HVAC Demand Trends: Google LSA Revenue Performance - April 2024
👋 Hey, Jon here! This week, we’re diving back into Google LSA performance for the full month of April.
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 March’s performance (the first 27 days of the month) compared to the prior 27 days of performance:
Spend: -5%
Conversions: -6%
Customer Acquisition Cost: $245.50
Average Ticket: $2,232.05
Sold Revenue: -8%
ROAS Potential: 15.2x
ROAS Closed: 8.5x
Note that spend on GLSA increased 25% from March to April.
With that, let’s dive into April’s performance!
Conversions from GLSA Increased by 63% From the Prior Month
Lead volume from Google Local Services ads has been volatile so far in 2024:
From January to February, lead volume declined 63%.
From February to March, lead volume declined 6%.
However, lead volume bounced back from March to April, with a 63% increase.
What’s even more interesting is that lead volume increased 73% in the last two weeks of April, compared to the first two weeks of the month.
For the past few years, the back-half of April seems to be the start of summer demand and in this sample for Google Local Service Ads, the data aligns to that seasonality.
Usually, when we see lead/conversion volume increase, we start to see decreases in the percentages of those customers who book, match/run and end up paying customers.
In April, booking rate actually increased 15% (to 37%), match rate increased 0.5% (to 31%) but paying customer rate decreased 8% (16%).
Not only did lead volume go up, but those leads more efficiently turned into revenue*.
*Note that while paying customer rate did decrease 65% of April leads came in the last two weeks of the month, and 36% of leads came in the last week of the month. Sometimes, it is hard to turn a lead into a paying customer in that short of a time frame. So, if you ever see your paying customer rate drop within a month, check the lead volume for the last week or two to see if there was a spike. It doesn’t mean it is a bad thing, and those customers likely will convert to sold / closed the following month!
Google LSAs Drove a 11.6x Return on Ad Spend Potential in April
Spend on GLSA increased 25% month-over-month, and ROAS potential improved 4% month-over-month.
Note, our last edition of GLSAs covered the first 27 days of revenue, which is why we show a 15.2x potential in the intro section. The full month of March generated an 11.5x ROAS potential).
Overall, revenue potential generated increased 30% month-over-month.
It’s critical to understand that ROAS is always a ratio of spend to revenue generated.
For example, if you only spend $1,000, one replacement with a $10,000 ticket brings you right to a 10x. While that looks good on paper, that’s no where near enough volume to sustain a business.
As you increase spend, the revenue targets to maintain the same ROAS get bigger and bigger, which is why it is always impressive whenever you are able to increase spend on a channel and maintain the ROAS.
In this case, GLSAs generated just over $17,000 of revenue opportunity per location, up from $14,000 in the prior month.
Google LSAs Drove an 6.2x Return on Ad Spend (Closed Revenue) in April
Closed revenue increased by 23% in April (just over $9,000 per business), but closed ROAS came down 1.4%.
This is an example of how ROAS going down isn’t a bad thing - yes, less closed revenue was generated per dollar spent ($0.50 less) but nearly $1,000 more closed revenue was generated per location.
And now that we know the majority of leads came in the last two weeks of April, we would expect May to start off strong (this is also evidenced by a significant increase in sold revenue, which is up $38,000 month-over-month).
Again, it is important to look at the timing of leads throughout a month, especially when volume comes in later - it is not that this is wasted opportunity, but rather due to the natural sales cycle in our industry that we would expect these leads to be sold and closed in the following month.
Overall, this is a positive for GLSA - it still doesn’t drive nearly the volume of organic and PPC, but it is trending in the right direction, with a strong pipeline for May.
It Cost $310.09 to Acquire a Paying Customer from Google LSAs in April
Customer acquisition costs came down by 5% in April, but average tickets increased 11% (to $2,288.53).
In March, the CAC from GLSA was $322.22.
We also saw that 76% of closed revenue from GLSAs was from new customers in April.
So, despite a 25% spend increase, the customer acquisition cost came down, customers from this channel spent more on average, more revenue potential and closed revenue was generated, but less revenue came from new customers (it was 90% in March).
GLSA is a channel to keep a close eye on, especially as we enter the summer months.
It does well from an efficiency perspective (53% of total revenue opportunity converted to closed revenue) with profitable returns, but the volume of revenue driven isn’t as high as it has been in the past.
Until next time . . .
-Jon