Stop Tracking Cost Per Lead (Track This Instead)

I think what people get stuck on is cost of lead.

It can get complicated quickly if you're not measuring the right things.

Number of sales from that channel, dollar amount of sales from that channel, that will get you to like your first layer of ROI.

How are you tracking down specific campaigns?

You wanna be able to measure like what is your blended ROI across the business?

I love it.

Attribution is a very complicated process. Cost per lead, like that's not the thing to measure. The thing to measure is like— Welcome back to Owned and Operated, a top 200 business and entrepreneurship podcast. I'm your host, John Wilson, and on this show we talk about how to build home service companies, oftentimes with examples and stories from my own. Today I'm rejoined by my somewhat frequent co-host, Mr. Jack Carr.

I thought you were going to say somewhat friend. That, that my heart sank. It hurt my feelings the first second.

My BFF for life. My ride or die.

Ride or die on the boat. Let's do this. Jack Carr, what is up, dude?

Uh, living it up. Um, what, July 1st? So June ended. June was kind of a funny month. We, um, for—

in what way?

Well, it's so funny for, I think, a lot of reasons. So like temperatures were— so May was tough for most of the industry, like HVAC-wise. It was kind of a bloodbath. And, um, I really need to start doing like industry news, like daily podcasts, like 5 minutes. And today in HVAC, it's a bloodbath. Uh, but yeah, May was kind of tough. And then June weather didn't cooperate for most people that I know. In the like the first half, it was okay. There was a middle week that was super weird, and then it went gangbusters for the last 2 days.

Yeah, because we have a jet— we had a giant heat wave that just like absolutely destroyed everything.

But yeah. You know, I have a friend that sold half a million and he's a $40 million business. So half a million is like more than double his daily budget yesterday. Yeah.

God. All I, all I have to say though is, again, like I've been saying, if you, if you're a long-term listener, like we haven't been ready the last 4 years for summer for like the first big heat wave and we're finally ready for it.

And you guys killed it.

It feels as good as you would think.

You killed it. It feels as good as you would think. I need to like, Can I screen share on this? Oh my God.

We, we blew out our best month by, I think like $200K.

Yeah, dude. I, we, okay. If, if you're not watching this on YouTube, I'm pulling up Jack's Service Titan right now.

This month was better than our whole first year. Yeah. One month beat our entire first year of sales.

You guys, you guys killed it.

It feels good.

It's, yeah, it's disgusting. All right. I'm, I'm screen sharing this right now.

Now we're hunting for a million.

Yeah. All right. So like, if you're not watching on YouTube or like Spotify, I think has videos.

Don't, don't look at that one. That's our daily sales.

Oh yeah, yeah, yeah, we'll ignore it. Yeah, okay, ignore that. It's in the morning. Well, nope, month to date. Okay, see, this is what I— this is what I get for trying to navigate, uh, last month.

Okay, there we go.

So yeah, $850,000 in total sales. Dude, so close to a million. Just couldn't— couldn't get there. But like, look at this freaking chart. Yeah, so if you're— if you're not— if— if for some reason, uh, you don't You're not watching this on video. Like, June was $818,000 in revenue, $850,000 of sales, and it was almost a double from last year's June. Yeah, which was, uh, $428,000. Um, May was up 40%, April was up 93%, $147,000 in March. So you've had a crazy year just in general. Uh, but like, yeah, June, June was nuts. June was nuts. Your Google Business Profiles are either printing money or they're losing it, and that's where Big Reputation comes in. Big Reputation turns your GBP into a true lead machine without adding more work to your plate. It runs in the background with automated posting, review generation, and fast responses so that your reputation compounds over time. And this is huge if you're multi-location. They make it dead simple to manage and scale your reputation across every branch so every location shows up and wins in the map pack. I'm actually using Big Reputation right now as I grow and scale my newest acquisitions. Plus, you get real insight into what's actually happening. You get to spot gaps with location health monitoring, track reviews and sentiment, and see which zip codes you're winning and which ones you're losing. Better insights, stronger trust, more calls from an asset you already own. Go check it out at bigreputation.ai/oao.

I think when I sent you mid-month June, I sent you a little— oh yeah, that was like 98%.

When you passed May Mid-month, you were like, hey dude, just passed May. I was like, fuck yeah, no big deal, it's fine, it's totally fine.

Yeah, it's exciting. It feels good. It feels good to have a team that's, that's, uh, executing. And we still have some, some opportunities, um, but overall it was crazy because I think the, the metrics I sent you were up 98% year over year, probably more now that we finished the month out. 98% year over year. And we're up 24% on call volume. But yes, we're up like 68% on call conversion. Like, it's crazy from like when we locked in on, um, converting bookings.

So yeah, no, no, you guys are, you guys are killing it. It's kind of awesome. Um, but yeah, it was fun. So June, we don't have final numbers yet, which might sound ridiculous, but like we don't actually know what revenue is yet because, uh, the size of our business, like there's multi-days and Like work in process, so usually it takes a couple days to like actually figure out what revenue was, which is kind of annoying because you want to just like open up Service Titan and like you know hey what do we do? But I think Service Titan says like 3.35, but we have a brand on Housecall Pro, so we have to add that in. All that to say, I think we're like 3.7.

So we didn't.

I know we didn't hit. We didn't hit four million, but like dude, so close. And the funny thing about that is like. Our first three million dollar month was this year.

Yeah, two months ago.

It was like April.

Yeah. So the so like a big celebration. Everybody's cheering. Yeah, yeah.

That was crazy.

Four.

And like yeah, now we're like knocking down the door at at four. Um, I don't know if we'll hit four in July.

We will.

We will in August because we have another we're bringing on another partner at the end of July. Yeah. And that's, uh, I think they're $8 or $9 million of revenue. So like, we— but ideally we hit it right before that. That way we just know we did it. Yeah.

Not to mention, I mean, like I said, we starting off July again, at least in Nashville, but most the South with like, dude, 100-degree weather for the first like foreseeable 10-day forecast. We are booked solid. We're ready to go. So I'm, I'm thinking this is the month. This is the month we hit— oh yeah, we're gonna hit a million, and then we as the collective are gonna hit 4, which will be—

yeah, awesome. Yeah, no, totally. I think, I think the most, um, I'm holding my breath on this. I don't think it's gonna happen, but I think like what's even cooler, June, I don't think we hit a million EBITDA, but I don't think we're far off. Yeah, which like It's always been interesting to like do an entire month's— like we, um, $3.7 million is like, that's the amount of revenue I think we did in 2019, or maybe, uh, might have actually been— yeah, I think that's about right. Maybe 2020. It was like, so that one month, but what's even— but like now it's like, okay. So when I first bought the business, we did $1 million of revenue and we just did that in EBITDA. In a month. Yeah. Now we're talking.

You know, it's it's funny because these these are all of our vanity metrics.

Like oh totally.

Just want the zeros, man.

Just hit the zeros. Yeah. Like I want to I want to see two commas on that either, dude. Like let's do it.

That is really cool.

Yeah. But I I don't think I don't think we're there. Um. But yeah, well like I'll keep you in the loop. I'll keep everybody in the loop. Did we hit it? Did we not? Pat sent preliminary numbers and I'm like I think you're just teasing me because I don't think this is real. But it was like it was midnight.

That's crazy. That's wild.

I know.

I just need to find a few add-backs and then we'll call it a day.

Okay. Yeah, yeah, yeah. John was tired. That's, that's an add-back, right?

Yeah, like, his— John was out this month, so like, definitely his salary gets all added back.

Like, yeah, yeah, yeah, it's good. Yeah, yeah, he didn't, he didn't— he hardly worked. Um, okay, so anyways, that was June. We're excited about July.

Uh, July we have a real chance at And if you want to join the team, we'll take a second here to say, if you want to join the team, reach out to Jack or John and help us.

Right. We have to pitch. We have to pitch.

It's also a lot of fun, if you couldn't tell, being, uh, working with people that you actually like.

So, um, I agree with that. Yeah. Well, it is pretty fun. Like we, um, we have, so we have, uh, uh, we've done 4 partners this year. And we're like, our 5th is in July, so this month, which that's pretty cool. It's at the end of the month. And then we're like, our 7th is already like set, I think. And we're really, really excited about that one. That one's gonna be a lot of fun. And then like, we're starting to talk to number 8, and it is definitely wild. to watch and feel the momentum.

Yeah.

It's really interesting. It's interesting to be building. And I honestly think what— I was talking to somebody about this the other day. I think that this isn't even a pitch. This is just like I'm complimenting you here for a few minutes. So I think what has been really interesting Is like, as I think about like how has this year been successful so far, which obviously like we're gonna 2.5 times and we started at around $30 million. So that's not like gonna be easy no matter what way you think about that. Obviously like we're working really hard this year. We are running. But when I think about like who the ideal person is Like, it has been you and it has been Jeremy on your team and David and Chrissa and like the team.

Yeah.

And I think that like there's sort of this component of like, how do I work with people that I like to work with, which is a really good part. But like, how do you work with people that are like smart and driven and like want to kill it together? And like, that's been the superpower is you just blew out June in the most ridiculous possible way. Like, that was crazy. And like, we got to partner in on that. And I just think that was— I think that was really cool. And I don't know. So yeah, that's been fun for me. And I think that's been a big part of like how the train has stayed on the track this year is like when we— when we bought most of our businesses over the years, we came in and replaced the leader just because they were so small. They were like $2 or $3 million businesses and the guy was retiring.

Yeah.

But being able to like partner with you has been like a totally different experience for the better by far.

We've been able to push culture in a way that I didn't expect, and that everybody is all on board the train pushing in the same direction.

It's crazy.

And if you're guys listening, I hope he takes this the right way, but like I was giving my, my sales guys, my Comfort Advisors, a bunch of shit about like, hey, you guys got beat by a guy that's been a door sales, door knocking guy for the last, you know, he's only been in HVAC for A month.

Tyler is a baller.

Tyler's a baller.

Tyler's a baller.

But like, they're all chasing this guy that they've never met, they've never seen.

I think he hit second last week or last month.

Yeah, he hit second. My God, we had 2 out of the 5 top people in the company, and our third guy was only— he only missed by $9K to beat the top 5. So we almost had 3 out of 5.

That's good, man.

But point being is like, the, the, um, Like the culture around having somebody to friendly chase has been fun. Oh, yeah. It's real. It's not like they don't like— like they're happy to be a part of something that is— I don't want to call it gamified, but there's a gamified experience.

Well, like I literally get a text. Do you get these every day?

Yeah, yeah, yeah.

We're starting to roll this out to the whole company. So we— Yeah, I'm trying to pull this up now. So yeah, so I get this text. I wish I could just screen share this entire conversation if you're looking at this. I get this text and it's daily stats for the company. This is an example of something we made with AI just for funsies. Well, I've talked about it on here. It's huge.

Yeah.

Which is even funnier. Yeah, I bought that like 3 years— I bought that domain a couple years ago as a joke, and my wife has totally hated it. And I'm like, babe, I found a way to use it.

I'm gonna even be more annoying with it is I'm gonna make a company out of it just so that it has to stay in play.

It's gonna be awesome. Well, it's gonna be huge. Uh, so, so it, it reads off like which team won. So like yesterday, Nashville HVAC won sales like $72,000. That's actually fucking ridiculous, dude. $72,878 in one day for HVAC sales team. That's like 3 dudes like clocking like 80 grand. That's crazy. And then revenue leader was Stowe Plumbing. And then there's like an individual leaderboard. And what I'm excited about is like, that was sort of like iteration one. The next iteration is it texts everyone on the team like where you fit on your team and in the company as a total.

Yeah.

Every day. And I think that like having line of sight of like, hey, this guy's a high producer in this market, like I'm gonna go chase him, never met him, I'm gonna like, You know, yeah, I think that's been a lot of fun.

What's been interesting too is like we're talking about this, this— people want this, by the way. I mean, I've received like 3 texts from individuals like, hey, how do we get—

Yeah, we have a waitlist. How do you do it? I think you're supposed to email info@ownedandoperated.com and we're slowly starting to like let people into it and it like aggregates data and like shares average ticket close rate. Yeah.

Yeah, because I think that part of it, right, you have to be able to get good data. So like, you don't just want to let anybody in so that you have a bunch of garbage data.

Yeah, like, is your CRM clean? Yeah, yeah. But like, yeah, we are opening it up. Um, just if you email info@ownedandoperated, I— they, they're keeping like a waitlist and we're slowly starting to add people into it. So if you already contacted, don't mind me. It's like literally— it's called Huge. So like, that gives you an idea of how seriously I take this. Which is very, so we're moving slow at it. Okay.

Okay.

We were supposed to be talking about marketing ROI. All right, let's do it. So marketing ROI is really interesting. I think what people get stuck on, and I suspect it's 'cause it's the fastest number that they can like figure out, is cost of lead. Which I think is kind of like a weird number to get stuck on. So like, as an example, like how much does a Thumbtack lead cost? Like $20 or $30 or something?

Depending on the industry, but yeah, between $20 and $60.

Yeah. So like $20 to $60, I think Angie's List from what I remember is the same. And those are like, that's cost a lead. If you go over to LSA, it's like $100. And so I think like most people get stuck on this, like, well, what's my cost to lead? And I'm like, well, fucking, I don't know. But like, what's the lead going to provide? And why is LSA worth 5 times an Angie's lead? Well, it's because someone's calling you to solve that problem right now versus a written lead that gets sent out to 3 or 4 people.

Yeah, because that's cost per lead. So if it costs me $60 per lead for a new unit.

Yeah.

And that gets out to 3 people, so I don't get that lead and it takes me— I get maybe 1 every 3 leads because my— let's just say I'm not using using Quick Staffers or a good speed-to-lead service.

That's good.

Good plug. Or a good like speed-to-lead service. And I'm pretty slow to it and I get 1 out of 3. So now my cost per booking, not even cost per, you know, acquired customer, but just cost per booking jumps to like $180, right? Just, yeah, 60 times 3. And then you get down to like cost per actual revenue. And I think it gets even crazier because you don't sell each one of those because they're getting 3 bids anyway. So you might get out there, but you have the booking but not the actual revenue generation cost per job. So it can get complicated quickly if you're not measuring the right things.

Yeah, yeah, and I think, so I think that's one, that's one I wanna flag is just like cost per lead is one of the things to measure when you're thinking about like marketing. So it's cost per lead, Cancel rate from that channel, number of sales from that channel, dollar amount of sales from that channel.

Mm-hmm.

Then there's a few, I mean, there's a few more, but like those are probably the big ones. And then you can figure out ROI from there. Like how much did I spend on this channel this month? How much did I make on this channel this month? And I think that that's a good place to start. And I think that will get you to like your first layer of ROI.

Yeah.

Which is, is my demand capture marketing productive? And we define productive as like minimum 5 times ROI. Yeah.

Like that's the first thing you need is revenue versus spend.

Cost. Yeah.

Because I mean, yes, again, like I said, the cost per lead matters, but it doesn't matter as much as, hey, I could have, you know, a cost per lead of $600. Yeah. But if I'm driving, you know, $60,000 and running a 10x, then great, because we do have channels channels like that where the cost per lead is extremely expensive, like we might only get 3 leads, but those 3 leads generate, you know, just massive amounts of revenue.

Yeah, no, I, I agree. I, I think the next layer, um, and this is where it gets a little bit tricky, is most of your demand capture is last click. So you get like last click gets a lot of work or gets a lot of credit. So like, hey, my— is my Google Ads driving the lead, or did my radio ads drive people to Google to look for Wilson and then they clicked on a PPC? I'm sure there are like tremendous amount of ways to measure this in like a productive way. I think overall the way that I find it to be helpful is What is my marketed? Like, let me let me step up back. Yeah, back up a step. You can divide your revenue by existing customer and non-existing customer, and I think that that's the first step is like outside of the amount of marketing that I'm spending, and am I tracking this by the lead? How much of my day-to-day revenue? Is marketed revenue versus non-marketed revenue. Non-marketed revenue is going to be like recurring customer, which is different than organic, because if somebody contacts you through GMB or GBP, like, that's organic. That's still marketed. Like, you paid for the GBP. Like, you're paying for a review service or something. Like, there's costs associated with that. So I would consider that marketed. Like, it's a new customer. So how much of your revenue is new customers, and then how much of it is existing customers? And you separate those 2 things. And then of your new customers, how much of them came through obvious organic channels? Like they just called my phone number. So maybe like, hey, I can't attribute this to anything, but they called my phone number and I don't have their file inside my system. So maybe that's radio, maybe that's they saw a truck, you know, like pick a thing. Then GBPs is its own thing. The best companies that I see, their marketing's divided. They track their organically as tightly as they track their paid, because I think that is an important piece of the puzzle. If I add a new GBP, what should it do for the business? What did it do for the business?

Yeah.

And then you track your paid. And what we find is—

So a question before you go into step 2 with that is, so I know the answer, but I know a lot of people throw this question around at the Breaking Five. How are you doing that? How are you tracking down specific campaigns? What's the avenue that you're utilizing to get this tracking ability? Because most smaller contractors have 1 or 2 numbers. They have that across everything. And so they're having trouble tracking. Do you ask? Do you like— what do you do?

It starts with like a new customer report. Like, and so this is where it gets— we talked about this, I think, last episode of like how to use AI inside your business. Attribution is a very complicated process, and but it starts with did someone create a new customer file? Yes, no. And then you can work backwards from there. So hey, I created ten new customer files yesterday. Okay, where did they come from? So then you start working through attribution. Well, hey, this phone number. Matches the phone number that came through LSA. Yeah, so I'm going to attribute this lead to LSA. This phone number matches this from Angie's, so I'm going to attribute to Angie's. This phone number matches nothing, like we did not buy this lead from anywhere because we get daily reports of what leads we bought. So I'm going to attribute that to random call-in because if it was on a GBP, then it would have gone through a GBP line.

Yeah, so all the phone numbers— so you have a bunch of different phone numbers for each marketing campaign that you're doing across everything. And I think that's the important— the thing I was fishing for here was like making sure that you have individualized phone numbers for every single different campaign. You do a mailer, you get a different number. You do a different mailer for water heaters than you do one for HVAC. Well, you should probably have different phone numbers associated with that.

Or just a way to track it. Because like for mailers, you don't necessarily— I mean, I'm not the expert at mailers, but like There are other ways to attribute because most of it's just like, hey, has— have I contacted this person and did they contact me? So like mailers, did I send something to their address and did I send it 7 times? And then did someone from that address call me? And that's where it gets complicated is you have like— there's like 20 different sources of data that you're trying to funnel in to attribution. And what a lot of companies do that like do this really well is they have a full second CRM. Like beyond, uh, ServiceTitan or Housecall Pro or whatever else they're using. They have a marketing CRM where all they do is like handle attribution inside that CRM. Uh, people use, um, GoHighLevel like a lot.

Yeah.

So like Isaac in Chicago uses GoHigh— I think it's GoHighLevel, but like he uses a software that tracks his post Like where he sends 200,000 mailers a month, like by address, by name. And then he shoves that into GoHighLevel and then like each contact point goes over there. And then when they contact, he can track ROI inside GoHighLevel.

Also, what a great way to be able to like do more automations because GoHighLevel has a really open API which allows you to like—

Let's do anything.

Do anything versus ServiceTitan's closed. So that's interesting.

Yeah.

What a great thing for a CRM that's currently trying to compete with ServiceTitan to do is wrap up a secondary CRM system inside their thing. Okay.

Well, yeah, I think marketing is just like its own very complicated— and like the Marketing Pro product is not good. So yeah, like it's not capable. Like if, you know, yeah, I have a lot of opinions. Okay, stop before I get in trouble, right?

So we've just attributed. Next.

So yeah, so we attributed, and then the next thing is like how much of your revenue came from paid, organic, and recurring customer? And that's a big thing to walk backwards on. And what that helps you figure out is what is your total blended marketing ROI? And the difference is Radio, TV, billboards, truck wraps, GBP rent, like pick a freaking thing. But you have channel ROI, but then you have marketing ROI, and those, those can be two different things. It's very similar to, um, I see companies measure gross profit by job and not by company or department or whatever. Well, they're like, on this job we did X, and on this job we did X. So we are a 60% gross margin company and it's like sort of you're also forgetting about training time, PTO, holidays, like you're forgetting about a lot of costs that are not directly attributed to that specific job, but it still counts against your gross margin. So this, this reminds me a lot of that where, hey, there's a bunch of stuff inside marketing that's not just that one lead. Like maybe you've got an agency cost. Maybe you've got canvassers, uh, maybe you have radio, maybe you have whatever, like software. Like, we have a bunch of marketing software. So, uh, you want to be able to like measure like what is your blended ROI across the business. Most marketing agencies will show you clicks, impressions, and maybe even traffic, but none of that really matters if the phone's not ringing. And that's why we partner with ServiceScalers. They are built specifically for home service companies and they focus on one thing, which is driving real high-quality calls and booked jobs. This is a no-brainer. They're offering a 60-day money-back guarantee on LSA management, Google Business Profile optimization, and website builds. If you don't get more visibility, more calls, and better leads, then you don't pay. If you want more booked jobs without the marketing headache, Click the link below and book a free strategy call with Service Scalers.

Yeah, fully agree. And, and I'm going to ask another leading conversation. Well, why do you measure then? Why do you— if you have a good blended ROI, why do you move into individualized ROI and break that down?

I think it depends on the business. So like as an example, like I'll just pick on you and me. So you, your revenue as a percentage of revenue that is dependent on leads, is much higher than Stowe Wilson. Like Stowe Wilson, 20 to 30% of revenue, like it differs a little bit by the trade, like electric's higher, but HVAC's the lowest. Depends on marketing because it has the least— like electric has the least amount of recurring service. HVAC has the most. Plumbing's in the middle. And so like for us it's only 20 to 30%, but for you I think it's like 45 or 50%.

Yeah.

I could be wrong, but—

Well, we don't have a brand. Like, we've never done branding work. We've never done a radio ad. We've done one set of TV commercials which flopped miserably.

Also, like, you don't have— like, there's no, like, reactivation. You don't have, like, a lifecycle marketing muscle. So, like, all of that stuff helps.

Yep.

But my point in saying that is, like, when someone says they're a 10% marketing spend business, that is an irrelevant metric to me. Because in this example of like half of your business is dependent on leads and 30% of our business is dependent on leads, if I spend 10% and you spend 10%, you're getting a 5x ROI. Like you're getting like you're doing it. Whereas for us, we're getting like a 3x, just like walking through that math. Does that make sense?

Yeah. And then I think that to granularize that one step further, Then not, not all 5x ROIs are equal either, right? So if we have to run double the amount of calls, right, you can have a higher amount of operating costs to be able to generate that revenue, more in fuel, more in this, more in that, to be able to generate that same 5x ROI. So I do think it's important that you're going from a very high level down to the intricacies, because 2 5x ROIs are not necessarily the same, right? A 5x ROI on service-only leads versus a 5x ROI on install-only leads in HVAC are 2 wildly different channels that require wildly different things. One requires, you know, 4 technicians and one requires 2 install crews. So yeah.

I agree. I think something that I get a little bit tripped up on personally There's a concept called CAC to LTV in like software and really any business, but I think it's mostly in software. And it's like cost to acquire a customer, which is CAC, and LTV is lifetime value of that customer. And I struggle with that metric in home service. The idea is in like a SaaS business or pick a thing, I'm just picking out SaaS.

Yeah.

If they spend $100, but that customer, like their average churn of a customer is 2 years and they get $1,000 a year, they get $2,000. That's lifetime value of that customer is $2,000 and the cost to acquire it's $100. So that's a 5%, yeah, 5% and like a 20 times CAC, which is crazy. So like big fan of that. People try to bring that into home service and I struggle with With it because a couple reasons. One, you tend to reacquire the same customer. Like, we've seen that a lot where like, if someone is a Google user, they're going to go to Google and they're going to call you and they might not save you in your phone. Like, we've had to rebuy the same lead from the same customer a million times and we have a very strong lifecycle marketing muscle.

Yeah.

I think like that makes it hard because you do have to reacquire the same customer. I also think like there's no set churn, you know, like in, in SaaS, like there's a set churn, like they pay for their monthly service or they don't. In home service, like, is it a one-time? Is it not a one-time? Yes, we're going to try to turn them into a member. But did it work?

Yeah.

I just think it's a lot more complicated. And I think that ultimately owners try to use CAC to LTV in home service to make sense of them being inefficient with their spend? Well, they're like, well, the LTV is $50,000, so if I spend— and that's if I replaced a furnace panel, generator, water heater over a 10-year period. I'm like, well, sure, like, fuck yeah, if you rebuild the home, it's $1 million. Yeah, like, I will grant you that, but that doesn't mean you should spend $5,000 to acquire that customer.

Yeah, I think it's an open thesis because I know that from, from a— that idea was perpetuated from a lot of larger PE-backed firms, right? Like that was the thesis. Thesis behind it was, hey, we buy a 3-trades business, we get them for over the 10-year period. That's the thesis. And it was picked up by a lot of smaller contractors. I mean, it's still utilized in our area to justify PPC. Like, hey, I can justify a $600 lead PPC because of— because over the life of the customer, I lose $600 this first year, but over the next 10 years I'm going to make $102,000. I've always had trouble with that one though, just because again, customers are extremely fickle and I don't think that the churn is like— you're not locked in even with memberships. You're generally not locked in. So there's no lock-in function to be able to measure churn correctly, even as a membership. Like it's not a great tool.

Yeah.

To be able to like measure accurate churn from the business.

Well, I also think like the way companies have done it is they've tried to convert over to a membership to like figure that out and like drive LTV. And like one of the fastest growing businesses that I know, it's based out in Phoenix and it's crazy. It went from like $30 million to mid-hundreds in the past 5 years. And still privately owned, and they like they don't have memberships at all. Like none. They just don't even have it. And like it is a 95% HVAC business. So I don't know. All that to say, like I think people. I don't think you should worry a tremendous amount about LTV because LTV it's not contracted revenue. It is easy to get over your skis when you're imagining a large pie at the end of this customer relationship, but that is not contracted. Like, it's not guaranteed, it's not anything. It's just like you hope that it happens. So I would focus on your first visit and can you drive like a near-term payback on your spend?

I love it, man.

What else do we— what else do we cover? I think my final one is like build a better scorecard. Like, you should just have a scorecard for marketing. I was thinking about this this morning. I invested in this business. I don't know, like, I mean, I think that's a hard stop right there.

I'm cutting you off, but like, build a scorecard for your business. It is wild how many smaller, like sub-$5 million, like in the $5 million. We talk about this a lot, breaking $5 million.

Yeah.

And that's one of the biggest requests we get is what does this look like? Can we see what this looks like?

Yeah.

It's not crazy difficult, but it's important to just Let's build something that's tracking.

Yeah.

Um, and then like, well, I have ServiceTitan. Well, is your data in ServiceTitan even good? Are you booking and attributing? Is your team doing the right thing? Because I know for, for me personally, like last year, early last year, ours wasn't. Like, we didn't have the right line items. We weren't adding marketing.

I mean, it takes real energy.

It takes real energy to design your CRM to be able to have your people then do the correct thing in the correct process to be able to build. And so part of what we did is we just generated an off-CRM scorecard, like, again, level 1 revenue to spend, which I think is important.

Yeah, I think we— so yeah, I think have a scorecard. And this is like, if you have in-house marketing, if you have an agency, if you have anything, like, everyone should be measured. If it's an agency, they should be measured. And back to my point on like cost per lead, like that's not the thing to measure. The thing to measure is like ROI and ideally ROI by channel and then ROI for the business. You can back into that. That's probably going to take some time if you're just starting off with a scorecard. Like the things that matter is number of calls, number of appointments, what percentage of your revenue is from existing customers, versus not. And the easiest way to track that is like new customer files. So like we created a new customer file, how many? Um, and, uh, call booking rate is important because then like did you book that lead or did you not? And that's an important part to like help you figure out which lead channels are working and which ones are not working. Uh, and then ideally sales or revenue by channel. And I know that this is like a lot, but most small companies only have like 1 or 2 channels. Like, it's like Google, right? Or Facebook or whatever. Like, pick a thing. And even if all you're starting with is like, hey, number of leads and like how much revenue came through, it is actually really hard to do. And I'm not saying it's like easy at all. I'm not— it's not like, oh, just go make a scorecard. It is genuinely hard to figure out how to assemble this data, but it's a really good exercise because once you figure out how to do it, you know how to do it. Uh, but the hardest part of like tracking and like creating scorecards and all of that is figuring out how to even get the data in the first place.

Yeah.

And then once you figure it out, like, you have— you can build a muscle.

And as the owner, this is your— this is your job. This is your— this is your job. I'm talking to the owners. This is your job. This is all you. I know you have an agency out there. Not their job. Your job.

Yeah.

Your job.

Yeah. It's like a, it's an agency and internal, whatever. Like they're a, they're a team member and they have to, like, you have, you have to hold them accountable.

You have to hold them accountable to your scorecard that you're providing them. I think that's an important step is like one of the big unlocks for me was understanding that marketing was my job in this business. Like I am CMO as well as everything else, but CMO is probably one of the most important sub-$10 million jobs you can set— $10 million in revenue jobs you can be doing as the owner. This is it.

Yeah, I agree. Um, I feel like we hit it.

We hit it.

If you have any questions on ROI or how incredible our, uh, Junes have been or July will be, just like throw in the comments. Also, if you want to be into— if you want to get into Huge, uh, email info@ownedandoperated.com and then they'll throw in the waitlist. We'll contact you.

And besides that, Head on over to ownedandoperated.com/events and check out the September Breaking 5, which will be fun. I'm excited.

Yeah, that'll be a ton of fun.

It's always great.

Thanks, everybody.