HVAC Demand Trends: Google LSA Revenue Performance - February 2024

👋 Hey, Jon here! This week, we’re diving back into Google LSA performance for February ‘24.

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 January’s performance compared to the prior period:

• Spend: +104%

• Conversions: +150%

• Customer Acquisition Cost: $401.97

• Average Ticket: $1,755

• Sold Revenue: +46%

• ROAS Potential: 9.15x

• ROAS Closed: 3.46x

Note that spend on GLSA decreased 55% from January to February.

Conversions from GLSA Decreased 63% From the Prior Month

GLSAs continue to show their volatility in 2024.

From December to January, conversion volume increased 150%, and now, from January to February, it’s come back down by 63%.

The number of paying customers from have also come down 41% month-over-month.

Data Analysis Note: When analyzing performance data, there are usually two ways to look at the numbers: (1) Volume and (2) Efficiency.

Different roles in your organization may care more about one or the other (ideally we get both) but it’s important to be able to see the data in these two directions.

Conversion volume (-63%), paying customers (-41%) and closed revenue (-31%) are all down noticeably in January.

From a volume perspective, this is a downtrend and is cause for concern.

On the other hand, from the efficiency perspective, spend was down 55% month-over-month, so we would expect to see improvements in ROAS potential and ROAS closed (as you’ll see below).

This month, Google LSAs had much better efficiency (more returns for every $1 spent) but lower total volume (31% less closed revenue).

When evaluating your marketing channels, it’s useful to identify which ones drive volume, and which ones are the most efficient. Rarely is this an ‘either, or’ conversation, but it more of a balance and mix of both.

For example, pulling back budget for the sake of better efficiency for a volume channel could hurt your revenue generation for that month, but also expecting a channel like GLSAs to generate volume when it usually doesn’t can negatively impact your marketing mix and be a primary reason for budget misallocation.

In summary, over the last few months, we’ve seen GLSA drive efficient returns, but at a lower volume relative to other channels.

Even though conversions came down from the prior month, Match Rates improved to 34% and paying customer rate improved to 21%, so more of those conversions made it to new revenue opportunities and sold/closed work than in the prior month.

Knowing that spend dropped 55%, with better efficiency of lead to revenue, we expect to see improved ROAS from the prior month.

Google LSAs Drove a 15.4x Return on Ad Spend Potential

In January, $1 of GLSA spend generated $9.15 in revenue opportunity.

In February, that increased by 68%, generated $15.40 in revenue opportunity for every $1 spent.

Based on my italisized note above about data analysis, GLSAs were quite succesful in February compared to January in terms of efficiency despite the overall lower in sales volume.

It’s difficult to create demand when it is not there in our space, so the ability to make up in efficiency what lacks in volume is important.

It’s also worth noting that 46% of total revenue opportunity was in the open estimate category, meaning more than half (54%) of total revenue opportunity ended up sold or closed.

Google LSAs Drove a 6.5x Return on Ad Spend (Closed Revenue)

In January, every $1 spent on GLSA generated $3.46 in return.

In February, that increased 87%, with $6.50 in closed revenue generated per every $1 spent, with 86% of closed revenue coming from new customers.

Sold revenue was down 8%, and closed revenue was down 31% but the dollars spent were much more efficient at generating a return.

Every business is going to be different - you may have much higher GLSA returns / volume, much lower, or similar.

The key is to compare all of your channels to figure out which ones consistently drive volume even in lieu of better efficiency to ensure your call board is full and you are hitting revenue goals.

Efficiency is important (you don’t want to break even or lose money on channels for the sake of volume) but knowing how your marketing channels serve your business will help lead to better business decisions.

GLSA showed better efficiency, but only generated $21,000 of closed revenue per location in this sample.

It Cost $273.89 to Acquire a Paying Customer from Google LSAs in February

The cost to acquire a paying customer came down 31% in February, from just over $400.

Not only that, but average tickets increased 23% month-over-month to $2,262.95.

As a reminder, GLSA customer acquisition cost in January ‘24 was higher than any other month in 2023, and while costs came down, February ‘24 is still noticeably higher than in 2023:

How Did Customers Convert Through Google LSAs?

97% of revenue opportunity from GLSAs converted via phone calls this month, compared to 92% in January.

Online booking accounted for just 2% of revenue opportunity (compared to 1% last month) and GLSA messages fell flat with minimal revenue produced.

Customer behavior continues to change, but it’s clear that booking and messaging via GLSAs haven’t caught on yet with a wider customer base.

Keep in mind, we are seeing really low conversion rate (lead to revenue) for GLSA messages. Often times, these are coming in after hours, but if you’re getting a high volume of messages, it’s worth paying attention to how well they’re converting to revenue.

Until next time . . .

-Jon