Lead Quality Benchmarks - Q3
AI Lead Grading
đ Hey, Jon here!
This is a new edition of the Substack covering data about lead quality from various marketing channels and what to be aware of in your business.
Earlier this week, I created two brief videos touching on this subject, one on LinkedIn and the other, embedded below:
For the last half-decade, my team and I have analyzed lead-to-revenue data for the now 1,500+ contractors on our data platform.
Weâve looked at a lot of low-ROAS channels and campaigns, using data to help businesses work with their agencies and internal team members to fix revenue leaks and improve ROI.
Weâve had a lot of success doing that, but the one question that came up over and over on low-ROAS investments was âIs this a lead quality problem?â
Raw Book Rates told part of that story, but a low raw book rate doesnât always mean itâs a booking problem; it could be a lead quality problem, and we set out to solve that data gap at scale.
We were fortunate enough to hire a rockstar software engineer from Stanfordâs AI program, who has been building AI models for us over the last year with a focus on accurate automated lead grading.
This provides us with a crucial new set of data to diagnose problems and offer solutions, allowing us to see bookability rates by channels, campaigns, business units, intents (e.g., you can now quantify lead volume by service type even if that customer didnât book), and more, as weâll discuss below.
And youâll benefit from some new benchmarks and insights now that this has been live for the last quarter :)
This sample comprises nearly 24,000 graded conversions (calls, forms and chats) from July through October (these will turn into monthly editions of the substack) from HVAC and plumbing businesses across the country (and of all different sizes).
49% of Graded Conversions Were Bookable
We graded nearly 24,000 conversions from 22 different marketing channels (Google Ads, Google LSA, Organic, Google Business Profile, etc.), and less than half were bookable.
Iâm going with facts over feelings here - itâs difficult to find in-market shoppers who are ready to buy from you, but if this number is surprising to you, letâs break it down a bit further, looking at the top reasons conversions were unbookable:
8% of graded conversions were spam callers
5% of graded conversions were inquiring about a service not offered by the business
5% of graded conversions were existing customers confirming an appointment
3% of graded conversions were out of the service area
2.5% of graded conversions were calling about a bill
2% of graded conversions were wrong number calls
There were a slew of other reasons (not the homeowner, canceling appointments, giving feedback) on the long tail, which is fascinating because at an aggregate level, it wasnât just two or three main reasons that accounted for the majority of unbookable conversions.
To make this more tangible for you, letâs take a look at Google Ads specifically:
48% of graded conversions from Google Ads were Bookable, but the top unbookable reasons point to areas of improvement:
8% of graded Google Ads conversions were unbookable because the service they inquired about was not offered by the business
5% of graded Google Ads conversions were unbookable because those customers were outside of the service area
5% of graded Google Ads conversions were unbookable because those customers called the wrong number
6% of graded Google Ads conversions were unbookable because those conversions were spam
I wouldnât expect to be able to completely eliminate wrong numbers, service not offered, or out of service area, but an estimated $138,000 was spent on those unbookable conversions!
[The total spend over this time period was nearly $800,000, and half was spent on conversions that werenât bookable. This explains a lot of why we see a 20% paying customer rate across most marketing channels.]
However, these types of unbookable conversions can be mitigated by:
(1) Ensuring you/your agency are dialed in and aligned on service areas (youâd be surprised how often this gets out of sync!)
(2) Ensure your website and campaigns accurately reflect the services you do offer - be more detailed than less detailed on those landing pages
(3) Determine if you are spending money on competitor names to take market-share - if you are, training CSRs to handle Wrong Numbers is very important, as nearly all of those that we see are not converting
Our rule of thumb with any data product is to find the 20% of work that will influence 80% of the outcome (Pareto principle) - and the above three items are a great start.
Campaign Level Metrics
It can also be useful to analyze this data at the campaign level because we identified 7 campaigns in the data set that accounted for 40% of the spend on unbookable conversions.
We also found that just 1 campaign accounted for 11% of spend on unbookable conversions.
Because this sample set spans various businesses and groups across the country (different agencies, operators, etc.), I canât provide specific campaign names, but I can discuss at a high level how the unbookables appear differently.
One common culprit tends to be Plumbing campaigns on Google Ads - over the years, itâs been notoriously hard to get strong ROAS from plumbing campaigns due to the lower average tickets vs. HVAC (often lifted by high-ticket installs).
The % breakdown of unbookable reasons looks quite different at the campaign level, with over 30% of conversions unbookable due to the service not being offered, and 11% because of a lack of immediate availability (emergency services!).
The data becomes really useful at the campaign level because those reasons are much more actionable and specific. For example, you can identify which service types require more immediate assistance and reduce spending if your capacity cannot accommodate that needed urgency, leading to greater efficiency.
As another example, itâs important to have negative keywords in heating/cooling that can reduce conversions related to vehicle AC / Heat (Iâve seen a lot of those in this batch!).
Before we get to the other side of the coin (bookable conversions NOT booking!), letâs get some benchmarks across other major channels:
59% of Google LSA conversions were bookable
57% of Google Organic conversions were bookable
48% of Google Ads conversions were bookable
47% of Google Business Profile conversions were bookable
(I am not surprised GBP is a bit lower, as we saw a higher volume of customers with existing appointments converting via this channel.)
45% of Bing (Organic) graded conversions were bookable
As you review your marketing performance, keep in mind that from a fairly large sample set, the âaverageâ marketing channel generated between 45%-59% bookable conversions, and 41% - 55% of conversions were unbookable.
This gives new meaning to âevery lead countsâ.
Efficiency throughout the customer journey is important because youâre already starting âbehindâ when half your conversions are unbookable.
This does not destroy ROAS - some of these accounts had commendable closed ROAS (8x or more) despite this reality, but it is still a reality to work around.
Over 3,000 Bookable Conversions Remain Unbooked, Worth an Estimated $11 million
Our product behaves a little differently since our attribution platform follows the entire customer journey from lead to revenue, which enables us to see if bookable conversions booked both at the time of the conversion and months later.
For example, if I look at my data today for the month of October, I can see if bookable conversions from July (or any prior month) still remain unbooked.
It was surprising to us to see that over 3,000 bookable conversions remained unbooked.
While most of you are marketers who care very much about the quality of conversions coming in, marketing can still take a hit if bookable conversions arenât getting booked.
I know I am stating the obvious, but it has to be said :)
The biggest reason for Bookable conversions not booking is Planned Follow-up.
33% of bookable conversions that did not book were because of a planned follow-up during that conversion.
We can also break this out by conversion intent (to see what service the customer was calling about), and did see large spikes in urgent services (need for immediate AC repair was a very big one this summer) that led to a bookable customer not booking at the time of the conversion and remaining unbooked months later.
Those bookable conversions that didnât book because they needed an earlier appointment (the majority were AC service and plumbing leaks) accounted for 10% of the total.
I also want to note that I am closely tracking the trends of requesting pricing over the phone or seeking more pricing transparency.
Just 4% of bookable conversions did not book due to pricing concerns, but if this rises a noticeably degree, it might warrant new conversions around how pricing is discussed early in the sales funnel.
Key Takeaways
This new data set unlocks many different directions and depths for me, but my goal is to provide you with concrete and simple takeaways to help your business through this newsletter.
Thereâs so much more I want to dive into, but to keep it high level and actionable, these are the three takeaways I walked away from this data with:
(1) Itâs fair to assume half of the conversions generated from Digital Marketing channels are not bookable - conversion or lead volume increasing does not mean a direct translation to revenue
(2) It may be tedious, but making sure your agency partners and internal team members are aligned on service areas and services offered is critical to mitigating some of the unbookable volume
(3) Do everything you can to book the customer at the time of the conversion - Iâm not saying you can do this 100% of the time, but just a 10% improvement in this sample would translate to an estimated extra $1.1 million of revenue
Until next time . . .
-Jon