“When you take the emotion out of it and do the math, it makes a lot of sense.”If you’re letting a few leads that haven’t turned into jobs discourage you, then you could be setting yourself up for failure. We’ve seen many beginners make the mistake of abandoning perfectly good lead generation campaigns because of a few lost opportunities. To get to the point where you’re winning more jobs, you must understand that emotions can sometimes get in the way of good decision making. Nobody likes the feeling of “wasting money” on an unconverted lead, but realistically you aren’t going to convert 100% of your leads into paying jobs. The goal isn’t to win every single job; you need do the math and to win more than enough to get a positive return on your lead investment.
The Beginner’s MistakeAs I mentioned earlier, many beginners make the mistake of giving up on lead generation without doing the math. We’ll illustrate this with the following story:
Once upon a time Harry purchased his first lead for $20. The lead lands him a job that nets him $400 in profit. Because this was such an easy win he continues to buy leads for $20. The second lead is almost another success but the homeowner backed out at the last minute, postponing the project until summer. The third job went to a competitor down the street. The fourth lead told Harry he called too late and she had already hired someone else. Harry continues to buy leads, 10 in total, only to lose each of the jobs due to very similar reasons. Harry thinks to himself “1 out of 10 leads. What a waste of money.” Harry feels defeated.Winning 1 out of 10 jobs is nothing to be proud of. If anything, Harry seems to be flushing good money down the toilet. Imagine the feeling of losing 9 jobs in a row! Harry has every right to feel disappointment, resentment, and frustration. Right?
Doing the MathAt first glance, it seems as if Harry’s right to want to abandon his lead generation campaign. But he’s not, and we can prove this with mathematical certainty. Let’s look at his total cost for the 10 leads. He spent a total of $200 on the campaign if he purchased 10 leads at $20 a piece.
Now let’s look at the 1 job he won. He only won one job but he netted a profit of $300. This is the amount he made after his materials and labor costs.
10 leads x $20 each = $200 total cost
Lastly, let’s look at his Return On Investment (ROI). He made a total of $100 from this marketing campaign. Another way to look at it is that Harry made a 50% gain.
1 won lead x $400 profit = $400 total profit
Harry is doing very well all things considered, making a 100% gain on his money. If every dollar you put into the stock market could give you a 100% gain, you’d do that all day right? Treat your leads the same way.
$400 total profit – $200 total cost = $200 ROI (100% gain)