Do You Know the Cost of Not Closing A Lead?

Have you ever met with a homeowner to discuss their upcoming remodeling project and left feeling positive about landing the job only to find out when you followed up that they went with another contractor or supplier? Or maybe you never heard back from the homeowner at all. Well, you are not alone.

When it comes to landing the job, competition is fierce. Our recent studies have found that when a homeowner is considering a contractor for their window replacement project, over half of the time they are also shopping major home improvement stores or other window and door dealers. So not only are you competing against other contractors, but more often than not, you are also competing against other ways for homeowners to purchase and have their windows installed (See Example 1).

So, how do you help ensure you win your next job, and, more important, what is the cost to your business if you don’t win?

Let’s take a quick look at the latter – the cost to your business if you don’t win the project. Many contractors never sit down to calculate what it costs them when they don’t close a lead. From the cost of generating a lead to working up an estimate and following up with customers, you put a lot of time – and money – into generating business. How much? Well, let’s take the cost of losing one lead as our example. With a lead generation cost of $100 – you are a rock star marketer when it comes to efficient lead generation – and your time worth $50 per hour, if you spend 10 hours meeting with the customer, generating the bid and following up, that lead has an opportunity cost of $500 worth of your time ($50 x 10). That is a total cost of $600 for generating and managing a single lead.

Now, let’s assume you generate 100 leads. Those leads will cost your business around $60,000. Assuming you close a third of the leads you generate, it is costing more than $40,000 for 67 leads that don’t turn into business ($600 x 67). Is the math making your head hurt yet? Mine, too. So what can you do to make your investment of time and money more profitable? (See Example 2).

Below are just the first few things that we’ve found contractors can do to help give themselves a better shot at closing leads.

  • Understand how you can set yourself apart from other suppliers when you are talking to customers.
  • Communicate what makes you different.
  • Have an awareness of what your customers’ needs are.
  • Offer unique products and features that others don’t have.
  • Make sure what you are doing when selling to potential customers gives you the best chance to win the deal.
     

Not sure where to start? Your Pella rep is here to discuss the consumer insights we’ve gained and the tools we’ve developed that can help you win more business.

Start a conversation with your local Pella sales representative today.

 

This article was written by

A 10-year building industry professional, Brandon is a member of the Pella Marketing team, focused on helping make builders and contractors successful. He always enjoys trying to bring new ideas to fruition and exploring what might be. A husband, and father, Brandon spends time making memories with his family and is always up for a good competition.