In Episode 9 of the Trades Secret Podcast hosts Devon Hayes and Amanda Joyce discuss the importance of calculating your marketing ROI. We explore the many expenditures that should be accounted for when assessing your marketing investment. Learn how to calculate your marketing ROI in order to maximize your marketing efforts!
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Transcription:
Amanda Joyce:
Hi, I’m Amanda Joyce.
Devon Hayes:
And I’m Devon Hayes.
Amanda Joyce:
And today’s topic is how to calculate ROI on your marketing and here’s why you should care. It’s really critical for you to have a firm understanding of the quality of leads you’re getting from your marketing channels and being able to calculate your ROI helps you understand where to invest your money.
Devon Hayes:
Welcome to Trades Secrets where we demystify digital marketing to help contractors get the most bang for their marketing bucks.
Amanda Joyce:
This is for you if you’re a contractor looking for actionable marketing insights.
Devon Hayes:
Learn from home services industry experts to elevate your business through simplified marketing strategies.
Amanda Joyce:
Let’s dive into today’s Trade Secret.
Okay, I’m excited about today’s topic. I think this is really valuable for anyone who’s investing in marketing.
Devon Hayes:
It’s true because obviously there’s the direct cost and you think about what it costs to say, hire an SEO agency or do a direct mail campaign. But when we were talking about this, the whole reason this podcast covers this idea, this topic came up was because there’s a lot of factors that maybe as a business owner, you’re not considering. It’s not just the cost of the service or the service fee associated with an agency who’s performing whatever it might be whether it’s like … It doesn’t even have to be an agency. Are you going to a home show? Is it direct mail? Is it your paid ads or SEO, whatever it is.
Amanda Joyce:
Or email marketing, whatever it may be. Like how much hard cost are you investing in it but also how many internal resources are you investing in it? It’s a bigger topic than a lot of times a business owner thinks about it. And we just really wanted to bring this up so people could really start thinking about the bigger picture of their marketing. Because if your marketing is really going to work for you, you have to be able to look at it quantifiably. And this is kind of a cool way to dissect it and figure out where you should be spending those marketing dollars.
Devon Hayes:
Absolutely. So yeah. So what you said to me, I’m like, “Oh my God, I didn’t even think about that.” So in our world, in contractor marketing, there is a well-known product out there that’s been really effective for a lot of contractors. And what it is, I think it just pretty much trains someone in-house on how to run your paid and organic social media. And if you’re a company, I think that’s a good fit for companies that are at like 10 million plus in revenue. So it definitely … I don’t think they try to sell to smaller businesses than that.
But if you have, if you’re a company, you’re that big, and you have someone in-house who can take this course and apply that … Amanda brought up a great point. It isn’t just the cost of the course when you’re trying to calculate the ROI on that particular marketing investment, right?
Amanda Joyce:
Exactly, exactly. It’s the cost of the person or persons that are actually performing the ad maintenance, that are optimizing, that are in there changing things up all the time. How many hours are they investing? And you’ve got to include that in your calculation when you’re determining what your return on investment is. If you’ve got a member of your team that wears a million hats and this is one of them, you have to consider that they are being taken away from other tasks to do this type of marketing. There’s plenty of reason for them to do that but you just have to make sure that you’re calculating that in when you’re looking at your ROI. It’s not just your hard advertising dollar cost that go into that c.
Devon Hayes:
Well yeah. So we know, as an agency, we absolutely do not love social media because of what a time suck it is. And for it to be great, it really, it has to be super collaborative with your client or they need to be … They really … I mean it’s more effective, it’s a lot more engaging when they’re posting the content, right?
Amanda Joyce:
Yeah.
Devon Hayes:
But even the little bit that we do in terms of how it helps SEO, the content creation. Okay, so the process. Say you have someone in-house getting those pictures like the communication between a project manager or whoever’s on-site. The back and forth in that. You have to think about the hours that go into that, the hours for this person who’s then posting to understand the business. Because if you’re an electrician, maybe you’re a business development person or whoever’s doing this. They don’t fully grasp, as they shouldn’t, what is being done or what’s in the image. Where an electrician could look at it and be like, “Oh, those wires are wrong.” But someone in a more administrative role wouldn’t understand that.
So there’s those costs that go into it too so it’s not as simple as, “Oh, okay, this course costs X amount of dollars and if I get X amount of leads from it, it will pay off.” It’s like, “No, no, no. Something like that is ongoing.” But then you break down obviously the cost for the tools and whatever else you’re using which is another direct cost. Which I’m sure-
Amanda Joyce:
Exactly.
Devon Hayes:
And I even … I’m no business person by any stretch of the imagination. Like I understand marketing. I understand SEO. I understand this realm. But when you’re looking at a business in numbers to make business decisions, admittedly, we have a business coach to talk us through that. But these are just some of the things that you have to factor in to. So there’s project management, there’s obviously the direct cost of whatever it is. But then how much time is being taken away from what someone internally was supposed to be doing? Or if they were hired specifically for marketing, that’s great. It’s just when it comes down to the brass tax and you’re calculating which marketing channel brings me the highest quality leads for my investment? This is something that you kind of have to think about. There’s all these other pieces, other variables, that go into that calculation. So it’s not as black and white as I initially thought it was myself.
Amanda Joyce:
Exactly. And then so on top of that, we’ve got the portion of analyzing your internal resources you’re using, the tools, all your hard costs, all that. Then the other side of this calculation is also the homework that a lot of business owners don’t like to do which is going in and actually assigning those leads inside of your customer management system, whether you’re using Java or Mercer, whatever it may be. And actually doing the homework where you’re going to go in and find that lead that came in on the website three weeks ago from that email marketing campaign and check in and see where this lead fell off. Maybe it finally closed. And a lot of times, there’s a long sales process too. So it’s something that you can’t … You got to check in on it more than once. But at the end of the day, you’ve also got to spend the time to find out, “Okay, we drove 20 leads with marketing and these ones closed so let’s figure out how much net income we made off of those. And then we can calculate. Then we can look at the investment we made to come to our ultimate calculations.”
So it’s not black and white and probably some people listening are like, “Oh God, that’s just one more thing to put on my list of to-dos.” But if you’re spending money on marketing, it’s really an important piece of the puzzle to make sure that you’re making smart marketing decisions and that you’re being data-driven with your decision-making and you’re not just looking at the counts. Maybe you’re getting a ton of leads from your social ads but when you actually do the math and look at it, maybe they’re not closing. Or maybe that’s happening with your Google local service ads and your social ads are closing. But it’s homework that has to be done.
Devon Hayes:
And I think what we see too is like the quantity. Like you can get a high amount of leads from say social media but what we hear over and over and over again from our clients in the home services space is that the quality of the leads on social are not great. And that’s not the same for all markets and all industries but it’s just a great example. If you’re putting a ton of money into social ads or social media, you’re spending admin hours trying to work that channel, are the leads really great? We even look at that with our SEO clients. We break it down like we want to know, are these high-quality? Are these high-quality leads that are coming in through your website form fills? Are they high-quality, the messages on the Google business profiles? There’s so much spam that comes through there. I mean it’s ridiculous. And so those aren’t high-quality leads.
We have some clients, there’s always some new shiny object out there in the home services space and something we’ve seen recently is those instant estimates or online estimates for, you know, “It’ll cost you X amount of dollars to do … Get a new roof.” Or whatever it is. But what we see with tools like that, it’s usually really price-conscious people. So if you’re paying for that tool, what is the quality of those leads coming in? Because all day long, you’re going to generate leads with something like that but you need to sit down and do the math and figure out, are these high-quality? Are these worth the time it takes to have that exploratory call? Go do an inspection, check it out? Or are they just price shopping and they just need numbers and it’s-
Amanda Joyce:
Exactly. And we talk to a lot of clients right now that are really moving towards the retail focus over the storm and the fear-based focus because that’s just the way their businesses need to move. And if you’re spending time and energy driving leads that are super price-conscious people, that are not coming to talk to you about your higher value materials and they’re not that ideal customer that you’re trying to attract, do you really want to spend the time going out and bidding all these people out and figuring out they’re not a good fit for you? Not to say that maybe … Some companies, it’ll be a good fit for but if you find it’s not, do the analysis, cut it off at the knees, and focus where the leads are really coming through that are really helping your business forward.
Devon Hayes:
Yeah. And there’s definitely a place for a tool like that. I mean if realtors need numbers right away and they’re your referral partners, you can drive them to a specific page. I mean there’s a lot of great uses for it. And then a lot of business models, they’re like let’s go, let’s turn and burn, quantity over … Not over quality. I’m sure they’re still doing quality work but the more leads they can get in the door, the better they can fill their pipelines. And maybe that’s kind of your business model. But at the end of the day, the conversation here is just really just sitting down and instead of just throwing money and seeing what sticks, take the time to figure out where the highest quality and the best leads have come from.
Even to the point of, we separate out our leads for our clients between website phone calls and website form fills. Are the higher quality leads coming from the phone calls or are they coming from the form fills? And that’s information they can give you. That’s information you have access to if you’ve got call tracking on your site which we would recommend specifically for this reason. Because at the end of the day, an SEO company, they can check boxes for performance, for example. They’re like, “Okay, we’re getting you back links. Okay, we wrote content. Okay, we published it.” But what’s the ROI? So you’ve got your KPIs and then your ROI. What is really though, what’s your ROI on your marketing investments.
So we just wanted to have just a quick chat about it and just-
Amanda Joyce:
Yeah.
Devon Hayes:
Yeah. Put a little worm in your ear because it’s really important to understand where the value is coming from. And then you can reinvest and double down on whatever’s working for you no matter what that is.
Amanda Joyce:
Exactly. You can spend the money better and your business will be better as a result if you’re focusing there. And to your point too about the call tracking, if you learn that the calls are higher quality than the lead form, it can change what your call to action is on your homepage. You can optimize your website to encourage the type of lead or contact that you’re looking for. So it’s just invaluable information that you can use for all kinds of things.
So I hope that we can put this bug in your ear and maybe this could help some people start their … If you can start the year off right doing this, your marketing will just be better in 2023 if you’ve done the legwork and you’re tracking this.
Devon Hayes:
Yeah, absolutely. And then take it a step further and then once you … I mean you can look at your marketing qualified leads to sales qualified leads and then look at that conversion rate and maybe do some quick math on your conversion rate as well. But we’ll put … I mean it’s simple math but we’ll put the calculations for both your marketing ROI and then your conversion rate calculations in the episode notes. You can take a look there. If you just want to see some easy math on it. And then yeah, start to back into your marketing investment, especially as we look to what some are anticipating a downturn in the economy. So it would be … You’re just going to want to tighten those marketing budgets and really be conservative with your spending. Not everybody, but a lot of folks will be. So we just wanted to speak on this and put our two cents out there.
Amanda Joyce:
Awesome. Well we hope you guys really found this interesting. Comment, let us know what you think. Do you find this useful? If you go through this, we’d love to hear from you if you go through this exercise and learn some new things about your marketing. Reach out to us on social, we’d love to hear about it.
Devon Hayes:
Absolutely. All right, we’ll see you on the next episode, guys. Thank you.
Amanda Joyce:
Thanks, guys.
That was today’s Trade Secret. Thanks for listening.
Devon Hayes:
Did you find this helpful? We’re just getting started.
Amanda Joyce:
Subscribe and don’t miss our next review.
Devon Hayes:
Until next time.
