Sponsored Content: 3 Ways You’re Wasting Your Marketing Budget
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Alright, show of hands: if you’re reading this, raise your hand if you actually enjoy marketing.
Yeah. My money says that if you’re reading this article, marketing probably makes you think of two things: you wish you could figure out how to get your phone to ring more, OR how on earth can you turn off all of the cold calls and spam emails from salesmen?
I feel you.
If you’re like most contractors, marketing probably isn’t high up on your “things you love to do” list, but you know that you need it to keep your business afloat. It seems like every single day, I speak with contractors across the country who are struggling to figure out the secret to getting their phone to ring more (without paying for every single lead through a program like HomeAdvisor), or who have literally spent thousands of dollars- or much more- each and every month on marketing that they’re not actually sure is working for them.
And honestly? They’re tired of it. For good reason. They’d rather be on the job site (or on a golf course) rather than having to deal with solving the call volume headache.
At DP Marketing.Services, our one main goal is to help our clients make more money. When we hear the struggle that so many great contractors struggle with, we look for ways to help relieve that pressure for them. Because, in our mind, if you’re not making money off of us, we’re not doing our job very well.
So, let’s talk about this. Chances are, there’s a problem with your marketing efforts somewhere. It’s not rocket science. But I will help break it down for you.
Here are some helpful tips based on our day-to-day conversions with real contractors like you.
3 Ways You’re Wasting Your Marketing Budget
Miscalculated Advertising Budget
Generally speaking, 7 out of 10 companies we talk to struggle in this area. They know they need to spend money to make money, but every single phonebook salesman or web designer knows that you have that button, and they find a way to push it. If you’re like most, you probably have some way to weed out the especially awful investments, and maybe in other areas, you’ve made some really smart decisions.
But that leaves a big question: you know that you should spend money to make money, but do you know how much money you should spend?
There’s lots of varying viewpoints floating around about how much HVAC/R contractors should spend on marketing. If you’re talking to a company who sells marketing services, it probably tends to float on the higher end: sometimes between 10-20% of your revenue. If you’re talking to a shop that’s been in business for years but never really crossed over the $2 million/year mark, they may give you an equally fuzzy answer, but maybe not totaling more than 5% of their revenue.
For this question, we’ll look to the guidance of the Small Business Administration (SBA). Since they see trends and stats for all sorts of industries, they’ll be able to offer an unbiased and well-researched answer to this question.
Based on SBA guidelines, you should expect to spend somewhere around 7-8% of your revenue to maintain your current size. So, if you’re a $500k/year shop, you should be actively investing $40k/year into the entirety of your marketing dollars (websites, SEO, AdWords, newspapers, and everything combined). If you’re a $4M/year shop, then your 8% mark places you at $320,000/year in marketing investments. (Of course, if you want to increase your sales, you’ll want to slightly increase your marketing budget as much as safe for your company, maybe even up to 10% of revenue. Then, once you hit your desired revenue goals, start pulling back to 7-8% again.)
At this point, many companies fall in one of two big buckets: either they spend far more than the 8% of revenue to maintain their size (which means their marketing isn’t working very well), or they only think about spending money on marketing when the phones slow down, but not when the phones are ringing.
If You’re Spending More Than 8%
If you’re spending more than 8% of your revenue on marketing and you’re not getting enough results to make it worthwhile, there’s a problem. This probably means that either the marketing channels you’re using aren’t working like they should, that you’re using the wrong marketing channels entirely, or that there’s a kink in your pricing model (basically making it where the busier you get, the more money you lose).
We recently onboarded a new HVAC client who has spent- for more than the past year- over $5,000/month with a very large company to provide “digital marketing” services for them. And, in over those many months, how many leads did that company generate for them? Zero. That’s a broken marketing problem.
We have another client who, despite several years of million-dollar-sales, has found it harder and harder to pay parts houses, make payroll, and more. In this case, they had the call volume, but in reality, the more jobs they worked, the more cash strapped they became. In this case, this isn’t a marketing problem, and spending 10% or 20% of your revenue isn’t really the answer. If this sounds like your company, look into analyzing your pricing structure by using our step-by-step guide here. Chances are, you’ll discover something that’ll surprise you, and will be the key to you becoming profitable again.
If You’re Not Investing Consistently
When a marketing plan is well-thought and well-executed, it actually works to reduce the effect of busy & slow seasons. Sure- you’ll still have seasonal demand (like in a summer heat outbreak), but when you have smartly invested in your marketing year around, you’ll find that your slow seasons aren’t as slow as your competitors, and your peak seasons are more intense. Develop the discipline to smartly invest in your marketing efforts consistently and persistently. Eventually, you’ll find yourself busier than every other shop around you.
We actually posted a video to our YouTube channel about this exact topic here, so if you’re interested in learning more, check it out. Regardless where your company is on the revenue scale, be careful to not spend outside the 7-8% of revenue range for your marketing efforts. And, be careful to monitor the results.
Which brings me to my next point:
Ineffective Marketing
There’s lots of terms that get thrown around by marketers to try to impress people like you. You’ll see things like “Impressions” or “CTR” or “Conversions”. Without getting too inside-baseball, while each of those terms have important concepts to understand, as an HVAC/R contractor, they’re largely irrelevant to you.
Why?
Because you should care about the scoreboard. Not the on-base percentage.
Let me explain.
We just mentioned a company that we recently partnered with who previously spent $60,000 over a 12-month period for digital marketing. It sounds impressive, right? How many impressions did they get? Who knows- let’s say 20,000. CTR? Let’s make it an incredible 10%. Conversions? Heck, I’ll make up a number and say 1,950. All of this sounds impressive, I bet.
But, bottom line this: how many leads were generated? Zero.
How many customers were created? Zero.
$60,000 invested and $0 generated is bad math. It’s not about the activity; it’s about the results.
Regardless of your company’s size, you need to be monitoring the results of your ad spend. At DP Marketing.Services, one of the most important metrics we try to measure is the COA, or Cost of Acquisition. Understanding your COA will help you make smarter decisions about your marketing efforts. Typically, we measure this as an aggregate of your entire marketing mix. In other words, we look at the sum investments you make with your website, door hangers, Facebook, AdWords, SEO, and everything else to determine your average COA. Then, we can break it down further into channel-specific COA, and look for channels to leverage further, or look for channels to reduce investment in.
To help you determine this metric for your company, we created a simple worksheet that you can use to gain those insights. Simply click here to go to DP Marketing.Services’s website, and we’ll give you the PDF for you to use for free. We suggest reviewing this at least once a year, and making sure you’re heading in the right track.
Your Google Ranking Stinks
Flashback with me.
The year is 1997. Cell phones weren’t smart, and home computers weren’t guaranteed. The internet access required stealing a phone line with a loud screeching sound every time you surfed the net. Pierce Brosnan was Bond, George Clooney was Batman, and Mike Tyson took a bite of Evander Holyfield’s ear.
It was a dark, savage time.
When people wanted to look for a contractor, they’d tend to pickup a phonebook. If they were especially sophisticated, they’d hop on their computer, dial up with AOL, and surf over to any number of search engines like Excite, AltaVista, WebCrawler, or Ask Jeeves.
In 1997, there were 1.1 million website for visitors to dig through. And basically, those search engines tried to prioritize those 1.1 million websites by scanning to see how many times certain words were used on your site.
So, it went like this.
A customer surfs over to Ask Jeeves, and looks for something like “HVAC contractor”.
Ask Jeeves, then, has scanned each of the 1.1 million websites, and counted how many times the word “HVAC contractor” has appeared on a website. Whoever used the words the most were recommended to the customer looking for the contractor, and thus, they’d begin weeding through them. So, of course, companies began stuffing as many of those words into their website as possible, hoping to get the attention of those Ask Jeevers.
In 1998, Google changed all of that. Google had a theory- that rather than counting how many times a website says a certain thing (like “HVAC contractor”), what would really be more important is what other people say about your site. In other words, it doesn’t matter if you say that you’re the “best HVAC contractor in the South Valley”. What matters more is if other people considered you the “best HVAC contractor in the South Valley”.
How did Google do that? Well, instead of only scanning your site for keywords (which they do), they also started scanning other websites with links pointing to your website. They started analyzing the content of these links: are they from respectable sources? are they credible? And, they started measuring customer’s experiences with a company: did customers say you did a good job taking care of them or not? And from this information, they started ranking websites; not based only on the amount of words that you use on your site, but mainly on how well it appears you take care of people.
Alright, let’s bring it back to current times. Google is now the dominate search engine for the entire planet. As of the time of this writing, Google claims nearly 92% market share for every country on every device. Those 1.1 million websites in 1997? That total has ballooned now to over 1.5 BILLION sites at the end of 2017. Statistically speaking, now when a customer is looking for “HVAC Contractor”, they’re not using a phonebook (although 3% still do); now, they’re using Google.
So, similar example: customer sits down at their computer (or more likely, pulls out their smartphone from their pocket), goes to Google, and does a search for “plumber.”
Google has indexed each of those 1.5 billion websites, is aware of all of the links of every site pointing to your site, is aware of each and every customer review your company has ever received, and will now present a very small list of companies who GOOGLE THINKS is most likely to solve that customer’s problem.
So, it presents them in a form for the customer to make a decision. Here’s a screenshot of a search for “Seattle Plumbers” to prove the point:
- You generate traffic to the site, and
- When your site converts traffic into leads
Ryan studied marketing at the University of Tulsa (MA), and went on to the University of Houston (CTC) and Northeastern State University (MBA).
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