How to Know If Your Marketing is Working: Essential Metrics and Strategies

All right, in this video, we're going to discuss how to evaluate if your marketing is working and what is good marketing and what is a bad marketing. Return on investment. My name is Phil Risher. I'm the owner of Flash Consulting. We partner with local service businesses to help them increase their sales and keep their schedules full. I used to be the director of sales at one of the largest air duct cleaning companies in the country. And this is literally how we would evaluate our sales process. Where are we going to spend our marketing dollars? How are they going to change year over year, month over month? And I'm going to walk you through how we came up with those things. There's two different ways that we look at it, and I'm going to share those as well. Cool. So let's hop right into this. This is our Flash customer journey. We've shared this in a bunch of videos before. Essentially, in this instance, we're going to be looking at creating visibility for your business, which is going to be running ads. And specifically, how can we track your return on investment for ads and also SEO, search engine optimization, social media campaigns, business to business. If you're in networking groups, all these things can be distilled down to some type of return on investment. And these are all ways to get visibility for your business. Conversions, which is people turning into leads and then retargeting. We're going to talk about some of those things, right? Because you could get a lot of leads, but then they don't turn into sales and they're leaking out. So what does that mean? And then we're also going to discuss over here, just in general, how can you get more of these leads coming into your business? Cool. So let's hop right into it. All right, so the first thing, what is a good roi? Very high level. How can you know if your marketing is actually working? If you get a 3x return on your spend, that is, you should be, you know, average return on investment, and that should be the baseline. If you get a 5x return, that's a good return on investment. If you get a 10x return, that's an amazing return on investment. What this means, if you spend $2,000, you should generate at least $6,000. Right. Three times that, up to $20,000. Right. Ten times that. So I'm not sure, you know, if you have a CRM or how you're tracking things, but what you want to focus on is these numbers 3x5x10x. And if you're in this realm, then you're going to be doing good and then you can evaluate what's good and what's great. So the way that we would use this when I was director of sales and the way we use it with our clients is we are evaluating all the different channels, right? Like Google local service ads, Google search ads, Facebook, Yelp, SEO, email newsletter, network marketing. And we're building out these channels and saying, okay, for Google, we spent X amount of dollars, we got this many leads, we got this many jobs, we got this much sales, and that return on investment was X and that is a 3x return, whereas yelp was a 5x return. So maybe we decrease our Google and increase our Yelp, right? So we kind of look through it that way. So this is really high level how you can evaluate these things. All right. The next thing is there are two ways to look at your roi and we do both of them. And there's a distinct reason why we do both of them. So the first one is your marketing spend to leads. Now this is important because if you're generating leads but you're not getting appointments and sales, then that doesn't mean that the marketing is not working. What that potentially means is that your leads to jobs process needs help. Doesn't always mean that, right? You could be getting bad leads, but it at least tells you like, hey, I can generate leads. They might not all be great leads, they might be great leads. You don't know. But essentially we want to see how many leads did we get, how many jobs do we convert from those leads? Other alright, so marketing to leads, a very simple thing. I spent $200, I got 10 leads, $20 per lead. How much does the lead cost me? That's a good number to know. How much does it cost to get a lead in my business? And then our average sale, let's just take an average sale, is $400. So of this $200 that I spent, I got 10 leads. Our average transaction is $400. So that $200 potentially made me $4,000. It doesn't mean that it made me $4,000. What it means is that I spent 200 and I had the opportunity to make 4,000. Now, as we know, these 10 leads, you may only close 40% of them, 50% of them, whatever that number is. But starting with just getting the leads is very important. Why is this important? Let's say you want to scale your business and you bring on another salesperson, you bring on another customer service representative and you need to get more leads in the door, right? Once you know this number especially from an ad channel. So Google local service ads cost me X amount of dollars per lead. I know that if I can work it into how I do my costing, my job costing at $20 per lead. Let's say I need two leads to close deal. That's $40 into a job and my job is $400. That's 10% of the job is going to marketing. That's a win. So these are some of the things that we're thinking through when we're evaluating our marketing return on investment. Marketing to leads. All right, the next one is marketing to appointment set. Obviously, we don't want to just stop at leads, right? We got this visibility, we got some leads in the door, but leads don't close the deal. They don't make any money. They're just leads. So we want to take it a step further. Right. And we want to see marketing to appointment set and ultimately into revenue, whatever that means for your business. If an appointment set means a set amount of money or if you send out a sales guy, right. You can track it all the way through how this works. Same thing, $200 spent. I got 10 leads. I booked 50% of them into five appointments. So that cost me $4 per appointment like we were talking about before. Those five appointments turn into $400, that's $2,000. I spent $200 and I made $2,000. And that's a 10x return. Right? So if you go back here, that's a 10x, that's good. Now are you going to convert them at 50%? Some people will, some people won't. There's a big study that went out and the average closing rate from lead to sale is 42%. So this might be, you know, 4 appointments, 4 times 400, 1600 out of 208x return still in this parameters, still pretty good. You can do this if you have a good CRM client relationship manager and you track your lead source or how your stuff came in. But essentially what you want to do is kind of come up with these numbers and you can do this on a monthly basis. What I would do and what we would recommend is set up like a simple Excel spreadsheet with all of your lead channels that you're spending money on and you can set them up like this, like Google, Yelp, Facebook, you know, whatever, other stuff, thumbtack, Angie, whatever. Then you put your spent in there and you put these for a month. So how much money did you spend on this? 150, whatever. And then you can calculate your leads, your jobs, and then your sales from this lead channel. So Google, I spent a hundred dollars, I made a thousand dollars in. If I go on my CRM, if I do the math myself, then you can see that's a 10x return. Yelp, 10x return. Facebook broke even. There's no return here. I got a bunch of leads, but I ain't getting that many jobs from these leads. Right? Disclosing percentage is lower than 50% or 40%. So what does that tell me? Facebook's not working. Maybe the leads are not good. Maybe my sales process and this is not good. Something needs to be fixed. And maybe I take this $200 and I put it into Google or I take 100 off this and put it into here. One bonus tip on this, once you get everything in some type of spreadsheet, you can take all your spend and you can add it all up. That's gonna be your marketing budget. And you can say, okay, my marketing budget is $1,000. So Google, I'm spending $100. So I'm spending 10% of my marketing budget on Google. Facebook is 20% of my marketing budget. What this will allow you to do is to create buckets and then you can optimize your buckets to say, okay, my marketing budget is $1,000. Google is going to be 30% of that because it generates the most ROI, right? You start to have higher level discussions about your business. It's not just like, oh, I need to start buying leads over here and try to like get this stuff on my schedule. What this is doing is helping you create a marketing system in your business that's going to help you scale the business and using the data to make good decisions. So it all starts with your data. If you, you know, just start with high level stuff like this, most of these ad platforms will give you some type of an roi. If they don't, you'll at least be able to see how many leads you generated from these platforms and then hopefully you'll be able to work backwards into these numbers. I'm curious to get your thoughts about how you evaluate marketing stuff. If this was beneficial, if you like content like this, or you have questions or ideas about other content, please drop a comment below. It helps us a lot to let us know what you like and what you don't like and what you want to see more of. If you're interested in implementing a good marketing system for your business, I'll put a link down below. You can set up a time to talk and also be sure to hit like and subscribe if you like content like this. It helps us out and also you'll get notified when we get our next video out. Thanks. Hope you have a great day. See you in the next video.