HVAC Organic Demand Trends - July 2024
👋 Hey, Jon here! This week, we are exploring July’s Organic revenue performance. The organic channels in this sample include Google and Bing Organic Listings, Google Business Profile, Organic Facebook, Yelp Organic, and DuckDuckGo.
PS - I am now doing video recaps of these substacks with additional analysis and data on our YouTube channel. If that’s more convenient for you, give us a follow!
Before we get into the July data, I’ll summarize June’s organic performance:
For every $1 spent on Organic in June, $30.70 in closed revenue was generated, and sold revenue increased by 50%, meaning lots of revenue pipeline to start July:
Conversions: +26%
Average Ticket: -6%
Sold Revenue: +50%
Customer Acquisition Cost: $69.71
Closed Revenue: +3% (30.7x 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) decreased by 0.6% month-over-month (no material change here).
Organic Lead Volume Increased by 0.3% Month-Over-Month
Lead volume has largely been up since December ‘23 but has experienced spikes in some months and evening out in others:
Organic lead volume increased by 32% from December to January but dropped by almost as much from January to February at 31%.
It then increased 7% from February to March and again from March to April, but only by 1%.
We saw an increase of 21% from April to May and another 26% from May to June.
In July, lead volumes were unchanged, up only 0.3%, but noticeably up since February.
The number of paying customers from June to July did increase by 1.4%, along with the booking rate (+1.8%) and match/run rate (+3%).
Given the lead volume across this sample of businesses, the small percentages did add up and move the needle from a revenue generation perspective compared to June.
It Cost $91.35 to Acquire a Paying Customer From Organic Channels in July
Customer acquisition costs for organic aren’t as cut-and-dry as channels like Google PPC and Google LSA. The cost basis to calculate CAC is based on SEO management fees and can be more influenced by the amount of time an investment has been made with SEO.
So, while CAC in 2024 has mostly been less than in 2023, some of that depends on the time it takes for an SEO strategy to develop and impact performance (which is why tracking this data as early as possible is essential!).
July has been the only anomaly to that pattern in 2024, with a 27% increase in customer acquisition cost year over year.
But as we’ll see below, paying more to acquire those customers generated more returns based on average ticket trends.
Average Tickets Increased by 11% From The Prior Period
Interestingly, average tickets from organic were mostly higher in 2023 than in 2024, with one anomaly: July.
Average tickets increased 32% from July 2023 to July 2024, exceeding the additional cost to acquire a paying customer, making the higher CAC worth it for the brands in this sample.
Note: Every market and brand is going to be different. Some of you are years deep into your SEO strategy, while others may have just recently pivoted. Organic is more challenging to capture relatable benchmarks for this reason, so it is more important to focus on the general direction of the trends versus the specific numbers.
Sold Revenue from Organic Leads Increased 6% from the Prior Period
Sold revenue increased significantly in the prior months (+65% and +50%) but settled at a 6% increase from June to July.
Although this is a modest month-over-month gain, sold revenue is still up substantially compared to April and ended at 17% of the total revenue collected in July.
Another way of saying this is that August will start with 17% of revenue from the entire month of July in the sold status.
Closed Revenue from Organic Leads Increased by 14% from the Prior Period
Total closed revenue volume increased by 14% month-over-month, and ROI from organic channels increased by $6.40 for every $1 spent.
However, it is worth noting that 55% of the total revenue opportunity in July was in unsold estimates.
We like to see around 50% on average, which would have yielded a 40x ROI, or close to $3 more for every $1 spent.
Since total revenue opportunity was up 25%, the 5% decrease in revenue conversion didn’t hurt revenue volume performance, and capacity was likely near-max for these brands, but it is always something to consider to maximize revenue from a particular channel.
Despite this, the story for 2024 has been very positive after Q1, with an up-and-to-the-right pattern for revenue by brand peaking in July:
Until next time . . .
-Jon