Tackle your ROI in three steps.

Community Manager TaylorS
Community Manager
3 23 1,945

roi.jpg

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:

1. Track your leads and hires.

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.

2. Figure the monthly revenue from your jobs.

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.

3. Calculate your ROI

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:

  • Booked 5 jobs from Thumbtack in May
  • Received $1,000 total for those jobs
  • Paid $375 to get those leads

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.

Now what?

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.

23 responses
DCFGCatering
Level 8

I've gotten zero jobs this year.

Pretty crazy considering I have been hired over 200 times.

Christine
Level 4

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. 

littleladykk
Level 4

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. 

ReeseTee
Level 7

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

The_General
Level 4

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. 

DawneBogner
Level 4

Yep he is spot on! I'm paying way too much for each lead for it to be a benefit anymore. 

RobsTrucking
Level 4
I tried to give Kudos but apparently they are now disabled. My leads went from around $13.81 to $63.42? How does that happen? Just like Home Advisor, TT wants to sell leads from people that are shopping prices or wondering what it is going to cost. In this last month I have responded to 7 leads of that 3 responded at $63.42 then never to be heard of again. What kind of ROI is that. I am no longer going to waste my money on TT.
ScottArcangel
Level 7

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.

RCPS
Level 7

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.

-RCPS, 5/30/19

bonnie_bill
Level 8
This formula ignores the most important part of the of the ROI calculation. The net earned is assuming there is no cost of the business. Business gross is not 100% profit so this formula is terribly flawed. You must include the hard costs of doing the business to calculate profit and therefore ROI.
Carl
Level 6

As a professional handyman, fully half of my business - maybe more - is repeat and referral.  For leads here on TT, I consider carefully the cost of each lead.  If it's too high, I simply ignore or decline it.  If that happens enough, customers will go elsewhere, and I'll go with 'em.  Fortunately, I have very high conversion and retention rates.

I've narrowed my service area as much as possible with the Promote system (which I find unworkable), so with the rare promoted lead, I see that I saved 20% (yippeee!), but there's no way to know exactly how much I paid for that lead.  That's just plain ludicrous.  If I were shopping for any item, and you were to tell me that I must buy it in order to know how much it costs, I'd tell you to take a hike.  How much more ridiculous to be charged for something and have no idea what I paid for it!

Moderator Kameron
Moderator

@Christine I'd like to share your feedback on our prices with our teams. What price do you feel would be fairer as opposed to the leads you're seeing for $9-$15?

MMM_Memories
Level 7

Please handle your end. Make a commitment to actually help bring in a consistent ROI on your platform, talk to Pros about what hinderance they face with this system, show us how you plan on eliminating those and achieving something measureably better. 

Moderator Kameron
Moderator

@ReeseTee I appreciate you sharing thoughts and experience on Thumbtacks pricing vs your ROI. The numbers you've shared here are great feedback. 

Moderator Kameron
Moderator

@RobsTrucking the cost of each lead will vary depending on multiple factors like the service you offer, amount of competition, and details of the job. To understand the cost of each lead, go to your budget tool. In the frequently asked questions, click How much do I pay? to see the typical price of leads and the maximum price you’ll pay for leads in that service.

Moderator Kameron
Moderator

@Carl while you won't know the amount that you'll be charged before the lead comes in, once it does you can check your pending and past charges via the Payments page. Be sure as well to check my response in this thread to RobsTrucking about how you can better understand how much you'll pay in the FAQ section of your budget page. 

jprc2017
Level 5

We started when there were credits you bought.   Was an easy way to keep our cost with in our budget.  Some weeks we spent alot on leads. others not so much. 

Now it is hard to know what an lead costs or to track them.  We are much more careful to what we respond to.  We have gotten jobs off of here, but most often we do not hear back once we send them our intial response.  

As a small business, every $$ counts.  We work hard for what we make and do quality work.  

bonnie_bill
Level 8
@jprc2017, I can appreciate your position with the leads. We are just waiting them out until they find the need to be a valuable service again. But we are going on three years now with no TT business. I would give you a thumbs up on your post but they have disabled the Kudo capability "again".
RobsTrucking
Level 4
@Kameron My point that you missed is- In less than 6 months for the same type of work and same type of lead the cost of the lead has gone from $13 to $63 that is a 384.615 % increase in the cost. In that same time the "Quality" or "Ghost" effect of the lead has increased probably the same amount. So based on your advice in your response to me, there is nothing in that FAQs that address my question or concerns. BTW what are you all doing about the "SPAM" leads? I have been charged for a lead that when you reach out to the customer you get bombarded with an advertisement.
Carl
Level 6

So I can find out how much I paid for a lead after I bought it.  Really?  Let's use that same logic to buy a drill, for example, since I'm a handyman...

Me:  How much is that drill?

Salesman:  I can't tell you until after you buy it.  Then I can tell you how much you paid for it.

Me:  Buahahahahaha!

Moderator Meckell
Moderator

@RobsTrucking we have a system set in place that catches suspicious requests. There are times that some make it through. When that happens, you can report it by following these steps or letting us know about it. Either way, we'll look into it and get you taken care of. 

Paul4
Level 4
they need to change the way you are charged for a "ghost" quote, if no response from customer no charge or bill the customer. Out of 5 bids only 1 replies, not a peep out of the other 4 after a couple of follow ups!
ChefOfAllSeason
Level 9

Well, since you asked, one of the ways I track my leads is by ratio. Between September 2014 until early 2018, only 5% of my leads ghosted. It was a superb ROI. I bid on leads left and right at all hours of the day. 55-65% of these leads led to a hire. They also cost significantly less. Since early 2018 until early 2019 over 95% of any leads I have accepted have ghosted. Very poor ROI. Even if the leads cost less than a dollar, they would not justify cost. A ghost is a ghost. Since last February, I accept an average of about 2-3 leads per month from the jobs tab and inbox. My ghost rate is down to a mere 60%, my expenditure on leads is about $25 per month and my ROI has improved. Careful tracking and prudent choices have helped gteatly in approving my return. Great post. Thanks.