Lead generation for remodeling companies

May 30, 2022

In January of 2016, I began helping the founder of a business with his start-up. He had a business plan that involved remodeling homes for the handicapped by utilizing on-staff Occupational Therapists. In January of 2017, he hired a VP of Business Development to work with rehab centers and home health care services in an attempt to create a direct line for lead generation.

During the two years all-of-the-above was happening, I focused on operations; either wearing a tool belt or hiring/training those who wore tool belts. We had grown to just over a million in sales. Through necessity, we had veered away from the founder’s vision, and had basically become a remodeling company; doing tub-to-shower conversions, complete bathroom remodeling, widening doors, and even room additions. Although the founder and I talked every day, I was not aware of our dire financial situation.

Along with the necessary home remodeling required to create a barrier free environment for the handicapped, we had begun to install stairlifts. However, our stairlift manufacturer’s product was unreliable – strike one – we had not fully developed the skills necessary for this meticulous installation process – strike two – we advertised heavily in the stairlift category which was a product we had to sell at a lower margin, sometimes going back three or four times to address issues – strike three.

In January of 2018, I was made aware of our situation;

· Our $150,000 line of credit was maxed out.

· Our Occupational Therapist(s) were being paid a salary – not just being paid for their services on an as-needed basis.

· Our bill for last month’s advertising – which leaned heavily towards stairlifts – was $10,000. It was an advertising program where we were being charged for each time the phone rang. From a distance, I felt certain we had not been properly answering or following up on these calls – we didn’t even have a land line – but had no idea as to the perimeters of our advertising agreement with this company.

The founder and I had a very frank conversation and it was decided I’d immediately take over the full financial responsibility of running the business.

The reason I told that long and sorted story was to share our lead-generating nightmare;

My first order of business was to cancel our advertising agreement for the pay-per-call program which was our only source of leads. I had to find a way to generate leads for our meat and potatoes – remodeling for the handicapped – and I had no idea how to make that happen. We had a couple of months work in the pipeline, about 20% of our business was contractual and did not require lead-generation, but, I had to make the phone ring with a new lead source… and soon.

Needing to act so quickly and respond to a “lead generating crisis” like this is not normal, but it really gave me a crash course. Looking back, I’m very glad to have gone through this difficult situation. We more than doubled our business over the next couple of years, which was a remarkable learning experience.

Lead generation – it’s a numbers game;

The most important first step in generating leads, is establishing how many leads you need based on two criteria;

1. Sustaining your existing sales as-is. In other words, how many leads do you need to continue to generate enough sales to hold steady at your current revenue.

2. How much – and how fast – do you want to grow.

Both of these items will require a deep dive into your current lead management system… if you have one. If not, the following example will work as a template for what you’re trying to identify.

Example of a random remodeling company;

· Your revenue is $800,000 yearly.

· You get approximately 6-10 calls/leads per week.

· These 6-10 leads come from Facebook, word-of-mouth, yard signs and Google Ads.

· Of the 6-10 weekly calls/leads, you actually go visit with 3 prospective clients.

· You did 40 projects in the past year.

· You spend $900 monthly on advertising.

Above random company’s statistics;

· You spend 13.5% of your gross revenue on advertising.

· You’re getting an appointment with 37.5% of total calls/leads received.

· Your close rate on sales calls is 26%.

· Your average project size is $20,000.

· You need to generate 8 responses to advertising weekly to sustain your current revenue.

· You need to personally visit 3 qualified leads per week to sustain your current revenue.

· You’re spending $69 per qualified lead.

Based on above business dynamics, in order to break $1,000,000 in revenue, you’d need to;

· Generate 8-13 responses to advertising per week.

· Set 4 appointments per week with qualified leads.

· Spend an additional $200-$250 monthly on advertising. (Cost per lead went up due to ratio of word-of-mouth to paid advertising).

This example is not to be viewed as right or wrong. It’s just a way to show how to identify your current status and estimate what’s necessary to go to the next step and grow your business. Use this as a training session in order to start plugging in your company’s numbers and identifying your own; advertising cost per lead, your own close rate, average project, etc. This is all great information to know and empowers you to make smart decisions!

Check in later for “How to generate leads!”

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