Painting contractors can measure marketing effectiveness two ways: revenue ROI (sales divided by spend) and net-profit ROI (profit divided by spend). A $250 Facebook ad generating a $5,000 job with 15% profit margin yields 3× net-profit ROI. Aim for net-profit ROI above 1.1× and revenue ROI above 10×.
Chapters
How much should you be willing to pay for a lead in your painting business? Let's talk about marketing return on investment, or ROI, both revenue-based and net profit-based ROI. First, let's talk about revenue-based ROI. So revenue-based ROI equals sales revenue divided by your marketing spend. This tells you how much sales revenue you're generating from each dollar spent on marketing. You've got $100,000 in sales from a marketing campaign you spent $10,000 on, that's a 10x ROI. Now let's dive into the net profit-based ROI. So net profit-based ROI is equal to net profit divided by marketing spend. This gives you a clearer picture of the actual return on your marketing investment by considering your profit. Now, for a painting business, you should Aim for 50% net profit. So let's say you spend $250 on Facebook ads and land a $5,000 project. That's awesome. Well, let's break it down further. With a 15% profit margin, you'll make $750 in profit from that $5,000 job. Now calculate your net profit-based ROI. That's $750 divided by the $250 you spent on the Facebook ad, which is a 3x ROI. Congrats, you 3x your money. Now, good net profit ROI is anything over 1.1x. Good revenue-based ROI is anything over 10x. Hey business owners, it's time to boost your profits by tracking your marketing return on investment, ROI. Start measuring and see your business grow.
