“When you take the emotion out of it and do the math, it makes a lot of sense.”

If you’re letting a few leads that haven’t turned into jobs discourage you, then you could be setting yourself up for failure. We’ve seen many beginners make the mistake of abandoning perfectly good lead generation campaigns because of a few lost opportunities. To get to the point where you’re winning more jobs, you must understand that emotions can sometimes get in the way of good decision making. Nobody likes the feeling of “wasting money” on an unconverted lead, but realistically you aren’t going to convert 100% of your leads into paying jobs. The goal isn’t to win every single job; you need do the math and to win more than enough to get a positive return on your lead investment.

The Beginner’s Mistake

As I mentioned earlier, many beginners make the mistake of giving up on lead generation without doing the math. We’ll illustrate this with the following story:

Once upon a time Harry purchased his first lead for $20. The lead lands him a job that nets him $400 in profit. Because this was such an easy win he continues to buy leads for $20. The second lead is almost another success but the homeowner backed out at the last minute, postponing the project until summer. The third job went to a competitor down the street. The fourth lead told Harry he called too late and she had already hired someone else. Harry continues to buy leads, 10 in total, only to lose each of the jobs due to very similar reasons. Harry thinks to himself “1 out of 10 leads. What a waste of money.” Harry feels defeated.

Winning 1 out of 10 jobs is nothing to be proud of. If anything, Harry seems to be flushing good money down the toilet. Imagine the feeling of losing 9 jobs in a row! Harry has every right to feel disappointment, resentment, and frustration. Right?

Doing the Math

At first glance, it seems as if Harry’s right to want to abandon his lead generation campaign. But he’s not, and we can prove this with mathematical certainty. Let’s look at his total cost for the 10 leads. He spent a total of $200 on the campaign if he purchased 10 leads at $20 a piece.

10 leads x $20 each = $200 total cost

Now let’s look at the 1 job he won. He only won one job but he netted a profit of $300. This is the amount he made after his materials and labor costs.

1 won lead x $400 profit = $400 total profit

Lastly, let’s look at his Return On Investment (ROI). He made a total of $100 from this marketing campaign. Another way to look at it is that Harry made a 50% gain.

$400 total profit – $200 total cost = $200 ROI (100% gain)

Harry is doing very well all things considered, making a 100% gain on his money. If every dollar you put into the stock market could give you a 100% gain, you’d do that all day right? Treat your leads the same way.

The Moral Of The Story

“Your lead wins and losses can feel like a roller coaster ride. You must do the math.”

The story was oversimplified to illustrate a point. The trap that many beginners fall into is letting their emotion override the math. Yes, paying for a lead and having it not convert into a paying job hurts. Losing several back-to-back hurts even more. It’s natural that your knee-jerk reaction is to pull the plug on lead generation altogether. Doing the math will always prove that your emotion was wrong but you need to look at the numbers to make a decision that could critically affect the future of your business. Do the math and make the decision based off of the data. It’s the smart thing to do, and sometimes you’ll be pleasantly surprised at just how profitable something that felt ineffective actually is.