Episode 003 - Leads Don't Close Themselves — Skilled Professionals Do
Hosts: Matt DeLong and Booker Fritz Runtime: ~24 minutes
Matt: All right, so today in this episode, we're going to talk about leads and lead generation. We've titled this episode "Leads Don't Close Themselves — Skilled Professionals Do." A lead's a phone number. A lot of people track how many leads they got, but the only thing that really matters is booked jobs. Leads are like a little seed; a booked job is like that seed that's now turned into a full oak tree.
For those of you who are interested, there's one thing to know before we dive in — later on in this season we're going to get into how AI and technology plays into fixing some of the problems we're going to be talking about today. So if you're wondering how that fits in, just stick with us. Today we're going to start with the fundamentals.
So one of the things people ask is: what does it cost for a lead? You pay for a phone number, and a lot of folks assume a lead is someone ready to sign on the dotted line. Booker, that's not the case, is it?
Booker: No, not the case at all. There's a massive difference between actually getting a lead and then booking a job.
Matt: Right, so it's super important that everybody is asking: what does it actually cost to book the job — not necessarily how much that lead costs. It may take five leads to actually get one job closed, so we need to be tracking the right numbers. Let's say it costs $100 a lead and you have a 20% closing rate. So you need five leads to get one job. The cost per lead would be $100, the cost per booked job would be $500 — because you need five leads at 20% to get that one booked job.
The average remodel job in the U.S. is mid-range between $35,000 and $75,000. So you're not paying $100 for a $35,000 job — you're paying about $500, assuming the ratios are correct. So the question becomes: would remodelers pay $500 to get a $35,000 to $75,000 kitchen or bath remodel? I think most would — but what most people try to do is say, "I only want to pay that $500 once I book the job." That's kind of like saying you'll buy a lottery ticket but only pay for it after it's a winner.
Booker: Unfortunately, that's not how that works. I wish it was, but it doesn't quite work that way.
Matt: Right. So one thing to think about too is you don't want to stop at counting just leads. There's a whole funnel: you have the lead that comes in, you have the appointment, and then you have the signed job. We want to be tracking those multiple categories — how many leads came in, how many leads it took to get an actual appointment, and how many appointments it takes to sign a job.
Booker: Super important to be tracking that. Right now a lead could be a phone call, a contact-us form, a text message. Most of the remodelers we've worked with come from a place where they relied solely on referrals and word of mouth, and that's drying up — we talked about that in previous episodes. You can build a business on referrals and word of mouth, but that's one channel, and if that thing dries up or slows down — which you have no control over — then what do you do? Leads can come in multiple forms.
Matt: Yes, and tracking that helps you keep an eye on where things might break down. If you get lots of leads, lots of appointments, and no signed jobs, that tells you something's wrong with what you're pitching the homeowner. If you have lots of leads with little to no appointments, that means the lead quality might not be the best, or there's some marketing you need to refine. So tracking all three — lead, appointment, signed job — will absolutely help you determine where you're falling short.
The thing that's really super important here is: what is your closing rate? Most builders have never had formal sales training. Most remodeling companies realize at some point they're spending just as much time trying to talk homeowners into hiring them as they do on the actual technical work. The difference between a 10% closing rate and a 30% closing rate sounds like just a few points, but it's a much bigger upfront math problem. Most remodeling companies average around 20 to 30% closing rate, meaning you need about three to five leads to close one job.
So what is the difference, Booker, on the marketing side — a 10% closing rate versus a 30% closing rate — when you're trying to figure out how to get six booked jobs this month?
Booker: It's pretty massive. Let's say you had 60 leads come in and your closing rate is roughly 10% — that's six jobs. But let's say we had 20 leads and a 30% closing rate — that's also six jobs. So it's pretty massive, and lots of things go into that: lead quality, but also your sales process and closing process.
Matt: So what you're saying is with a lower closing rate, you're going to spend about three times as much on ad budget or paying for leads, because you're not as efficient?
Booker: Yes, definitely. That's exactly it. And typically what we've seen is most people we work with are looking for more leads, more leads, more leads. When we ask, "What is your closing rate?" — the answer I hear very frequently, which is kind of horrifying, is "I don't really know." Which means they're not even tracking any of this. As you guys know, what you track you can improve; if you're not tracking it, it's anyone's guess — maybe your closing rate is 2%, maybe it's 1%.
Matt: As a business owner, that could be quite scary — having no idea what's happening in your own business, and maybe you just haven't had any guidance on it. These podcasts will offer you tips and tricks on how to improve some of this. The difference between 10% and 30% is that you're paying 300% more to get the same business — or you could say it the other way: 60 leads at 30% wouldn't give you six jobs, it'd give you 18 jobs. So that same ad spend at a 30% closing rate gives you three times as many jobs.
Booker: It's pretty interesting, and knowing your closing rate absolutely is the first step in trying to work on and improve that.
Matt: Let's say somebody is spending roughly $3,000 a month in ad spend. Based on your closing rate, your numbers are going to look very different — the cost per signed job is going to look very different. Let's say it costs roughly $100 per lead, so that's 30 leads per month. At a 10% closing rate, you might get three signed jobs — that's $1,000 per signed job. That's pretty good, depending on what your service costs, if you're targeting that $35,000 to $75,000 kitchen/bath remodel range.
But when you consider you maybe only have a 20% margin, we're not talking about $35,000 of profit — we're talking about a much smaller number. So being efficient matters: $35,000 becomes $7,000 in margin, and you paid $1,000 for the marketing piece. Going from a 10% to a 30% closing rate means using a lot less lead volume to generate the same amount of business. There are some markets — Florida, Texas, California — that are super saturated, where it's tough to have a high closing ratio because you're competing with a lot of other people offering the same service.
That's the first piece: the sales closing ratio, and what you're tracking for leads, appointments, and closed jobs. The other thing that's super important, before any of that even happens, is what the industry calls "speed to lead" — meaning when someone first contacts you, how long before you call them back if you don't answer right away. We've seen huge differences between a few minutes, a few hours, the next day, or next week.
What is a good response time, Booker, when you first contact someone if they don't answer the phone right away?
Booker: Obviously if you can pick up right away, don't put it off — sit the tools down and pick up the phone if you can. It really is the difference between losing a job or getting a job. But if for whatever reason that's not possible, I'd say five to ten minutes — give them a call back or shoot them a text, let them know you're going to be calling them back. Establish that communication right away. That's absolutely vital — people are very impatient, and if you're in a highly competitive area, the fastest to respond has the highest likelihood of winning that job.
Matt: So five minutes or less is the ideal speed to lead. If you take over an hour — think about it from the customer's point of view: if I call someone about remodeling my kitchen and they don't answer, am I just going to wait for them to call back, or am I going to the next remodeling company on my list? You have to think about it from the customer's point of view, not "they deserve to do business with us because we're so fantastic." These people don't know you — you haven't built trust with them. You're just one company on a list. You don't stand out yet.
Plus, people are excited — they're thinking about remodeling their home, and with excitement comes a lack of patience. Anything beyond an hour, you really risk losing that lead to a competitor. And if you can't answer within an hour, the next day is even worse — and that's part of why I'm not a huge fan of contact-us forms, because usually those come in after hours and then you end up chasing someone down the next day.
Ideally, the scenario here would be something like we talked about in a previous episode — local service ads — because that's an actual live customer on the phone. You're not having to get back to them, and if you can answer the phone live, that's all the better. We actually had a client whose family member would answer the phone live but then just say, "We'll have someone call you back" — and in my mind, that's basically the same as not answering at all, because you still have to chase them down to figure out a date and time.
On that first call, you should be qualifying them — are they looking for what you do, are they in your service area? If not, that conversation needs to stay brief, and you can refer them to someone else who works in that area. Just answering live and then saying "I'll get back to you" almost doesn't make sense as an approach.
Booker: I totally agree. At minimum, you need to be scheduling something if it's not going to be you answering the phone. Have the person set something up right then — a consultation, someone comes out to take a look, sets something up — so you're furthering that communication on that very first phone call. You're setting the expectation, and getting something on the books on that first call is going to prevent them from shopping as many competitors as they would have otherwise.
It's almost like the person answering the phone needs to first qualify them — confirm they're looking for your service in your service area — and then go ahead and book a time for someone to come out, look at the project, and understand what it is. That makes a lot more sense than answering live and saying "someone will call you back later," because then you're in phone-chase mode. Why not collect all of that on the very first call?
Matt: Once you've booked a time to meet them at their address and gotten all that worked out — "let's talk tomorrow at 6 p.m." — that makes sense. Then you're queued up for the next step, instead of the next step being "let me call you back."
Booker: You really need a good follow-up game as well. That speed-to-lead piece is absolutely massive — sometimes you're just going to miss the call, sometimes you're busy, sometimes things aren't going to work out to where you can get that phone call. There are things you can do with automation, but you want to get in contact with them — at minimum, text them back as soon as possible.
Matt: If the phone rings and nobody answers, shoot them a text right away. Somebody on your team, if it's not you, needs to follow up as soon as possible — something like, "Sorry, we missed your call. What project are you thinking about? I'll give you a call back as soon as possible — currently on a job." We've actually set up automations where, if there's a missed call that someone didn't answer, our automated systems will text the customer back for you — it becomes something people don't even realize is happening, there's no manual process, it just happens automatically, and the customer responds. We'll talk in future episodes about how to get into that specifically — but I feel like most construction contractors are a little bit averse to technology. Do you feel like that's accurate, Booker?
Booker: Yeah, I definitely feel like that. There's also that feeling of being busy — there's always something to do.
Matt: Yes, definitely — and we can help solve some of those technology problems. Especially if you think about how much one missed job in a year is worth — if you can get one a year, that more than pays for the service itself.
So what are we saying in this episode? Number one: make sure you fix the follow-up before you spend on more leads. Work on improving your closing ratio — if you're not tracking it, start tracking it. Answer the phone — when you pay for marketing to get the phone to ring and then don't answer it, that's just money going out the door. Track your appointments, book the appointment — don't do the back-and-forth phone-tag thing, it's awkward and causes friction. Book the appointment once you've verified the service they're looking for and the service area, and go ahead and schedule a date and time to meet the homeowner — and then, of course, follow up.
We actually have automated systems we've built for clients where it'll say, "Hey Joe and Susie Smith, just a reminder, we have an appointment tomorrow at 5 p.m. — please confirm this still works for you," and then an hour out it can send another text or email reminder. People get busy, they forget, and it's a huge disappointment when you drive 45 minutes to meet a homeowner and they're not even there. All of that helps improve your odds, just slightly, at every step of the way — and a few of those improvements over time can make a huge difference.
And then, start tracking the jobs you've won. If you can follow every ad spend, every campaign, everything, you can see what's working and what's not — because in marketing, not everything works perfectly every time. You spend $100, you don't always get exactly the leads you expect.
Booker: That's correct. Knowing what works and what doesn't is a huge part of it, and being able to track all the way to closed jobs is super important — not just what makes the phone ring, and then losing track of which of those became actual paying clients versus not.
Matt: So that's what we have for you today, folks. Again, if you aren't planning to scale, you are planning to fail. We will get into AI and some of the technology around specifically what we talked about today — answering fast, booking the appointment, winning those jobs — and we'll talk specifically about how AI can help you fix some of these problems. Thanks so much for listening, and don't forget to like this episode and subscribe for more. Thanks.
