You want to make sure you’re investing your money in channels that will help grow your business. A working knowledge of the return on your investment (ROI) in lead generation platforms will help you understand just that. Start a new spreadsheet, grab a pen and paper – figuring the return on your investment in leads is pretty straightforward. Follow these steps:
Start a spreadsheet, or keep a physical notebook handy. Make a column for each acquisition channel you use (Thumbtack leads, social media, ads). Jot down how many leads you get through each channel throughout the month, and how many of those leads turned into jobs.
At the end of the month, you should have a good understanding of the number of leads and jobs coming from each channel.
Next, we’ll take a look at the revenue earned from your jobs. For this example, let’s just focus on jobs from Thumbtack. Let's say you were hired 5 times in May, and those jobs resulted in $1,000 in revenue, for an average of $200 per job.
But were the leads worth it? Let’s dig into the cost of those leads, or your investment.
Let's say hypothetically, you got 25 leads on Thumbtack that ultimately led to those 5 jobs, meaning 20% of the leads converted into revenue. If the average cost of those leads was $15, you spent a total of $375 on 25 leads.
So, to recap, you:
Subtract the cost of leads from the revenue attributed to Thumbtack: you made $625 in May through that channel. Now, divide that profit by the total number of leads - both the ones that turned into jobs and the ones that didn’t. Your gross profit per Thumbtack lead is $25.00.
To calculate the ROI for each individual lead, divide that gross profit per lead ($25.00) by the cost of the lead ($15.00), and express it as a percentage — 166.7% in this case. Your average lead – whether won or lost – paid for itself a bit over 1.5 times. That’s a great return!
Looking at the ROI of individual leads is helpful in identifying patterns, but remember to look at the aggregate return on your investment to get an idea of how the channel you’re measuring is performing overall.
The good news is you can always improve your ROI. If you’re responsive, professional, and do great work, you’re more likely to turn one-time jobs into repeat customers, and grow your return without increasing your investment. Even if a lead isn’t quite ready to hire, give them all the information they need to contact you when they’re ready, so the investment you made in that lead is worth it down the road.
Another worthwhile exercise is to take a look back at your job and lead tally for the month. Is there a trend in the types of jobs you were hired for? If you’re a plumber and the majority of leads you get for emergency repairs ends up hiring you, you might want to adjust your profile and your preferences to target these customers, specifically. The more you can narrow the gap between the number of leads and the number of jobs, the greater the return on your investment.
How do you track your leads and jobs? Give your advice in the comment section below.
Hey Thumbtack! DO YOU EVER LISTEN?! Time after time after time, I can't respond to what would be good valuable leads - because it costs me $9-15 to even get in touch with them to talk and see if they are even viable. I have previously let the company know that there have to be THOUSANDS of pros who feel the same, watching potential THOUSANDS of jobs never even get responded to - because I'm not going to pay $15 to find out whether a lead is viable or not. I'm probably going to deactivate my TT, since this goes unaddressed. Meanwhile, Thumbtack, there are other such services and platforms going into business who I'm sure would LOVE to have our business. Thanks for not answering my emails or addressing these concerns.
It doesn't matter how professional you are or how quickly you reply, it's been my experience that most ppl just have an idea on Thumbtack and don't follow thru (at least in the beauty category). I've replied to almost every lead thrown my way very quickly and maybe 10% have replied (which I am then charged for) and 1% have actually hired. It almost would make more sense that the customer gets charged a small fee to post instead of me paying for someone to reply only to get ghosted which happens way more than getting hired. At least then there would be some accountability involved. I've used the Promote feature as well which lost me even more money because same thing, I just get ghosted after I automatically get charged for the lead. I will say the customer service is pretty good and I've disputed several charges which I did get credit for. I will continue to use Thumbtack but am much more picky with the leads I reply to instead of replying to every single one.
This is actually offensive and insulting. Clearly there seems to be a disconnect between the way TT corporate calculates ROI, and the way MANY pro's calculate ROI!!!
Using those same numbers: and BTW, I am a small job handyman so this fit's for me. I charge $199 for a 1/2 day of picture hanging.
Spending $375 to win five jobs, where my gross revenue is $1,000 .... My customer acquisition cost is about $75.00 per job.
That leaves me about $125.00 after lead/contact expense, and before any other overhead costs (liability insurance, gasoline, tolls, vehicle maintanance and insurance, tools and misc hardware, taxes, etc.... I have wear and tear on my tools, and then there incidentals. things like tape, garbage bags, my stupid blue booties, my Gatorade, and so on).
In my mind, to pay $75.00 to acquire a $200 job, is what... a 37.5% customer acquisition cost. FYI, I think that is too high.
About a year ago. I had a phone conversation with a high ranking TT staffer, who told me that TT's goal was to have Pro's be paying 8% to acquire a customer.
8% of $200 is about $16.00, and I could live with that.
Reese Turbin, May 29, 2019
Reese is spot on. It's pretty clear that TT has absolutely no clue what kind of ROI we as pros are actually getting from this platform. The examples given in this post are not only unrealistic, but even if they were...they would NOT represent a good ROI.
I've said it countless times before, even in private messages to TT themselves. Leads should cost no more than 10% of a job's value and actual client acquisition costs should NEVER exceed 20%.
Bottom line is quite simple: Client acquisition is a gamble. Doesn't matter if you are betting on Google Ads, Home Advisor, Thumbtack or the countless other methods of gaining new business. At this point, TT represents the WORST odds of success. In Thumbtack's world, the house always wins. It's no longer worth it to play their games by their rules. We have much better luck elsewhere.
First of all - 166% ROI is fantastic if you're playing the stock market.
However, if you're running a business and measure the ROI in your marketing investment, it's pretty terrible - and considering the amount of time we spend messaging clients (especially ghosts) - 166% is kind of a break even point.
If you aren't making at least 5 times your invesment, it's time to look for another platform.
Second of all, I do keep a spreadsheet - that is a good idea. I track the number of leads that I get, and exactly how many of them are ghost clients.
Since Thumbtack tracks the same exact data and won't share it with us in spite of numerous requests, I feel this is important information for anyone who is a professional and is using the TT platform.
PROS - If you don't know the % of "investment" that you have spent on
fake "ghost" leads, you need to start doing so.
So far this year, my ROI with Thumbtack is negative. The very few leads I actually receive (averaging ZERO to ONE per MONTH total) have all ghosted me. There is no ROI if there are no serious buyers on the platform. From my 50+ hires as a Personal Stylist to NONE since last December is abysmal.