How Do Weather Changes Impact HVAC Lead Volume, Match Rates and Closed Revenue?
👋 Hey, Jon here, first off Happy New Year 🎉 I hope you all had a wonderful holiday! I’m so excited to kick off 2023 with you and have so much in store for The Data-Driven Trades newsletter this year 👀 I’m humbled by your continued support and readership.
Many of you probably felt the effects of the dramatic weather change on December 23rd and into Christmas Eve, so I thought it was the perfect topic for the first newsletter of the year.
This newsletter will help uncover some insights about how those weather changes affected PPC + Facebook lead volume, match rates and ultimately, closed revenue.
Before we dig in to today’s topic, below are the most popular articles (based on readership) of 2022, so if you want hand-picked articles to go back to and read over, here you go!
📈 Measuring Revenue Flow from Impression to Sold Job: August 2022
📊Analyzing November HVAC Demand Trends
📅 We Measured Revenue Converted by Schedule Engine for 10 Months
⌨️ How Much Revenue Does SEO Generate for HVAC Contractors?
🖱️Here's How Many Clicks from Google PPC, Bing PPC and Facebook Turn Into Revenue
💵 How Is the Recession Impacting the HVAC Industry?
🤝 How Much Revenue Does Google Local Service Ads Drive for HVAC Contractors?
With that, let’s dive into the cold snap weather analysis!
Lead Volume Increased 180% During the Cold Snap
The power of weather and its ability to create demand for our industry is often talked about, and for good reason:
On December 23rd and 24th of 2022, most of the country saw significant temperature drops.
Even Florida had its coldest Christmas Eve in 33 years!
As a result of this weather change, lead volumes nearly tripled.
I’m not saying weather is the only driver of demand in our industry, but its powerful, and sometimes rapid temperature changes cause as much headache as opportunity (which I’ll dive into in a later section).
In our anonymized sample of HVAC contractors, we saw 411 leads come in on 12/21 and 12/22, and that number jumped to 1,145 on 12/23 and 12/24.
83% of those leads came in via phone call, which is a bit higher than the usual 78% we see, but it’s worth noting that 82% of leads from 12/21 and 12/22 also came in via phone call.
But what’s more important than lead volume and how those leads converted is seeing how well those leads turned into revenue.
12.4% of Leads Submitted on 12/23 and 12/24 Matched to New Work in the CRM
As of January 3rd, only 12.4% of the leads that came in on 12/23 and 12/24 ended up in the CRM with a sellable opportunity.
In the prior 2 days with normal lead volume, match rates were noticeably higher at 21.7%.
After the holiday, on 12/26 and 12/27 lead volumes were still up 56% from 12/21 and 12/22, but match rate remained more stable at 20.3%.
It’s not surprising that match rates dropped during the cold snap - capacity fills up, customers cancel when their equipment starts working again or find a sooner appointment, and people are calling around, not willing to wait if they don’t hear back right away.
As we’ll see below, this is an important metric to track, because a lower percentage of leads turning into revenue during a busy time can impact profitability.
Closed Revenue From Cold Snap Leads Was 78% Higher Than The Previous 2 Days
The closed and completed revenue generated from leads that originated on 12/23 and 12/24 was $166,000 compared to $93,100 from leads that originated from 2 days prior.
While lead volumes were up 180%, this translated to a 78% increase in closed revenue.
Leads that originated on 12/26 and 12/27 generated $115,736 in closed revenue (as of January 3rd). Lead volumes on those dates were up 56% from prior to the cold snap and 24% more revenue was closed from those leads.
While fewer leads ended up in the CRM with a sellable opportunity, there was still a significant increase in closed revenue from leads that originated on those dates.
For those who love the details, the average tickets for jobs originating from cold snap leads were ~$1,700, while the average tickets for jobs originating from the 2 days prior was ~$1,900.
One more note on this - it’s still possible that more revenue could be closed from leads that originated on 12/23 and 12/24 especially if follow-up processes are in place.
There was over $81,000 of estimates given to those leads, and another $45,000 of revenue that was sold but yet not complete.
Closing Thoughts
Based on this sample data, sudden and significant weather changes had a measurable impact on lead volume, so much so that match rates dropped nearly 10% due to the overwhelming demand.
This is something to be mindful of - while additional revenue was generated, it wasn’t as efficient and produced a lower ROAS (4x versus a typical average of 6x) relative to lower lead volume periods.
This is the mix of headache and opportunity:
Without preparation and a plan for a weather event, lead handling and revenue flow can get unprofitable very quickly.
But if you have a plan, you can make informed decisions (like reducing or pausing campaigns with emergency keywords), staff properly (in this case, likely hard to 3x capacity, but take the opportunity of getting leads that don’t need immediate service) and come up with a plan to follow-up on leads that came in during this period but didn’t convert.
It’s worth noting that the 88% of the jobs that did make it into the CRM were sold.
Demand dropped 75% on Christmas (again, to be expected), then increased 95% the very next day, so excess demand from the cold snap lingered into the following week, which is an opportunity if you’re ready and aware of those trends.
Until next time . . .
Jon