Contractor Lead ROI: Measuring What Your Marketing Actually Returns
Marketing ROI for contractors is best measured in three layers: cost per lead (what you pay per contact), cost per acquisition (what you pay per won job), and return on ad spend (revenue generated per dollar spent). Most contractors track only the first layer, which produces misleading conclusions.
Layer 1 -- Cost per lead: What you pay per contact. Useful for comparing channels on a raw cost basis, but misleading without close rate data. A $25 lead that closes at 8% costs more per job than a $70 lead that closes at 30%.
Layer 2 -- Cost per acquisition: Total spend divided by jobs won. This is the right comparison metric. A CPA of $200 on a $10,000 job is a 2% acquisition cost. The same CPA on a $1,000 job is 20%.
Layer 3 -- Return on ad spend (ROAS): Revenue from a channel divided by spend on that channel. A 10:1 ROAS (spend $500, generate $5,000 in jobs) is excellent for most trades. Build a simple spreadsheet tracking these three numbers by source monthly.
Frequently Asked Questions
How do I calculate ROI on contractor lead generation?
Track cost per lead, cost per acquisition (spend / jobs won), and ROAS (revenue from channel / channel spend). Cost per acquisition is the most actionable metric -- it tells you what you're paying per job won, not just per contact.
What is a good ROAS for contractor lead generation?
8:1 to 15:1 ROAS is strong for most residential trades. You spend $1 and generate $8-15 in revenue. ROAS below 5:1 often signals poor lead quality or conversion issues that should be addressed.
Why is cost per lead a misleading metric?
Cost per lead doesn't account for close rate. A $25 shared lead at 8% close = $312 CPA. A $70 exclusive call at 30% close = $233 CPA. The 'cheaper' lead produced 35% higher cost per acquired job.