HVAC Demand Trends: Direct Mail
First Direct Mail Issue!
👋 Hey, Jon here! This week’s newsletter is our very first introduction of Direct Mail ROI and full customer journey across a sample of 12 HVAC and Plumbing businesses for November.
I want to shout out MSI Direct, who provided anonymized performance data after our recent partnership to build out their revenue analytics.
This sample will continue to grow over time and will be included in the regular newsletter rotation.
Note: The listed spend is the total cost of the mailers sent, and revenue attribution is based on call tracking with SearchLight’s closest touch attribution logic.
The median spend on direct mail across the 12 accounts in this sample for November was $5,591.89.
It Cost $121.56 per Unique Lead from Direct Mail in November
The median cost per unique lead from Direct Mail across this sample of 12 HVAC and Plumbing contractors in November was $121.56, with a median lead volume of 46 unique leads per business.
Note: I am using medians here because the sample is small, and a single outlier can skew the average. E.g., the average number of unique leads per business in this sample generated by Direct Mail was 133. As the sample size increases, I’ll go back to averages.
To better frame this data, we’ll do a comparison to Google Ads performance across a ~1,000 company sample:
The median spend on Google Ads for the larger sample was $7,391.91, with 80 unique leads generated per business (median), at $99.14 per lead.
I chose Google Ads for comparison because it is a paid channel and accounts for the majority of our paid digital spend, according to our data.
It’s not an apples-to-apples comparison because the samples are different, but Direct Mail generated 57% as much unique lead volume as Google Ads with only 75% of the spend.
It Cost $141.56 per Booked Job From Direct Mail
Direct Mail generated 39.5 booked customers per business (median) in this 12-company sample, at a median cost of $141.56 per booked job.
To reiterate the Google Ads sample comparison: Across a ~1,000-company sample, Google Ads drove 34 booked customers per business (median) at $217.40 per booked customer.
Despite generating fewer unique leads than Google Ads, Direct Mail had a higher conversion rate of unique leads into booked customers.
This data may differ in your market, but it underscores the potential insight of comparing marketing channels as you assess your channel mix and budget allocations, beyond lead volume and cost per unique lead.
While the sample comparison isn’t perfect, it helps to put data points toward assumptions to make better marketing decisions - I wasn’t sure what to expect when doing a Direct Mail to Google Ads comparison. I had my assumptions, but this is interesting to explore now that we have the dataset!
It Cost $215.07 to Acquire a Paying Customer from Direct Mail
Direct Mail generated an average of 26 paying customers (median) per business in this sample at a cost of $215.07 per paying customer.
The average ticket of those paying customers from Direct Mail was $3,095.
Google Ads (1,000-company sample) generated a median of 18 paying customers per business, with a customer acquisition cost of $410.66. Those customers spent an average of $2,999.11.
It’s essential to keep the sample size in mind when interpreting these results. While we’re using median values to reduce the impact of outliers, a sample of ~1,000 observations is still far more stable and representative than a sample of 12. Smaller samples remain inherently more volatile and can appear to outperform due to limited exposure to the full range of real-world outcomes. Aka, please don’t take this as me saying Direct Mail outperforms Google Ads every time - again, this is more to highlight how important it is to compare channel performance in your market because your assumptions may be challenged and lead to new opportunities.
Direct Mail Drove a 21.1x ROAS potential and 8.3x ROAS Closed in November
For every $1 spent on Direct Mail, $21.10 in revenue opportunity was generated (median), and $8.30 in closed revenue was generated (median) in November.
40% of Direct Mail's closed revenue came from new customers, and 57% of the channel's revenue opportunity converted to closed revenue.
As a final comparison, Google Ads (1,000 company sample) drove an 11.1x ROAS Potential (median) and a 4.66x ROAS Closed (median).
There’s much more to come on direct mail, with additional providers and larger sample sizes. Performance will vary, but it’s clear that Direct Mail produced strong ROAS, and it’s valuable to do channel comparisons to determine the best channel mix for your market, business and season.
Until next time . . .
-Jon