HVAC Demand Trends: May 2023 PPC Performance

👋 Hey, Jon here! PPC performance is back :)

In my last PPC breakdown, I mentioned that May was on target to be a strong month and that is exactly how it played out. Although lead volumes were flat and average tickets were down slightly (3%) both closed revenue and ROAS increased noticeably in this sample.

I’ll deep dive why that was, the numbers and give a look ahead into June 👇

PPC Lead Volume Increased 1% Month-over-Month

Lead volume and trends are so interesting to observe, because it often doesn’t correlate with closed revenue and ROAS in that same month.

We only saw 1% more leads in May than in April, but May’s ROAS was much stronger.

Why?

Opportunities increased 6.5% Month-over-Month

Oftentimes, a lead submitted toward the end of a month won’t have an appointment until the following month, and sometimes won’t move to closed revenue into the second or third month.

A lead today pays dividends tomorrow (if it is nurtured):

There were 20% more paying customers in May than in April.

Match rate (the percentage of leads that match to a sellable opportunity in the CRM after the lead came in) stayed relatively flat with just 1% growth, but paid customer rate (the % of leads that turn into paying customers) increased a whopping 14%.

Lead volume increased 15% MoM in April, but ROAS didn’t noticeably improve until May.

There are two lessons here:

(1) However you perform your attribution, make sure you don’t exclude leads from prior months - especially during the busy season when you’re booking out 2-3 weeks and revenue may not hit the books until a month or two after that initial lead came in.

(2) Longer customer journey cycles are more pronounced in the busy season - during shoulder season, you’ll probably close and complete leads faster, but during these busy months when you’re booking further out, nurturing is crucial to keep your flywheel engine strong.

PPC Closed Revenue Increased 30% Month-over-Month

I wanted to get right to the good stuff - closed revenue from PPC leads increased 30% month-over-month.

That’s a ROAS of 7.3x (versus ~5x the prior month).

Revenue potential was at a 14.5x, meaning that closed revenue was exactly one half of that total opportunity.

That’s an indicator that lead handling, the sales process / experience and follow-up were all performing as expected.

If you’re evaluating your own business, check to see if you are closing half of your revenue potential. If you aren’t, there’s opportunity for improvement.

65% of Revenue Opportunity from PPC Converted via Phone Calls

How your customer’s converted on your website is just as important as how they got there, and the fact that 65% of PPC revenue opportunity stood out to me for two reasons:

(1) If you want to optimize your lead handling process, start with phone calls. 65% is the majority, and you may not have the time or resources to optimize every conversion tool at once.

(2) This number is down noticeably a year ago - this is fascinating to me. I wrote a guest post for Schedule Engine about the trend of customers converting differently last July, when 78% of leads converted via phone calls. In May, only 68% of leads converted via phone calls. That’s a 10% drop and shift in customer behavior.

Phone calls are still the most important conversion tool, but another way to look at this is that 35% of your PPC revenue opportunity came from customers who converted via form, chat and online scheduling.

I expect this number to grow, but 10% is no small change. 1 in 10 people who called last year decided to convert via a different path this year.

Pay attention to this - you want consideration in a moment of need for a typically emotional purchase (ac not working in summer - lots of emotion there) and those who make it easiest to convert and book an appointment will continue to drive results.

Customer-Acquisition Cost Is Up 18.8% Year-Over-Year

We’re entering the least expensive months to acquire paying customers via PPC:

But Customer Acquisition Cost was $325 in May 2023, up from $273 last year. The dollar difference isn’t that big, but 18% is still 18%.

Average tickets have been up YoY, making up some of the difference, but be mindful that it’s been more expensive to acquire a paid customer from PPC this year than it was last year.

However, I’ve been sharing the above graphic on LinkedIn for a reason: as you evaluate budgets for the busy season, just know that CaCs tend to drop and there could be an opportunity in your market to increase spend to capture more demand if you have the capacity for it.

Looking Ahead Into June

May was a strong month, but sold revenue was down 23% month-over-month, meaning we have less pipeline to work with beginning in June.

This is often a strong indicator of the next month’s performance, but we can hope that weather changes drive more demand for HVAC services.

But you will want to make sure to look at your pipeline - if it is down month-over-month, my recommendation is to do outbound campaigns on unsold estimates.

Historically speaking, I’d expect June to be a strong month, but that reduced pipeline makes me nervous, so don’t take increased demand for granted :)

Until next time . . .

-Jon