It’s estimated that in 2015, small and medium businesses will spend over 50 billion dollars on advertising. You may recognize that as a lot of money. And if you’re contributing to that figure, you’re probably aware of the difficulty in tracking precisely whether or not your investments are generating home improvement leads for you.
Unfortunately, statistical tracking is often either vague or obtuse, especially considering that small business owners have about 800 other things to do besides pursue charts and graphs. Pay per click advertising generally uses eight key metrics to track a marketing campaign’s effectiveness, including cost per click, click through rate and impressions, the raw number of times an ad is shown.
Keeping track of all of these statistics can be overwhelming – not because they’re complicated, but because it’s never clear as to what degree all these different performance metrics are influencing your lead generation.
If you’re a home improvement business owner, I have good news and bad news for you. The good news is that there’s really only key statistic you need to keep track of – Cost Per Lead (CPL), which is often called Lead Acquisition Cost (LAC) by marketing companies. The bad news is that keeping track of it can be like keeping track of a needle in a haystack in the dark wilderness. If you listen carefully, you can hear coyotes howling.
You can calculate your CPL by taking the money you’ve been spending on marketing and dividing it by the number of leads you’ve generated since the campaign began. That sounds simple in theory, but a marketing company can’t tell you whether that guy who called last Thursday found your website through Google Adsense or had it recommended to him by a previous customer. And, to be blunt, not every small business tracks their marketing budget as carefully as they should.
Combine these factors and calculating your CPL can become closer to augury than an exact science.
On the plus side, marketing companies are getting better at addressing this issue. Of the multitude of services being offered to you, call tracking and appointment booking software now commonly rank among them, and they’re being integrated into your marketing dashboard in a way that implies some causality between performance indicators and CPL.
But while progress is being made, it simply isn’t enough yet. Small business owners want and need leads, not better ways to calculate how many leads they may have received. Any marketing company that can say “You gave us X money and we gave you Y leads in return” would be worshiped for turning a complex, time-consuming process into something simple and straightforward.
Unfortunately, that doesn’t appear to be happening anytime soon, which means you need to keep analyzing metrics and calculating CPL yourself. Don’t be overwhelmed by the number of performance indicators you’re being bombarded with – focus on the ones that relate directly to lead generation. By doing that you’ll get the best sense of how much your leads are costing you, and in turn whether your marketing campaign is cost-effective. And you won’t have to spend days making charts of click through rates to do it.