Paying For Tree Service Leads
Most tree services can expect to spend between $45 to $100 per lead. However, knowing what a tree service lead costs and what it’s worth are two different things. There is also a big difference between exclusive leads and shared leads. This means that for every lead you receive where the customer is actively interested in your tree services you will pay that cost per lead (CPL).
In order to effectively market your tree service business, you need to know how much you should be spending on generating leads. Leads can come from a variety of sources, but all of them require a different investment. Keep reading for tips on how to determine the value of your tree service leads!
There is no doubt that owning a tree service business is rewarding. However, just as you would expect with any service-based business, a tree service business comes with its fair share of frustrations.
At Home Service Direct, we have spent enough time with tree service businesses like yours. We know tree service providers are tired of getting sold by a marketing company and wish they could avoid getting marketing calls.
Still, as you probably know, marketing is a necessary part of running your tree service business. Without marketing, generating revenue is nearly impossible:
- Marketing creates tree leads for your business.
- The tree service leads create paying customers.
- Paying customers create revenue.
While the logical progression mentioned above is what every tree service business owner will have in mind, this progression does come with its share of “ifs”. These “ifs” include:
- Marketing will only create tree service leads for your business if your team is targeting the right audience. To give you an example, in the US, the demand for tree trimming services is driven by single-family homes and commercial properties with green spaces. If your marketing is targeting an audience that doesn’t have green spaces, your chances of generating tree leads will be very low.
- Once you generate leads, you will only turn the leads into paying customers if your website is designed to convert and if your sales team is well trained.
- Your customers will only generate revenue for your tree service business if you have a value-based pricing strategy in place and the services you offer are referral- and retention-worthy.
When you put the 3 “ifs” under control, the next thing you have to worry about is the cost of setting everything in motion.
At Home Service Direct, our team is made of professionals with expertise – and years of experience – in tree service marketing. One thing that all the members of our team agree on is: that raising an eyebrow at pricey marketing suggestions is very reasonable.
After all, if the money you are spending on marketing is more than the revenue you are getting from the leads generated, something is not right. The right marketing should have a high ROI (Return on Investment) – that is, the amount you spend on marketing should be much less compared to the revenue generated by the leads.
The trick to having a high ROI is creating a right-sized marketing budget. To set a right-sized marketing budget – the first thing you will have to do is focus on the leads you are getting.
Cost Per Lead For Tree Service vs. Worth of Tree Service Leads
Determining the tree leads cost today is extremely easy: Take the amount of money you’re spending on marketing (in a predefined period) and divide this by the number of leads you got in that same period.
To give you an example, if you spend $10,000 on marketing a month and you get 200 leads in the 12 months, your cost per lead will be:
$10,000 divided by 200 leads = $50 per lead
However, do not forget that our goal is to determine how much the leads generated are worth. Sure, the cost incurred to generate a single lead is $50. But, what’s the value, the worth, of that lead?
To run a profitable tree service business, each lead should be worth many times the amount you spent to get it. Unfortunately for many tree service businesses, looking past the immediate cost of a Pay Per Click (PPC) ad campaign to see the value of the investment is often difficult. The next section, however, is carefully designed to help you see past the lead cost so that you can see the value that each lead brings in.
Determining Leads Worth: How Much Value Are You Getting from Your Tree Leads Cost Today?
If your goal is to grow a sustainable tree service business, you have to do more than track your marketing data – you also have to respond to the marketing data.
At Home Service Direct, we understand that tracking and responding to marketing data involves a ton of numbers and some good amount of math. While the numbers and the math may not be fun, wasting money is not fun as well.
To figure out the value – or worth – of your cost per lead for tree service in the last 6 months, do the following:
Step 1: Create a List of All the Sources for Your Paid Leads
Sit down and create a list with all the places where you have spent your money to get new jobs/business/leads. These places could include:
- Angie’s List
- Facebook Ads
- Google Ads, etc.
Step 2: Count Your Leads
Count the number of leads you got from all your paid sources. Limit yourself to the last 6 months. To get accurate numbers, you have to limit yourself to a specific period.
Step 3: Count Your New Customers
From the paid leads you have generated in the last 6 months, determine how many you managed to convert to paying customers.
Question: How Do I Know Where My Leads Came From?
Let’s pause for a moment and answer a common question that many tree service business owners ask. The question is, “how do I know whether my leads came from Angie’s List, Google Ads, or Facebook Ads?”
If you currently do not have a way to collect lead source data, you will have to create one. Every time your business phone rings – and every time your team leaves a tree service work site – ask the customer, “how did you hear about us?’
This simple question should help you determine which marketing strategy works for you. The question will go a long way in helping you separate marketing techniques that work from those that do not work. With time, you should stop spending money on platforms that have minimal – or zero – returns on investment.
Step 4: Determine Your Lead-to-Sale Conversion Rate
The next step after determining the number of customers you have generated from your leads in the last 6 months is to divide the new customers by the total number of leads.
For example, if you have generated 100 leads last month and 70 of them became customers, then your lead-to-sale conversion rate will be:
(70 new customers divided by 100 leads) 70 ÷ 100 = 70%
Step 5: Determine the Average Revenue from the Customers
Using the numbers from step 4 above, let’s assume that the 70 jobs (from the 70 new customers) averaged $1500 in revenue.
Step 6: Determine How Much Each Lead is Worth
Multiply the amount of money you got in step 5 by the percentage you got in step 4. Using the numbers in our example, each lead will be worth:
($1,500 x 70%) = $1050
Why Knowing Your Leads Worth is Vital?
Right now, you may be asking yourself questions like:
- Why do I have to do all these calculations?
- Does leads worth matter that much?
- Do I have to keep track of all this marketing data?
Keeping track of your marketing data and doing the calculations to determine the worth of your leads is necessary. When you give special attention to what the leads you get are worth, you get a better idea of where you need to cap various (or certain) elements in your tree service marketing strategy.
For example, when using Google Local Services, you will have to pay per lead. If you are spending less per lead than the leads you get are worth, Google Local Services will be an ideal option for you.
However, if your per lead cost is more than what your lead is worth – say, you are spending $500 to get a lead that is worth $300 – you may need to sit down and re-think using Home Service Direct as your new preferred marketing channel.
Always remember that “how much should my tree leads cost today?” is not the right question. At best, this question is not complete. The most vital metric is how much your tree service leads are worth.
Note: Leads Worth = Profit Potential
Let’s assume you have spent $10,000 on leads that will generate $10,000 in revenue. This means that you will not get any profit. After all;
Profit = Revenue Generated – Amount Spent on Stock = $10,000 – $10,000 = $0
The fact that your profit will be zero means that the hassle is unnecessary.
If you spend $10,000 on leads that will generate a revenue of $8,000, this means that you are operating at a loss – you will end up losing $2,000. This makes the hassle unnecessary.
Calculating leads’ worth helps determine whether you are generating profit from your marketing. For example, if you are spending $50 on a lead that will generate a revenue of $500, then you have a profit of $450.
However, if your marketing spending is similar to the revenue generated – or the marketing spending is higher than the revenue generated – you may need to replace your current marketing channel with a better option.
Stop Comparing the Worth of Leads from Different Channels
It is not uncommon for some tree service business owners to get too mired in the details. If you are looking at the worth of leads from Google Ads, compared to the worth of leads from Facebook Ads compared to the value of leads from Angie’s List, you will end up making less profitable decisions.
Here is why: Worth carries a relative value that depends on how much a specific sale brings in. When focusing on tree service leads with the highest potential worth, you may end up dramatically slashing the marketing budget – this will make you lose a large number of middle-of-the-road opportunities. Over time, this may not be sustainable.
Your tree service business probably does not get as many high-dollar tree removal jobs as it gets low-cost tree trimming jobs, right? Figure out what the ideal bread-and-butter (tried-and-true) jobs are and then create a lead acquisition strategy that allows you to get more of these opportunities.
READY TO GROW YOUR BUSINESS?
Contact Us To Work With A Results-Driven Digital Marketing Agency