue by existing customer and non-existing customer. And I think that that's the first step. Is like outside of the amount of marketing that I'm spending, and am I tracking this by the lead? How much of my day-to-day revenue is marketed revenue versus non-marketed revenue? Non-marketed revenue is gonna be like recurring customer, which is different than organic. Because if somebody contacts you through GMB or GBP, like that's organic, that's still marketed. Like you paid for the GBP, like you're paying for a review service or something. Like there's costs associated with that. So I would consider that marketed, like it's a new customer. So how much of your revenue is new customers, and then how much of it is existing customers, and you separate those two things. And then of your new customers, how much of them came through or obvious organic channels? Uh, like that they just called my phone number. So maybe, like, hey, I can't attribute this to anything, but they called my phone number and I don't have their file inside my system. So maybe that's radio, maybe that's uh they saw a truck, you know, like pick a thing. Um, then GBPs is its own thing. And the best companies that I see, like their marketing is divide, they track their organically as tightly as they track their paid. Because I think that is an important piece of the puzzle. If I add a new GBP, what should it do for the business? What did it do for the business?
Yeah.
Um, and then you track your paid.
And what we find So question before before you go into step two with that is so I I know the answer, but I know a lot of people throw this question around at like the breaking five. Um how are you doing that? How are you tracking down specific campaigns? What what's the avenue that you're utilizing to get this tracking ability? Because most smaller contractors have one or two numbers, they have that across everything. Um, and so they're having trouble tracking. Do you ask? Do you like what what do you do?
It starts with like a new customer report. Like, and so this is where it gets we talked about this, I think, last episode of like how to use AI inside your business, but attribution is a very complicated. Process and uh but it starts with did someone create a new customer file? Yes, no. And then you can work backwards from there. So hey, I created 10 new customer files yesterday. Okay. Where did they come from? So then you start working through attribution. Well, hey, this phone number matches the phone number that came through LSA. Yeah. So I'm going to attribute this lead to LSA. This phone number matches this from Angie's. So I'm going to attribute to Angie's. This phone number matches nothing. Like we did not buy this lead from anywhere because we get daily reports of what leads we bought. So I'm going to attribute that to random call-in because if it was on a GBP, then it would have gone through a G VP line.
Yeah. So all the phone numbers. So you have a bunch of different phone numbers for each marketing campaign that you're doing across everything. And I think that's the important thing I was fishing for here was like making sure that you have individualized phone numbers for every single different campaign. You do a mailer, you get a different number. You do a different mailer for water heaters than you do one for um HVAC. Well, you should probably have different phone numbers associated with that.
Or just a way to track it. Because like for mailers, you don't necessarily I mean, I'm not the expert at mailers, but like there are other ways to attribute. Because most of it's just like, hey, has have I contacted this person and did they contact me? So like mailers, did I send something to their address? And did I send it seven times? And then did someone from that address call me? And that's where it gets complicated, is you have like there's like 20 different sources of data that you're trying to funnel in to attribution. And what a lot of companies do that like do this really well is they have a full second CRM, like beyond uh Service Titan or House Call Pro or whatever else they're using, they have a marketing CRM where all they do is like handle attribution inside that CRM. Uh people use um GoHigh Level a lot. Yeah. So like Isaac in Chicago uses Go Hi, I think it's Go High Level, but like he uses uh software that tracks his post, like where he sends 200,000 mailers a month, uh like by address, by name, and then he shoves that into Go High Levels, and then like each contact point goes over there, and then when they contact, he can track ROI inside Go High Level.
Also, what a great way to be able to like do more automations because Go High Level has a really open API which allows you to like do anything versus Service Titans closed. So that's interesting. Um what a great thing for a CRM that's currently trying to compete with Service Titan to do is wrap up a secondary CRM system inside their thing. Okay.
Well, I think yeah, I think marketing is just like its own very complicated and like the marketing pro product uh is not good. So um yeah. Like it's not capable. Like if you know, yeah, I have a lot of opinions. Um okay. Stop before I get in trouble, right?
Um so we've just attributed next.
So yeah, so we attributed uh and then the next thing is like how much of your revenue came from paid, organic, and recurring customer. And that's a big thing to walk backwards on. And what that helps you figure out is what is your total blended marketing ROI. And the difference is radio, TV, billboards, truck wraps, GBP rent, like pick a freaking thing. But you have channel ROI, but then you have marketing ROI, and those can be two different things. It's very similar to um I see companies measure gross profit by job and not by company or department or whatever. Well, they're like, on this job we did X, and on this job we did X. So we are a 60% gross margin company, and it's like sort of, you're also forgetting about training time, PTO, holidays, like you're forgetting about a lot of costs that are not directly attributed to that specific job, but it still counts against your gross margin. So this reminds me a lot of that. Where um, hey, there's a bunch of stuff inside marketing that's not just that one lead. Like maybe you've got an agency cost, maybe you've got canvassers, uh, maybe you have radio, maybe you have whatever, like software. Like we have a bunch of marketing software. So uh you want to be able to like measure like what is your blended ROI across the business. Most marketing agencies will show you clicks, impressions, and maybe even traffic, but none of that really matters if the phone's not ringing. And that's why we partner with Service Scalers. They are built specifically for home service companies and they focus on one thing, which is driving real, high-quality calls and book jobs. This is a no-brainer. They're offering a 60-day money-back guarantee on LSA management, Google Business Profile Optimization, and website builds. If you don't get more visibility, more calls, and better leads, then you don't pay. If you want more book jobs without the marketing headache, click the link below and book a free strategy call with Service Scalers.
Yeah, fully agree. And and I'm gonna ask another leading conversation. Well, why do you measure then why do you, if you have a good blended ROI, why do you move into individualized ROI and break that down?
I think it depends on the business. So, like as an example, like I'll just pick on you and me. Um, so you, your revenue as a percentage of revenue that is dependent on leads is much higher than Stowe Wilson. Like Stowe Wilson, 20 to 30 percent of revenue, like it differs a little bit by the trade. Like Electric's higher, but HVAC's the lowest, depends on marketing because it has the least, like Electric has the least amount of reoccurring service. HVAC has the most, plumbing's in the middle. Um and so like for us, it's only 20 to 30 percent, but for you, I think it's like 45 or 50 percent.
Uh, I could be wrong, but well, we don't have a brand. Like, we've never done branding work, we've never done a radio ad. We've done one set of TV commercials which flopped miserably.
Also, like you don't have like there's no like reactivation, you don't have like a lifecycle marketing muscle. So um, like all of that stuff helps.
Yep.
But my point in saying that is like when someone says they're a 10% marketing spend business, that is an irrelevant metric to me. Because in this example of like half of your business is dependent on leads and 30% of our business is dependent on leads. If I spend 10% and you spend 10%, you're getting a five times ROI. Like you're getting like you're doing it. Whereas for us, we're getting like a three times, just like walking through that math.
Does that make sense? Yeah, and and then I think that to to granularize that one step further, um, then not not all five X ROIs are equal either, right? So if we have to run double the amount of calls, right, you can have a higher amount of operating costs to be able to generate that revenue, more in fuel, more in this, more in that, to be able to generate that same 5x ROI. So I do think it's important that you're going from a very high level down to the intricacies because two 5x ROIs are not necessarily the same, right? A 5x ROI on service-only leads versus 5x ROI on install only leads in HVAC are two wildly different channels that require wildly different things. One requires, you know, four technicians, and one requires two install crews.
So I agree. I think something that I get a little bit tripped up on personally. There's a concept called CAC to LTV in like software and really any business, but I think it's mostly in software. And it's like cost to acquire a customer, which is CAC, and LTV is lifetime value of that customer. And I struggle with that metric in uh home service. The idea is in like a SaaS business or pick a thing. I'm just picking out SaaS. If they spend $100, but that customer, like their average churn of a customer is two years, and they get $1,000 a year, they get $2,000. That's a lifetime value of that customer is $2,000, and the cost to acquire it's $100. So that's a 5% uh yeah, 5% and like a 20 times CAC, which is crazy. Um, so like big fan of that. People try to bring that into home service, and I struggle with with it because a couple reasons. One, you tend to reacquire the same customer. Like we've seen that a lot, where like if someone is a Google user, they're going to go to Google and they're gonna call you and they might not save you in your phone. Like, we've had to rebuy the same lead from the same customer a milli a million times, and we have a very strong life cycle marketing muscle.
Yeah.
So I I think like that makes it hard because you do have to reacquire the same customer. I also think like there's no set churn, you know, like in in uh SaaS, like as a set churn, like they pay for their monthly service or they don't. In home service, like, is it a one time? Is it not a one time? Yes, we're gonna try to turn them into a member, but did it work? Yeah, I just think it's a lot more complicated. And I think that ultimately owners try to use CAC to LTV in home service to make sense of them being inefficient with their spend. Well, they're like, well, the LTV is fifty thousand dollars. So if I spend, and that's if I replaced a furnace, panel, generator, water heater over a 10-year period. I'm like, well, sure, like fuck yeah. If you rebuild the home, it's a million dollars. Yeah, like I'll I will grant you that. But that doesn't mean you should spend $5,000 to acquire that customer.
Yeah, I think it's an open thesis because I know that from from a that idea was perpetuated from a lot of uh larger PE backed firms, right? Like that was the thesis, thesis behind it was hey, we buy a three trades business, we get them for over the 10-year period. That's the thesis. And it was picked up by a lot of smaller contractors. I mean, it's still utilized in our area to justify PPC. Like, hey, I can justify a $600 lead PPC because of um, because I over the life of the customer, I lose $600 this first year, but over the next 10 years, I'm gonna make $102,000. Um, I've always had trouble with that one though, just because again, uh, customers are extremely fickle, and I don't think that the churn is like you're not locked in. Even with memberships, you're generally not locked in. So there's no lock-in function to be able to measure churn correctly, even as a membership. Like it's not a great tool to be able to um like measure accurate churn from the business.
Well, I I also think like the way companies have done it is they've tried to convert over to a membership to like figure that out and like drive LTV. And like one of the fastest growing businesses that I know, it's based out in Phoenix, and it's crazy. It went from like 30 million to uh mid-hundreds in the past five years and still privately owned, and they um like they don't have memberships at all, like none, they just don't even have it, and like it is a 95% HVAC business. Uh so I don't know, all that to say, like I think people I don't think you should worry a tremendous amount about LTV because LTV, it's not contracted revenue, it is easy to get over your skis when you're imagining a large pie at the end of this customer relationship, but that is not contracted, like it's not guaranteed, it's not anything, it's just like you hope that it happens. So I would focus on your first visit. And can you drive like a near-term payback on your spend?
I love it.
Man, what else do we what else
do we cover? I think my final one is like build a better scorecard. Like, you should just have a scorecard for marketing. I was thinking about this this morning. Uh, I invested in this business. Um, I don't know, like I mean six.
I think that's a hard stop right there. I I'm cutting you off, but like build a scorecard for your business. It is wild how many uh smaller, like sub five million, like in the five million dollar, we talk about this a lot, breaking five. Yeah. And that's one of the biggest requests we get is what does this look like? Can we see what this looks like? It's not crazy difficult, but it's important to just build something that's tracking.
Yeah.
Um, and then like, well, I have service titan. Well, is your data in service tight and even good? Are you booking and attributing? Is your team doing the right thing? Because I know for for me personally, like last year, early last year, ours wasn't. Like we didn't have the right line items, we weren't adding marketing.
I mean, it takes real energy.
It takes real energy to design your CRM to be able to have your people then do the correct thing and the correct process to be able to build. And so part of what we did is we just generated a off CRM scorecard, like again, level one revenue to spend, which I think is important.
Yeah, I think we um so yeah, I think have a have a scorecard. Um and this is like if you have in-house marketing, if you have an agency, if you have anything, like everyone should be measured. If it's an agency, they should be measured. And back to my point on like cost per lead, like that's not the thing to measure. The thing to measure is like ROI. And ideally ROI by channel and then ROI for the business. Uh you can back into that. That's probably gonna take some time. If you're just starting off with a scorecard, like the things that matter is number of calls, number of appointments, um, what percentage of your revenue is from existing customers versus not. And the easiest way to track that is like new customer files. So, like we created a new customer file, how many? Um and uh call booking rate is important because then like did you book that lead or did you not? And that's an important part to like help you figure out which lead channels are working and which ones are not working. Uh and then ideally sales or revenue by channel. And I know that this is like a lot, but uh most small companies only have like one or two channels, like it's like Google, right? Or Facebook or whatever, like pick a thing. Um and even if all you're starting with is like hey, number of leads and like how much revenue came through, uh, it is actually really hard to do. And I'm not saying it's like easy at all. I'm not it's not like, oh, just go make a scorecard. It is uh genuinely hard to figure out how to assemble this data, but it's a really good exercise because once you figure out how to do it, you know how to do it. Uh, but the hardest part of like tracking and like creating scorecards and all of that is figuring out how to even get the data in the first place.
Yeah.
And then once you figure it out, like you have you can build a muscle.
And as the owner, this is your this is your job. This is your job. This is your this is your job. I'm talking to the owners. This is your job. This is all you. I know you have an agency out there, not their job, your job. Yeah, your job.
Yeah, it's like uh an agency, an internal whatever, like they're a they're a team member and they have to like you have you have to hold them accountable.
You have to hold them accountable to your scorecard that you're providing them. I think that's an important step. Is like one of the big unlocks for me was understanding that marketing was my job in this business. Like I am CMO as well as everything else, but CMO is probably one of the most important sub ten million dollar jobs you can set $10 million in revenue jobs you can be doing as the owner. This is it.
I agree. Um, I feel like we hit it.
We hit it.
If you have any questions on ROI or how incredible our uh Junes have been or July will be, just like throw in the comments. Also, if you want to be into if you want to get into huge uh email info at owned and operated.com and then they'll throw in the wait list. We'll contact you.
And besides that, head on over to owned and operated.com slash events and check out the September breaking five, which will be fun. I'm excited.
Yeah, that'll be a ton of fun. It's always great. Thanks, everybody.
.png)
.webp)
