As a contractor, your marketing ROI is one of the most reliable metrics to figure out which channels and campaigns are supporting growth.

Key takeaways:

• For contractors in the building trades, marketing should bring in profitable jobs, not just leads.
• That’s why understanding your marketing ROI is important.
• We explain how to calculate your ROI and what to do with the findings.

How much money are you spending on marketing? More importantly, how much of a profit are you getting from your marketing efforts?

Many contractors don’t track enough data to figure this out. Calculating your contractor marketing ROI and using the results to make better spending decisions is easier than you might think.

How to Calculate Marketing ROI for Contractors in the Building Trades

ROI stands for Return on Investment. It’s a percentage that reflects whether an investment was profitable or not.

Here’s how to calculate it:

Marketing ROI = ( Net profit from the campaign / Total investment in the campaign ) x 100.

An ROI of 100% means you broke even and your net profit covered what you spend. If it’s higher than 100%, your ROI is positive and the campaign has the potential to help your business grow.

For instance, let’s say you spend $1,000 on an ad campaign. You booked enough jobs from this ad campaign to generate a net profit of $1,700. That’s an ROI of 170%.

However, another ad campaign that also cost you $1,000 resulted in a net profit of $800. Your ROI is 80%, and you lost $200.

Why ROI Is Different From Lead Volume and Revenue

Many contractors track their lead volume and revenue, but overlook their ROI.

Here’s why tracking all three values is important:

• Your lead volume tells you how many leads you got from a marketing campaign. However, it doesn’t tell you how many of these leads turned into booked jobs or how much money you made from these jobs.
• Your revenue shows the cash coming in from jobs, but not what you’re spending to get and complete these jobs. You should deduct your cost per lead and what you spend on parts and labor (and other expenses) to calculate your net profit.

You Need Attribution to Calculate Your Marketing ROI

For contractors, calculating an accurate marketing ROI can be difficult because they don’t have a good attribution system in place.

Attribution shows you where your leads come from:

• For instance, you can associate a specific phone number with your website and use a different one for your ad campaign.
• You can use tracking codes when users fill out estimate request form to figure out where the traffic comes from.
• You can also ask customers how they heard about your business. Make sure to add a note in your CRM.

The idea is to connect each booked job (or lost lead) to a specific channel, whether it’s organic or paid.

Use ROI to Compare Your Marketing Channels

Once you have a solid attribution system in place, you should track revenue per job and deduct all your costs to get your net profit.

The next step is to figure out the average ROI per job booked through each channel. This will give you a better idea of which marketing channels have the best ROI.

Marketing ROI and Budgeting Decisions

Getting better visibility into your marketing ROI helps you make better decisions for your building trades business.

• You can decide to spend more of your marketing budget on a channel that has a good ROI.
• If a channel has a bad ROI, you can decide to investigate and make some tweaks to try and improve the number and value of the jobs booked.
• If you’ve already spent too much time and money on a channel that consistently has bad ROI, it’s likely time to cut it and spend that money somewhere else.

It’s one of the clearest ways to tell if marketing is actually helping your business.

Improve Your Marketing ROI With Tempesta Media

There are many different reasons why a marketing channel has bad ROI, but a common one is that the strategy isn’t well executed.

It’s where working with a team of professionals can make a difference. At Tempesta Media, we specialize in helping home service and building trades businesses get results. We offer a full suite of marketing solutions designed to help you achieve optimal ROI and growth.

And if you have existing marketing programs, we can take a look at the ROI together and figure out what you could do better.

See the solutions we offer here or contact us to learn more about how we can help.

FAQ

What is marketing ROI for an electrician, HVAC contractor, or plumber?
Marketing ROI shows whether the money you spend on ads, SEO, lead generation, or content turns into profitable jobs after all costs are counted.

How do I calculate ROI for my contractor marketing?
Use this formula: Marketing ROI = ( Net profit from the campaign / Total investment in the campaign ) x 100. For example, if you spend $1,000 on local ads and make $1,700 in net profit from those jobs, your ROI is 170%.

What costs should I include when calculating ROI for my building trades business?
Include ad spend, SEO or agency fees, lead costs, software, call tracking, labor, parts, and any other job-related expenses tied to the campaign.

How do contractors track which leads came from which channel?
Use call tracking numbers, form tracking, and CRM notes so you can see whether a lead came from SEO, Google Ads, your website, a directory, or a lead service.