3 Step Marketing Funnel: How Much Should You Spend on Ads?

Hey everyone, It's Mike Andes. Landscapebusinesscourse.com today is going to be a quick tip on a question that came in from the Facebook group. If you're not part of the Facebook group, definitely should join. It's free. Don't know why you wouldn't do it. Earlier this week I posted a question on there a post about if you had questions to give, go ahead and post them below as comments. Carlos Here we go. Commented how to invest your marketing dollars when investing around $200 a day on Google Ads isn't working. Alright so so first things first and that is realize that for Most markets spending $200 a day on Google Ads is not the wisest thing to do. The reason for that is because remember, you gotta remember that Facebook ads and Google Ads are a marketplace. They're a place where there is a bidding process for clicks and for people to click on an ad. And so if you're offering too much money, you're going to get junk leads or junk clicks. And one of the things to remember is so for example, if you're spending $200 a day in your ad budget for a specific Google Ad campaign, I would imagine I would venture to believe that you are probably spending far too much per click. And when I say far too much per click, I'm thinking anything above about $8 or $10 per click on Google in my mind is too much. And so that's just one man's opinion. Maybe you're to spend a lot more if you're trying to grow quickly and you have a lot of cash. But in general in my mind 8 to $10 for a lawn care landscaping click is anything more than that is quite a bit of money. Now the reason if you inflate your budget, if you inflate your daily budget on an ad campaign on Google, what happens is you start winning the bidding process but for far far, far too much. I've seen people paying 40, 60, $80 per click but the reason is because their budget is so high that Google eventuals make them pay $80 to win out on a keyword that isn't even relevant to them. So first things first, if you're spending $200 a day on Google Ads, I would say number one thing I would do is cut that down to $50 because at $200 per day you might be spending, you might get maybe let's just say 8 to 10 clicks. I venture to believe that if you Change that to $50 per day, unless your market and your target demographic is huge, like, millions of people. There's a very good chance that you're going to go from 8 to 10 leads a day to probably like 5 to 8. Literally. You might be paying for the. There's a. There's a diminishing return on your leads. In other words, as you increase your budget, you're gonna start paying more and more for leads. Unless, again, your demographic and your population is so big and there's so many people searching that term that you can afford four or five dollars per click and spend $200 and get 50 clicks a day. So first things first. What we're talking about right now is at the top of the funnel in terms of just someone clicking, then they got to actually convert on your website to submit an estimate form. So that's a whole different, you know, other conversion game of your website. Is it mobile friendly? Do you have an estimate request form that is on every single page or at least a button on the top of every page, especially on mobile? Do you have a phone number that is really easy to click on and call if they're on mobile? Do you ask people where they're coming from? Because if they just come to your website and click call, you might just get a phone call. But if you're not asking them where they are actually coming from, like, where did you hear about us? Did you find us on Google? Did you find us on Facebook? Did you find us on YouTube? Did you see our trucks? If you're not asking for the referral source or for the marketing source where they're coming from, you really have no way to track whether or not they're coming from Google. If they're just coming to your website and giving you a call. Same thing with estimate request forms. So I got command center for Augusta Lawn Care. All of our calls that come in, all the estimate request forms, we are asking them, how did you hear about us? We. Why did you call us? And sometimes people don't know, and we don't make any notes on that person's profile. But if they heard about us from a Facebook ad or from a flyer or from a postcard, or they saw our trucks driving down the street, those are all important data points that you need to know. So number one, top of the funnel, like getting people in as clicks, that's one thing. Then you got to go from clicks to leads, and that is going to be in the form of getting them to fill out an estimate request form or call you on your website. And that's why we started Lawn Care Web Design. And so many of you have taken advantage of that, where we build that site and make sure it is mobile friendly and it does have the estimate request forms and that it is trying to convert as many of those clicks into actual leads. Alright, so that's the next layer. The next layer is then going to be when you actually they've called you or they submit an SM request form, what percentage of those people are actually going to convert into paying customers? So your conversion ratio, what's your closing ratio on your estimates? Now this is the thing that, you know, a rule of thumb, a lot of people ask, well how much should I be paying for leads or how much should I spend on marketing? And in my mind anything that is $100 or less for a paying customer is a pretty good deal. And I see that obviously fluctuate based upon demographic, based upon how many competitors you have and based upon the time of year because the more people are searching, the less you're going to have to pay per click in general. And so what I would say is obviously you gotta fix the top line. You gotta fix. What is your ad saying? Are you overspending your budget and therefore overspending on clicks? That's top. Then once they click, what's your lead? Do you actually get them to fill out an estimate request form? Do you get them to call you? That's the lead part. Then the next part is the conversion. So this is the end of the funnel. How many people actually become paying customers? And so what I traditionally look at is $100 per converted customer is really, really good. If you can do that consistently, you're gonna have a really, really good business. Because $100 per customer means that if I spend $10,000 on that campaign and on average $100 gets me a paying recurring customer, that means that I'm gonna get a hundred recurring customers out of $10,000. That's a really, really good return on investment and something that is only done usually if you've really perfected your marketing system. So I'm not saying you should just go spend 10,000 dol.

You gotta perfect again that top line know what does the ad say, what is the creative, if you're doing Facebook ads, etc. But in general, $100, I want to be able to say that a hundred dollars is going to get me a real customer. So what that means is some people will say, oh, I only got, I got, I got Google Ads and I'm spending, you know, $3 per click. Well, that's fantastic. But how Many of those people then that click on your website actually fill out an estimate request form. How many of them give you a call? Let's say that 1 in 10 of the clicks actually convert into leads or they actually fill out the estimate request form. They actually give you a call and they become leads. They ask for an estimate so that now we're looking at $30 per lead because it was $3 per click. We're gonna assume 1 in 10 actually ask for an estimate and become a lead. They give you their contact information, they go beyond just click on your website, they actually convert into a lead. Now we're at $30 per lead. Alright, now the big question is conversion. How many of those leads become paying customers? And that's going to depend on the systems you have for estimating how fast you get in touch with them. How efficient are you with creating that estimate and sending it to them as quickly as possible.

How is your pricing? Obviously if you're lower prices, you're in general, if all other variables are held constant, you're going to close more deals, obviously. So let's say 1 in 10 of your estimates. So 10% closing ratio, which is really, really not good. If you had a 1 in 10 closing ratio for your estimates, that would mean that you're spending $300 per closed customer, right? You have $3 that are going to click 1 in 10 become a lead. So now we're at $30 per lead. And then if 1 in 10 of those become a paying customer, you're at $300 per per converted paying customer. Traditionally how we measure that is a recurring customer in terms of when we're doing advertising, we're traditionally going after the recurring customer. And then we use upselling tactics and one click estimates to get them on landscaping and one time jobs. So I'm traditionally talking about the low hanging fruit of lawn care and maintenance. And so now we're looking at $300. That's really not that fantastic. It's not great. You might buy a company and pay $300 per contract or $300 per recurring client in their database, but you're not going to want to pay $300 per customer from your own marketing. And so in that scenario you got to ask are asking yourself the question, are you one paying too much for the lead or sorry, too much for the click at $3 per click. That's pretty good. I would give you a check on that one. Then you have to ask yourself the next question. Are you paying too much for the lead? In other words should you close two or three of those clicks out of 10 that come to your website? One out of 10? I actually think that's pretty good. In terms of 10 people clicking your website and one of those 10 actually calling you, actually submitting an estimate, that's pretty good. And that $30 per lead, that's pretty good. I'd be very happy with that. Traditionally, for us, we're getting under $50 per lead. We're pretty happy with that. In this scenario, that third step of the funnel, the conversion from lead to customer, that's where that example breaks down because you have a 10% closing ratio. So now if you move that closing ratio up to 50%, in other words, you closed one deal out of every two estimates that you gave, then your customer acquisition cost would only be $60. All right, because $3 per click. And then if you got one out of 10 to get a lead and ask for an estimate, that's $30 per lead. And then if you closed one out of two of those, you'd be looking at $60 per per customer. That's your customer acquisition cost, your CAC or your CAC customer acquisition cost of $60. That's really good. So I wanted to explain all of that and all of that to go back to Carlos's question is I really think that Carlos is probably breaking down in step one of the funnel, and that is his cost per click. I would imagine he is paying between 10 and $20 per click. And that is the breakdown, because that's where it's falling apart. Because if I pay $20 for per click and then 1 in 10 become a lead, I'm now paying $200 per lead, which if I have. Even if I have a 50% close ratio of my leads to customers and estimates I give 50% of them close, I'm still looking at a $400, like 50% of close ratio. Really good. But $400 per customer. CAC, customer acquisition cost, if you paying $20 per click. So those are the three steps you got to be tracking. What's your click cost per click, then your cost per lead. In other words, what how many of those lead those clicks convert into an estimate being given. And then the third and final step is the conversion from lead into customer. And if any of those three things are slightly off, you can really mess up your marketing. And that's when people start saying that marketing doesn't work. And they say, oh, it's only word of mouth. Well, guess what? If you're spending 30, $40 per click or you're getting one out of 100 people that click on your website. Even submit an estimate. Or if you're only closing 10 or 15 or 20% of your estimates, any three of those variables or ratios being off is going to cause you to think that marketing doesn't work or that you are overpaying. And really, you probably are. You are losing money and you should not be. It's a bad marketing method. Or something's wrong with your estimating process or something's wrong with your website. Like I've seen it so many times, people are paying an exorbitant amount of money to get people to their website. And then the button isn't correct. You know, there's HTML, it's all messed up and people can't see on their phone. I have to pinch in and zoom in. So those are the three levels. I would say, Carlos, right now that you're actually. The problem that you're actually facing is the top line level. That is you're paying too much per click. And once you get that figured out, then you can start figuring out the second level, which is your website. And the third level is going to be your estimating systems, your processes, your pricing, and all of that good stuff. So hopefully that cleared things up. If you guys have any questions, let me know. And if you want your website to be built by us here, the same developers and people that I work with on our tech team that built augustalawncareservices.com they help you build lawn care at Lawn Care Web Design, they'll build your website. And so here in the next few weeks, we're going to get some examples of some of the first people that we have already got their websites up and running. And so that way you can see some templates and examples of stuff that we do. But if you're interested in that, check it out. Lawn carewebdesign.com all the money we make from that goes into producing more content and as well as creating better software for this industry. So check it out today. And I really appreciate everyone's support. Take care.