HVAC Demand Trends: Google LSA Revenue Performance - May 2024
👋 Hey, Jon here! This week, we’re diving back into Google LSA performance for May 1st - May 29th.
Note: This data is from a sample of ~20 businesses across the US. Shout out to Josh Crouch and his team at Relentless Digital, who partnered with us to measure lead-to-revenue from their organic and GLSA management services, enabling us to share these trends with you.
As a refresher, below is a summary of April’s performance:
Spend: +25%
Conversions: +63%
Customer Acquisition Cost: $310.09
Average Ticket: $2,288.53
ROAS Potential: 11.6x
ROAS Closed: 6.2x
Note that spend on GLSA increased 13% from April to May.
Conversions from GLSA Increased by 19% From the Prior Month
After a difficult start to 2024 for GLSAs (63% decrease in lead volume from January to February, and 6% from February to March), lead volume has rocketed back with two straight months of growth (63% increase from March to April, and now 19% from April to May).
Lead volume is up 108% since February.
That is quite the bounceback.
And despite the significant increase in lead volume, Booked Rate, Match Rate, and Paying Customer Rate all increased (+21%, +40%, +41%, respectively).
So not only did lead volume increase, but a higher percentage of those leads booked jobs, matched to net-new revenue, and turned into sold/closed revenue.
When lead volume increases, the efficiency metrics of lead to revenue tend to decrease (this is normal). Still, the businesses in this sample had operations dialed in enough to handle the excess lead volume and turn more of it into revenue.
You want to monitor your efficiency metrics (book rate, match rate, paying customer rate) during lead volume spikes. Sometimes, this can overwhelm a team and the conversion rate of those leads drops so low that your bottom line may not change much despite more leads coming in. Remember, lead volume is only one step of the revenue generation process!
Lead volume was also more evenly distributed in May, with 45% of that volume coming in the first two weeks of the month and the remaining 55% coming in the second half of the month.
Google LSAs Drove a 15.5x Return on Ad Spend Potential in May
The total revenue potential generated (unsold estimates, sold revenue, closed revenue) driven by GLSAs increased 53% month-over-month.
And while spend was up 13% MoM, the ROAS potential was up 33%.
Every $1 spent on GLSAs drove $15.50 in revenue opportunity with an increase of total volume by 53%.
It’s also worth noting that 68% of total revenue opportunity converted to sold/closed revenue.
Our benchmark for that conversion rate is typically 50%, so not only was revenue opportunity much higher in May, those opportunities generated sold/closed revenue at a much higher rate than in other months.
Sold revenue was also up 51%, meaning that June will start with even more sold revenue ready to be completed than in May.
Google LSAs Drove a 9.3x Return on Ad Spend (Closed Revenue) in May
For every $1 spent on GLSA in May, $9.30 of closed revenue was generated, which is up 50% month-over-month.
The total closed revenue volume was up 111% month-over-month, which is significant.
ROAS (the ratio of revenue driven to spend) is important, but sometimes it is worth sacrificing a bit on that ROAS to generate more volume.
For example, you may be okay earning $5 for every $1 spent if it generates $100,000 in revenue, versus earning $7 for every $1 spent to generate $65,000 in revenue.
But for GLSA's performance in May, we saw both ROAS improvement and closed revenue volume.
It Cost $339.81 to Acquire a Paying Customer from Google LSAs in May
Customer acquisition costs came down another 8% from April to May, and average tickets increased 63% (to over $3,600).
We also saw that 79% of closed revenue from GLSAs came from new customers (up from 76% in April).
For a while, GLSA performance was concerning and volatile, with our recommendation being to prepare for the event of less volume from the channel and pivoting that earmarked spend into other channels.
I still recommend monitoring GLSAs closely and keeping that plan, but so far the data is looking great heading into June.
Until next time . . .
-Jon