Budgeting For Lead Generation

Lead generation is a vital part of growing a home services business. Learn how to effectively budget for this important part of marketing.

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Marketing is essential for any business and particularly important for home service businesses that provide one-off services such as landscaping or renovations. To thrive, it must have a steady stream of new customers. Word of mouth can only go so far. A robust lead generation strategy is a must for any business that wants to enjoy continued growth.

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Why Invest In Lead Generation?

Finding new customers takes time and effort. Acquiring a new customer can cost five times what it costs to retain an existing customer, which is why businesses that can base their retention model around repeat customers prefer to do so. Home cleaning services that can fill their order books with weekly or biweekly visits to clean existing customers' properties will find their bottom lines remain healthy if they have a high retention rate.

Businesses that rely on one-off engagements, such as landscaping, painting, or remodeling work, need to invest in brand recognition. It takes five to seven impressions of a brand for recognition to occur. From there, it takes more impressions to build trust. With high-value services such as building work or decorating, the barrier to conversion is high.

This means a home remodeling contractor that wants to bring in new customers must invest in a steady and sustained campaign to raise awareness of their brand. Marketing works best when it's a consistent effort rather than sporadic campaigns.

Many smaller contractors find it hard to budget for marketing. Fortunately, there are many marketing options available to smaller businesses that can have impressive reach without costing a fortune.

Lead Generation On A Budget

One of the best things about the internet is the way it democratizes marketing. Both a small business and a multinational company can have a web presence and have impressive reach if they know what they're doing.

If you're a local painting company or a gardener looking for landscaping leads in your city, you don't need to rank number one in the search engines for the most competitive keywords in global search. All you need is to be found by local homeowners.

A good lead generation strategy will focus on local business directories, the main review sites, and social media. This will help you generate highly targeted leads. Some services to look at include:

  • TrustPilot reviews
  • Craigslist
  • NextDoor
  • Facebook
  • Instagram
  • Local business directories
  • Google Maps
  • Pinterest

The above sites and services are where the majority of homeowners spend their time and where they look for recommendations or inspiration. Invest your time and effort in those areas and you'll find a steady stream of leads.

In addition to the above, many businesses still use traditional advertising options, such as:

  • Flyers
  • Business cards
  • Local team sponsorships
  • Billboards
  • Newspaper ads
  • Local radio ads

The costs for these ads are easier to predict than the costs for maintaining an online advertising presence, but tracking the response to those ads to calculate ROI can be more difficult. Advertisers can't track clicks on a billboard, so they rely on people truthfully answering the question, "How did you hear about us?" by saying they saw an advertisement in the real world.

Social Media Marketing For Home Services Businesses

Facebook and Instagram offer business owners the chance to spend money to raise their profiles or get traffic to their websites. However, it's possible to get some free attention for your profile if you post high-quality content and have a strong group of followers who are willing to like, share, and comment on your posts.

A local painting company may find it gets more qualified and high-quality interest in its painting business from a recent customer sharing photos of their newly finished child's bedroom than it does from any paid ad campaign.

It is, however, worth investing in ad campaigns to build interest in your business. For example, if you're offering a short-term discount, have a graphic designer create a post advertising that discount and run a campaign aimed at homeowners in the local area.

You can judge the success of that campaign by how many people contact you referencing the discount. If the campaign does well, run it again. If you don't generate a lot of interest, change the targeting settings used on your paid posts and try again. Testing and evaluation in this form is an important part of lead generation.

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Building A Strong Profile Online

One often-overlooked part of marketing reviews is an online profile. With expensive and important jobs such as remodeling work, consumers are unlikely to want to make an impulse buy. They'll most likely compare prices and read lots of reviews. If your business has few reviews or the reviews are mixed, you could be missing out on customers.

Lead generation services such as CraftJack offer reputation management as a service. CraftJack will contact recent customers and ask them for feedback. They'll also encourage the customers to leave a review of your business and can also assist with replying to reviews to show your brand is interested, is engaged, and cares about the feedback it's getting. Many consumers are willing to accept the occasional bad review of a business if they see that the business responds to those reviews in a professional and calm way, but hostile responses (or no response at all) could damage a brand.

One recent survey suggests that 90% of shoppers read reviews before they buy. This means having a robust online reputation is essential. Reputation management isn't a direct lead generation tool, but it contributes significantly to closing the deal once a prospective customer gets toward the end of their conversion journey.

Working Out Your Marketing Budget

Many small businesses get their start with word-of-mouth marketing or simply picking up jobs from friends. Contractors who previously worked for someone else might be fortunate enough to have their first long-term client be their former employer. Making the transition from doing odd jobs for a bigger business to being a fully independent company can be tricky.

In general, a B2B company would allocate 2% to 5% of its annual revenue towards marketing. A B2C company would spend more like 5% to 10% of its revenue on lead generation.

That may feel like a lot of money when viewed as a lump sum, but it's important to reframe the expenditure in terms of what it brings to the business. A marketing campaign may cost $10,000, but if it brings in 10 customers and each customer spends $20,000, the campaign has generated $200,000 in revenue for the business. This is known as the return on investment or return on ad spend.

The challenge for business owners is predicting which ad campaigns are going to generate the best returns. A business looking for landscaping leads in an affluent area may find Pinterest or Instagram is a good choice. A home repairs contractor might find Facebook or even Craigslist or a similar classifieds site is a better place to spend its money.

Managing advertising budgets and researching keywords can be time-consuming, and many business owners opt to hire someone to do this job for them. It's something people can learn to do themselves, though. Google offers free training courses to help people learn how to advertise on their platform.

Finding The Best ROI For Your Business

There's an element of trial and error to lead generation. When you run a marketing campaign, you can't be sure how your target audience will respond since there are so many factors at play. You're not just competing against other contractors for their customers but also against other things a homeowner might spend their discretionary budget on.

Seasonal trends, economic factors, and even the weather can influence how consumers behave. This means your marketing expenditure might be a fixed cost but the impact that expenditure will have on your bottom line is less predictable.

Many businesses work around these challenges by planning their marketing on a quarterly or biannual basis. They know what they want to promote for each season and have an idea what creative content they'll use, as well as what platforms they'll focus their promotional efforts on.

Each quarter, they'll run a campaign or two and monitor the results. They might print out flyers offering one discount and run a social media campaign with a slightly different offer. This allows them to track the performance of the campaigns based on the discount code each customer used.

At the end of the campaign, a contractor can get an accurate idea of how each promotion performed by counting up those conversions. They can then look at the amount spent on each platform, creative, or promotion versus the amount of revenue generated.

Some businesses lend themselves towards marketing on specific platforms. For example, Instagram is a platform that's image-heavy and aspirational; people go there looking for fun ideas and entertainment. A landscape gardener or painter might generate a lot of customers there. A cleaner or plumber who specializes in less glamorous work might find their content falls flat.

Never Stop Testing

Once you've found a campaign that works well, it can be tempting to stick with that campaign and run it season after season, or even year after year. This is likely to be counterproductive.

Home decorating fashions change regularly, so using outdated photographs could make your business look out of touch. Tastes, trends, and consumer interests are always evolving. A joke that's eye-catching and funny one year could be viewed as tasteless the next. Even the fonts used in ads could start to show their age after a while.

For this reason, it's a good idea to keep testing and tweaking your campaigns. Even if you don't have a lot of space in your cash flow to be hiring graphic designers and copywriters, it's worth allocating a small amount of your budget to market research, keyword research, and coming up with ideas for new ad campaigns.

Keep running the old, successful campaigns while allocating a small amount of your ad spend to trying new ideas and seeing how they perform. If a new idea appears to be profitable, increase the allocation of funds towards that idea.

Look at what your competitors are doing and take some inspiration from them. This doesn't mean copying their ideas — just showing an awareness of what they're doing and knowing there's probably a reason they've taken their business in that direction.

At CraftJack, we offer lead generation and reputation management services for home services contractors. We work with businesses of all sizes to help them grow their sales revenues and expand their reach. Contact us to learn how we can help you get qualified leads for your business.