HVAC Organic Demand Trends - April '24
👋 Hey, Jon here! This week we are diving into Organic revenue performance for April. The organic channels in this sample include Google and Bing Organic Listings, Google Business Profile, Organic Facebook, and DuckDuckGo.
Before we get into the data for April, I’ll give a recap of March’s organic performance, which showed positive trends in lead volume and reduced customer acquisition cost. March ROI increased, but the total volume of closed revenue generated was less than in Februray.
For every $1 spent on Organic in March, $22 in closed revenue was generated:
Conversions: +7%
Average Ticket: -17%
Sold Revenue: +16%
Customer Acquisition Cost: $85.34
Closed Revenue: -25% (22x return on investment)
As usual, shout out to Josh Crouch and his team at Relentless Digital, who partnered with us to measure lead-to-revenue from their organic and LSA management services, enabling us to share these trends with you.
Note that organic spend (based on SEO management fee) increased by 2% month-over-month.
Organic Lead Volume Increased by 1% Month-Over-Month
From December to January, Organic lead volume increased by 32%.
But from January to February, lead volume dropped by almost as much at 31%.
From February to March, lead volume increased 7% and it increased again from March to April, but only by 1%.
Of the active customers in April, 36% booked a new job, 33% matched to a net new opportunity with revenue and 19% turned into a paying customer.
In summary, while there wasn’t a noticeable increase in lead volume this month compared to March, a higher percentage of those active opportunities for the month booked appointments, matched to new work, and turned into paying customers.
This is your friendly reminder that lead volume is only a very small part of the story - leads being up, or down, influences how your month is performing for a given channel, but it does not define it.
It Cost $84.41 to Acquire a Paying Customer From Organic Channels in April
The cost to acquire a paying customer came down by $0.93 month-over-month . . . so not much difference at all.
However, it does seem that CACs have stabilized after the spike in February:
It’s worth repeating that while it is always great to see the customer acquisition costs go down for a channel, it isn’t always a bad thing if they go up, either.
Sometimes, your business would be willing to spend more to acquire a paying customer to secure more volume, or because those customers in your market spend more on average.
It’s critical to look at your customer acquisition cost in the context of average ticket, volume, paying customer rate, and total closed revenue driven.
As we’ll see below, it virtually cost the same to acquire a paying customer in March and April, but the revenue generated and ROI numbers look very different.
Average Tickets Increased by 19% From The Prior Period
From March to April, average tickets increased by $583, to $2,783.29.
This is likely a sign of summer demand coming alive with higher ticket replacements, which may also mean an increased willingness to pay for those customers through channels like organic.
If you’re also seeing a rise in average tickets within your business (and paying customer rate remains steady, with a profitable ROI), now is a time when you might consider investing more $ in organic knowing that the pay-off will likely be higher:
You can also use past year trends to evaluate when your demand tends to spike, and plan accordingly.
Sold Revenue from Organic Leads Decreased 15% from the Prior Period
Last month, we saw a 16% increase in sold revenue (customers that have been sold, but jobs not yet completed and collected on), which indicated a strong pipeline for April.
In April, however, sold revenue has now dropped 16% month-over-month, so May would start with less sold revenue than in April.
This doesn’t mean May's performance is doomed, but as you start the month, you’ll want to keep a closer eye on your data.
It’s also worth noting that the percentage of total revenue opportunity that went unsold was 51%, down from 56% in March.
While it may not seem like a lot, that 5% delta resulted in $280,000 MORE of sold/closed revenue than in March.
Small percentage changes at a high volume can make a very big difference.
Closed Revenue from Organic Leads Increased by 42% from the Prior Period
Last month, $1 of spend on organic generated $22 in closed revenue.
This month, $1 of spend generated $29 in closed revenue, and the total volume of closed revenue the channel drove increased 42%.
Note: 50% of closed revenue came from new customers.
And that’s with virtually the same amount of leads and similar customer acquisition costs as March.
What changed was a higher percentage of that revenue opportunity converting to sold/closed (5% more), higher paying customer rates, and higher average tickets.
With all of that said, there was an interesting question posed in the Service Einsteins Facebook group yesterday:
Note: I am not affiliated with this group (other than being a member - I am a member of many groups to stay informed of what is top of mind for contractors) and am not promoting the group in any special way. I love how much knowledge sharing happens within these groups, and I liked the idea of picking questions to help answer with some data.
This question is fascinating to me because the data has been pretty clear that the Google Business Profile drives the majority of Organic conversions and revenue:
% of Total Closed Revenue by Organic Channel:
78% of closed revenue came from the Google Business Profile
16% of closed revenue came from Google Organic Listings
1% of closed revenue came from Bing Organic Listings
So, this anonymous member is correct in the gut feeling that there is a lot of other digital real estate ahead of Organic listings, and while GBPs drive the majority of revenue, it’s all connected:
The way customers ultimately convert through SEO / Organic will likely continue to change and evolve, but your website, its content, structure, and compliance with search engines is an asset for your business.
Where you ask your SEO agency to put emphasis and focus may change, but let’s not forget that organic brought in over $2.4 million of closed revenue for the group of contractors in this sample.
It’s always good to simulate your customer’s experiences and get in tune with their shopping process, knowing what it looks like so you can stay informed, ask the right questions, and ensure your business is staying on top of the right trends.
I love questions like this and am so glad to see the continued mentality of ‘all boats rise with the tides’ in the trades.
Until next time . . .
-Jon