I Analyzed 74 Home Service Businesses... Here's Why Most Never Grow

Over the last 12 months, I sat down with 74 home service business owners and I kept seeing the same mistakes over and over again, holding them back from growth. In this video, I'm going to walk you through those 5 mistakes, how to fix them, and how to unlock the next level of growth in your business. Real quick, if you don't know who I am, my name is Phil Risher. I've been doing growth marketing for home service companies since 2019, and we've generated over $47 million in revenue. But before that, I worked at a home service business inside as director of business development, helped them fix the problems in their business and scale and then sell. So I know firsthand how to fix these problems, and that's what we're going to walk through right now. The first mistake that we see is that you're tracking the wrong numbers, and most owners only track marketing spend versus total revenue. This is exactly what happened at my home service business when I start. Revenue is the last number in the process, not the first signal. So at my home service business, the owner would say, okay, let's throw some money at Yelp, let's throw some money at Angie's List, let's throw some money at Facebook and see what happens. And then 3 months later, he would say, I got a gut feeling this isn't working because revenue was flat or down, so that marketing magically didn't work. That's not how you want to do this, okay? So we're going to walk you through how to do this. So instead, what we started tracking at My Home Service Business was booking rate, close rate, average ticket, and customer acquisition cost. This allowed us to see, okay, if we got 100 leads, we booked 60 of them, so that gave us a 60% booking rate. So when we got more leads coming in on top, did our booking rate maintain at 60% or drop? Or is our booking rate 30%, which is not good? It should be around 50-60%. And same thing with our close rate. When we sent out estimates Are we closing 40% to 60%? Are we dropping? What ends up happening a lot of times is that those 4 numbers lead to increased revenue, but those are leading indicators of what's going to happen to revenue. But when we just look at revenue as the outcome and we don't track these numbers, it hurts. And this is why we're tracking the wrong numbers. So let's say that we did this for Google Ads. A lot of people just say, okay, I increased my ad spend from $2,000 to $5,000, so my revenue should be up, but it's not, so my Google Ads are not working. However, if we were to pull back the layers and look at specifically the booking rate, the close rate, the average ticket from Google Ads in particular, we would say, okay, we spent $2,000 and we got 10 leads, so $200 a lead. And of those leads, we booked 3 of them. So 10 leads and 3, that's only a 30% booking rate. So then it's like, okay, are the leads bad or is our actual intake process bad? So let's go listen to the calls and see, are the leads bad or is the actual sales call script not good? Or is there a little lead nurture sequence? And you can do the exact same thing with, okay, I booked 6 of them, but only 3 of them converted. So is my estimate process not good? My average ticket, all those things. My actual revenue generated from Google Ads was only $3,000. So is my average ticket too low on those? Like, am I only running service calls on $200 jobs or what? This is why you have to break down the actual ad channel from the right numbers instead of just saying, oh, I went to $2,000 to $5,000 and then my revenue doesn't work. So you got to track the right numbers. Answer only visible when you look at booking rate and close rate and you look at it specifically by the ad channels. So the key lesson, you can't orchestrate growth if you're only watching the scoreboard. If you're just looking at the score on the board, you don't know how many times did I get to the red zone? How many possessions did I have? How many times did I shoot the ball? Like how many fouls did I get? Like all the stuff that goes into it, you have to look and figure out what the problem is and then fix it. All right, mistake number 2, you're obsessed with new customers. Everyone wants more leads. Almost nobody has a retention system. So I mentioned I talked to 74 home service businesses, probably 70% 70 of them told me the number one way that they get customers is referrals and word of mouth, and those are the best leads. Cool, but we don't have a process for it, and we're focused on throwing money at the Google gods and spending more money on ads to try to grow our business. So owners assume that repeat business and referrals just happen naturally. They'll call me when they need me. They know that I do that service, so they'll reach out to me, and it, it's not how it works. You have to build a retention system, and that system has 3 parts. You gotta have memberships, you gotta do a newsletter, and you gotta do some type of annual text or calls or something to stay top of mind. So let me break these 3 down. Memberships. What we did at my home service business, we did duct cleaning. So like, people do not want to buy a membership for duct cleaning. So what we did was we enrolled every single person into a free membership. We said, as part of our program, when you work with us as a client, you instantly become a Clean Air member. Part of that Clean Air membership is you get proactive scheduling. So we're going to call you every single January and get your schedule, get you scheduled for your dry vent cleaning that year. Then you don't have to think about it, remember, and we're going to help keep your home safe. And now they're enrolled in this membership program. It's an instant membership and it allows you to build a retention system. Next is newsletters. A lot of people don't want to be pushy or salesy or annoying and email their clients, whatever, all those things. What I'm telling you is you probably do a handful of services, definitely not just one. You probably do 4 or 5, maybe even 20. If you do not educate your customers on all the services that you do, they already know, like, and trust you, but they don't know that you do those other services, so they're going to go find other people. This is exactly why you would use email newsletters to cross-sell different services, educate your customers so you can get referrals, you can get repeat business. It's a great way to have people coming back in. And the last one is biannual texts or calls, something that's like, hey, we're going to be in your area next week doing X, Y, and Z service. Would you like us to stop by and take care of any projects for you? This allows you to bring people that know, like, and trust you back into your funnel without spending a bunch of money on ads and getting these repeat customers that we all want. They're warm, they're going to convert. Annual check-in calls alone can unlock thousands per customer. If you just called 2 to 3 customers every single day and just checked in, hey, we were in your neighborhood last week and just wanted to check in and see how everything's going. I know we were there like a couple years ago. You have any projects coming up that you might want to get taken care of? Like, this is a big, big piece, especially when we talk about AI search and the trust recession and people trying to automate all these things. If you can do this, like, this is how you build real customer base, real authority, real trust, and this is how you build repeat business. So your best lead is someone who already knows, like, and trusts you. I think we'd all agree on that. It's going to close a lot faster. You don't have to try to sell them the dream about working with you. They already know what it's like. The key lesson: you can't increase lifetime value without building lifetime relationships. I want to say that one more time. You can't increase lifetime value without building lifetime relationships. Just because they use you one time doesn't mean you have a relationship. You have to build the relationship so then they would use you more often for different things. Mistake number 3: you think Google is the only channel. Every competitor follows the same Google Ads, SEO, reviews playbook. What I can tell you is that that plan is dying, okay? Like Google Ads, SEO, and reviews playbook, it's still good, but that is a playbook that everyone is doing. And when you look at these big behemoth companies, how are you going to compete with them? So if you're copying a $100 million company's playbook with a $50K annual budget, that doesn't work, and it's not going to work. You have to figure out another solution. So one of my first clients, they were like $1.8 million HVAC business, and literally down the street they had $200 million HVAC contractors. And when we met with them, they were on Google Ads and they're like, yeah, our budget is $2,000 a month. And I'm like, okay, well, to get a lead in your market is $500. So you're going to get 4 leads. Of those 4 leads, one of them might convert into a service call or something. Like, are you ready to do that? Like, no, that doesn't make any sense. So we have to figure out another strategy. And this is what I mean by it's not just Go to Google and run the place because if you don't have enough reviews, you can't do Google LSAs. If you're budget and you're in a competitive market, Google search ads might not be the best thing to do. So what do you do? You find untapped channels. You use B2B partnerships. You do Yelp, you do Angie, you create content, you play in a different ecosystem that they're not playing in. So B2B partnerships. So at my home service business, we were $3 million when I started there. About $1.5 million of it was partnerships with other companies. We would pay them for customers. So if you're willing to pay Google for customers, go and find referral partners that would refer you business and pay them for customers. So let's say you're a roofing contractor, go find gutter cleaning companies that don't do roofing and say, hey, you're up on the roofs or around the gutters, if you see a shingle loose, a wet spot, something like that, go get off the ladder, go to the customer and say, hey, I was up on your roof, it looked like there's a couple shingles missing here. We don't do roofing, but I know a really great company, I can have them at least just come take a look, it probably help you out and I know that they do good work. They're a local company. You want me to have them give you a call? Yes. Boom. Now they send you the information and now you just got a customer and a lead. And here's the best thing. It's a warm lead. It's a referral. This is what I'm talking about, about B2B partnerships. If you're willing to pay money for customers, do that. Like, it crushes. Yelp, same thing. I used to think Yelp was a scam. It's annoying. They call me over and over again, want me to increase my budget. I have no visibility into the, into the Yelp platform. What I can tell you is another HVAC contractor we work with in Denver, Similar thing, like they were right around $1 million, competitive market, big guys next to them. And they said, okay, well, we're spending money on Yelp. They were doing like $3,000, but they had no return on ad spend visibility from mistake number 1. They didn't know the numbers. So the first time we pulled it, we said, okay, you're spending $3,000 and you made $30,000. You know, you got, I think they got 2 installs from it. So it's like, well, let's ramp that up. So ultimately they got up to $9,000 a month in spend, but they were making $112,000 from that $9,000 spent. And this is what happens when you actually pull those numbers based off of the actual ad channel. There's these sub ad channels that you can make money on. All these platforms, Yelp, Angie's List, Thumbtack, they can all work. Facebook, like, they can all work. It's just about having a plan for them. And the last one, content. I can't stress this one enough with AI search and the shifts going on. Content is going to be king and content is going to create the trust with these AI platforms because they're going to index all the content that you create. So can't stress that one enough for sure. Home shows, local strategic partnerships, community events, like home shows, another really good strategy here. Let's say you go to a home show. A lot of people just give out pens or shirts or they have a wheel to spin, something silly like that. I'm not saying that's bad, but if we really want to drive leads and growth, what you would do is do a giveaway. And the giveaway would be something big. Like we had a remodeling company, they used to charge about $3,000, $4,000 for the initial design, sketch, 3D renderings of a project. So at the home show, they said, hey, if you have a project coming up, We're giving away a $3,000 value. We'll actually do the 3D renderings and the drawings. They got 36 leads. One person won that thing, which is great, but all the other 35 leads got a second place prize. They got $500 off that specific service. They ended up closing 3 jobs from that. So imagine 3 jobs. I mean, this is like $40,000-$50,000 jobs. And this is what I mean by home shows, but having a game plan. A lot of times we— people want to do these things, but they don't have a system to generate leads and they think that Google is the only channel and it's not. Client example, we grew $1.5 to $2 million through B2B partnerships. I mentioned that. Go and find local partners, build relationships, and go and get them to send you customers. The key lesson is that growth often comes from channels that your competitors ignore. Specifically, if you're in a very competitive market, you can't just run the same playbook as everyone else and say, okay, this is just going to work and just throw some money at the ads and let me go do my thing. That's not how this is going to work to grow your business. Mistake number 4, your customer experience isn't memorable. I want to stress this one a lot because we specifically work with $1 million to $10 million home service businesses. And I believe that small businesses have the advantage and they rarely use, which is being human, specifically in the PE, private equity-backed world and people just running businesses that are not, not feeling authentic. So most small businesses act like a smaller version of a corporate company. They see how these companies operate and they want to get AI answering service and all these things. They want all the, the automations and everything, and they lose the heart and soul of the business. And what I'm telling you is that you as a local business owner probably grew up in this area. You got kids that go to the same schools as them. You shop at the same places. Like, that is the story that you want to tell. People will pay more money to work with real local people, but you got to tell them the story and explain it. So here's how I would recommend doing this is create a founder story video or on your website create personalized videos and follow-up calls. So when someone fills out a form on your website, imagine if you send them a video that introduced you as the business owner and You're a local guy. Here's how we got started. All those things through your sales process. You send them an estimate. Hey, here's some of the questions we get on estimates. Here's what the down payment looks like. Here's what this looks like. Like all the stuff, like explaining it and going through in an authentic way, it builds a lot of trust. Community connection, relationship building, retention, referrals, like going out and building local B2B partnerships and getting people to refer you, like being true salt of the earth in the community. So we had a company, it was probably the third company that I ever worked with. We helped them go from $3 million to $8 million. It was HVAC business in 36 months. And it was so nice, like husband and wife team, good people, you know, church people, all this stuff. And they were very involved in the business, in the community. And they sold to private equity. And literally within 2 years, the business was out of business. The PE removed the personal touch, they got rid of all the personal stuff, got rid of the heart and soul of the business, and then it was gone in 2 years. And the problem is that a lot of people see the PE side and like, wow, they have all the systems and all this money, which which is great, but what they don't have is the heart and soul of local home service business, which is what I'm passionate about. So key lesson, people don't just buy service, they buy connection and trust. I want to say that again, people don't just buy service, they don't just want the problem solved, they want a connection and trust the people that they're working with. They want to tell the story of the people that came to that house and fix their stuff. All right, and the last one is you're ignoring content creation. I mentioned this in number 3, which is content creation is more important now than ever, and most business measure content by likes and views, which is the wrong metric. So when I was at my home service business, I used to think that content like, okay, are my clients going to Facebook and looking for duct cleaning or HVAC, whatever? Like, no, they're going to go to Google and they're going to ask Google for HVAC repair near me, and then they're going to find a company and they're going to work with it. And I was like, I don't want to create content because this is going to be a waste of time for me as a home service business. Now that's way different. Content that educates prospects and answers buying questions builds trust. And it's not just on the platform. This is the part I want to stress. Content is now indexed on Google. Content is now indexed inside of AI platforms. And the more content that you create, it's going to give you a knowledge base of information on your business. And this is why content is so important. It's not just about likes and shares or views or even getting customers. It's about training AI platforms about your business. So posting randomly or not at all leaves literal money on the table, and it's an opportunity for to grab the next piece of the pie, which these big guys, they feel the same way because they're crushing it on Google. And you have the first mover's advantage if you go over and start creating content to start ranking in AI search as the authority. So AI search platforms, ChatGPT, Gemini, Perplexity, they cite trusted content. And the way that they trust your content is by talking about similar things over and over again and building authority. Your competitors aren't doing this yet, and that's the opportunity. So the lesson is the future isn't just Google rankings, it's being the answer in AI recommends. There's a shift right now from keywords to conversations. People are interacting with Google and other platforms a lot different. Used to, people would say 4 words, HVAC repair near me. That's a keyword. Now it's 3 times more is the most recent study is now they're asking, let's say 12 words, which is my thermostat is on and my fan is blowing warm air. Why? Like they're asking a lot more questions. That's the type of content that you need to create. All right. So before you spend more on marketing, ask these 5 questions. Before I go through the 5 questions, if you're a $1 to $10 million home service business and you want a marketing company that actually cares about this stuff and helps you grow, our average client grew 27% last year. I'll put a link down below. You can schedule some time to talk. I'd love the opportunity to talk with you. Question number 1, am I tracking the right numbers? Am I just throwing money out and seeing if my revenue goes up? That is not a direct equation. There are steps in between that need to happen in order for the revenue to go up. Number 2, do I have a system for repeat business and referrals? If we all know that warm business and referrals is the best thing from sliced bread, is the best type of lead, do we have a system to get those people coming back in? If you don't have a system, you need to build a system. Number 3, am I using more than one lead gen channel? If all your eggs are in one basket and you just run Google LSA and you crush Google LSA, Google LSA is unpredictable. Same thing with Google Search Ads. Like, you got to have a diversified channel, especially if you're going to go from $1 to $10 million. You can't just put it all on one thing and expect that to be the winner. And the last one is my customer— oh, the fourth one— is my customer experience genuinely memorable? Are you layering videos? Are you building a personal brand, a personal local touch, a local touch brand? If you're not, then you're going to be like everyone else and just going to be lumped into the same exact thing when they're evaluating quotes. Is this apples to apples? Yes, if you're not building the brand on top of it. And the last one, am I creating content that builds trust and ranks in AI search? If you're not, you need to start doing that. You need to fix these things first and then you will scale. So let me put this old thinking versus new approach. So before, you'd watch revenue versus marketing spend. The new approach, track your booking rate, your close rate, your customer acquisition cost. Before, you focus 100% on new customer acquisition. Now, Build retention and referral system. Before, all in on Google Ads and SEO only. Now, diversifying the partnerships and other channels. Before, you'd copy corporate customer experience. Now, lead with your personality, your story, your connection. Before, you'd skip content because you thought it was just for posts and likes. Now, you're creating content that ranks in AI search. This is the shift that's happening. You need to prepare your home service business. If you like content like this, be sure to hit like and subscribe, and I'll see you in the next video.