HVAC Organic Demand Trends - November 2023

👋 Hey, Jon here!

This week, we’re diving into SEO / organic revenue data for HVAC contractors for November.

Before we get into the data, I’ll give a recap of October’s organic performance, which showed a decrease in customer acquisition costs, but also decreases in sold and closed revenue with $19 returned for every $1 spent:

• Conversions: +3%

• Average Tickets: -30%

• Sold Revenue: -21%

• Customer Acquisition Cost: $100.56

• Closed Revenue: -33% (19x 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.

PS - In case you missed it, Josh and Billy Stevens hosted a killer webinar (click the link to watch it) yesterday covering digital marketing trends and tactics you can apply to your business today. They featured some of our data and gave a lot of actionable advice from deep experience - if you have the time, give it a watch!

Okay, now onto the data for November!

Organic Conversion Volume Decreased by 7% Month-Over-Month

In the last few months, we’ve seen upticks in total conversions from organic channels, but in November, we saw a 7% decrease. We do have to keep in mind the Thanksgiving holiday (as well as the upcoming December holidays) that tend to lessen conversion demand outside of any extreme weather changes.

However, just because conversion volume drops does not mean revenue performance is also going to drop.

You are in control of your match rates and paying customer rates, both of which went up from October:

The match rate increased to nearly 32% and the paying customer rate increased by 8%, resulting in 19.7% of all active customers who converted into sold or closed jobs.

Despite 7% fewer conversions in November, 8% more opportunities spent money with these businesses, and as we will see later, that positively impacted closed revenue generation.

It Cost $92.75 to Acquire a Paying Customer From Organic Channels in November

Last week, I wrote about how the customer acquisition cost for Google LSAs has doubled since September to $633. Yikes!

With organic, customer acquisition costs dropped again from about $100 to $92.75.

We use SEO management fees as the cost basis to calculate this return, and with such a lower CAC, it’s no wonder why Josh and Billy focused on organic presence, especially with Google beta-testing generative AI search results.

That’s not to say other channels aren’t effective or profitable, but organic channels consistently generate customers for the lowest customer acquisition costs across most marketing channels (outside of automated outbound campaigns).

And in this sample, 64% of closed revenue came from new customers.

In short, organic is one of the most cost-effective digital marketing channels when done well, and it does drive revenue from new customers.

Average Tickets Increased by 19% From The Prior Period

This is a welcome change compared to last month when average tickets decreased by 30%. Average tickets are now back up above $3,000.

Some brands I consult with get excited about increasing average tickets and making it part of the strategy to increase profits. While other brands tend to focus more on unit sales and whether or not they are trending up or down.

Regardless of your philosophy, it is helpful to look at average tickets both to get an indication of what job types are converting via a specific channel and also to help you dig a layer deeper into understanding your revenue growth or decline.

Earlier this year, average ticket increases saved revenue performance when unit sales decreased noticeably, so it is still a big part of the story and why it warrants a section in this newsletter!

Sold Revenue from Organic Leads Decreased 4% from the Prior Period

Sold revenue was down again, but only by 4% this month.

This is one of my favorite metrics to monitor because it is a lagging indicator: oftentimes, sold revenue can predict whether or not the following month will get off to an on-target start, or off-target start and you can adjust accordingly for your business.

A decrease in sold revenue by only 4% doesn’t worry me, especially because the total amount of sold revenue was 32% of closed revenue for the entire month of November.

For most brands, this means that 32% of the revenue they closed in November is already sold and ready to be completed in December.

But again, given the upcoming holidays and fewer working days on average, it’ll be important to keep a close eye on closed revenue trends throughout December.

Closed Revenue from Organic Leads Increased by 32% from the Prior Period to 24x ROI

In the last two months, we saw declining closed revenue, both by over 30% so it is amazing to see it bounce back in November with a whopping 32% increase.

Return on investment also increased this month to 24.4x: so for every $1 spent on SEO management fees, $24.40 was earned in closed revenue.

Also keep in mind that, like many other months, Google Business Profiles generated 82% of the total closed revenue from organic channels.

Followed by 15% from Google Organic.

If you’re going to look at one place to emphasize (Billy and Josh put focus on this in their webinar, which is why I recommend you watch it) organic efforts, ensuring your GBP/GMB is up-to-date, accurate, and stocked with content.

Lastly, I’ll just note that 90% of organic conversions came in via phone call. So if you are looking to maximize opportunity from organic channels, phone handling is also the place I’d recommend you focus your efforts.

Until next time . . .

-Jon