Phil Risher explains why companies between $1M and $10M revenue hit a wall: they pour money into ads without knowing their booking rate. A home-service business stuck at $2.7M discovered it was converting 40-50% of leads but had no visibility into that number, wasting acquisition spend. Measure your conversion rate first, then scale lead generation.
A lot of companies scale their lead flow before they fix their booking rate. Usually between $1 and $10 million, there's this invisible ceiling that people hit, and they think, I just got to spend more money on ads to grow my business. The problem is that they spend a bunch of money and it doesn't work, and then they're either in debt or they're salty or they're frustrated with marketing companies or frustrated with the Google gods that they didn't get the leads. But when we ask them, what's your booking rate look like, they don't know what it is. At my home service business, this is exactly what happened. The owner was $2.7 million stuck and he was throwing money all over the place. And when I asked him what the booking rate was, I went to the CSRs and there was nothing happening. So we set up a process to track our booking rate. We got this many leads and that turned into this many jobs. So I knew as a director of business development, if I just get more leads into the system and our booking rate is 40, 50%, then these numbers all make sense to me and I can track it. The problem is, is that if you're just throwing money at lead sources and you don't know if it's actually making its way through your funnel, you don't know what to fix first.
