Marketing Tracking ROI and Customer Acquisition Costs
For contractors, understanding where your money is going—and how much it’s bringing back—is essential for growing your business. Tracking your marketing return on investment (ROI) and customer acquisition costs (CAC) helps you see what’s working and what isn’t. This insight allows you to focus your efforts and budget on the strategies that bring the best results.
Understanding Customer Acquisition Costs (CAC)
What is CAC?
Customer acquisition cost (CAC) is the total amount you spend to get a new customer. This includes all marketing expenses, like ads, sales efforts, and promotional campaigns. To calculate CAC, divide your total marketing spend by the number of new customers acquired during a specific time.
How to Track CAC
Step 1: Track all marketing costs, including online ads, printed flyers, and sales commissions.
Step 2: Count the number of new customers your marketing generated.
Step 3: Divide your total costs by the number of customers. For example, if you spent $1,000 and gained 10 customers, your CAC is $100.
Calculating Marketing ROI
Marketing Spend vs. Revenue
To calculate your marketing ROI, subtract your marketing spend from the revenue generated by your campaigns, then divide by the spend. Multiply by 100 to get a percentage. For example, if you earned $5,000 from a $1,000 campaign, your ROI is 400%.
Assessing Campaign Performance
Evaluate how each marketing channel performs. Online ads, SEO, and print flyers may each bring different results. Tools like Google Analytics or Facebook Ads Manager can show which channels bring the most traffic and conversions.
Breaking Down ROI by Project Type
Calculate ROI for each service you offer. For example:
Wood fencing: Compare revenue from wood fence projects to the cost of acquiring those customers.
Chain link fencing: Do the same for chain link projects to see which is more profitable.
Evaluating Profitability per Project Type
Tracking Profit Margins per Job
Once you know the CAC for each project type, compare it to the revenue and profit margins of those jobs. If a certain service costs more to market but brings in less profit, you may need to adjust your strategy.
Per-Project Profitability
Assess if your pricing aligns with your CAC. Some projects, like wood fencing, may have higher profit margins, while others may cost more to deliver. Focus on promoting the most profitable services.
Tools and Techniques for Tracking ROI and CAC
CRM and Project Management Software
Tools like Contractor Accelerator help track marketing efforts, customer data, and project profitability. This makes it easier to measure results and stay organized.
Excel/Spreadsheets
If you’re just starting, use simple spreadsheets to track expenses and calculate ROI. Add columns for costs, revenue, and profits for each marketing channel or project type.
Google Analytics and Ad Tracking
Use tools like Google Analytics and Facebook Ads Manager to track the performance of digital campaigns. They show you which ads drive traffic and lead to conversions.
Adjusting Marketing Strategy Based on ROI and CAC
Reallocation of Marketing Budget
Focus your budget on the channels that deliver the best ROI. For instance, if social media ads bring in more customers than print ads, shift more funds toward online campaigns.
Scaling Up or Downsizing Campaigns
If a strategy shows high ROI, consider increasing your investment. On the other hand, cut back on campaigns with poor performance to save money.
Improving Marketing Efforts
Use your data to refine campaigns. Test different messages, platforms, and strategies to find what resonates most with your audience.
Conclusion
Tracking your marketing ROI and customer acquisition costs is vital for growing a successful contracting business. By understanding which strategies work best, you can allocate your budget wisely and focus on the most profitable services.