In the world of business, life is uncertain. Plans can be unraveled by politics, tariffs or by ever-shifting consumer behaviors. So it’s important to know where to seek the knowledge and data you need to make the decisions that will keep money flowing into your business.
Whether you’re a retailer, service provider, builder, or manufacturer, these shifts trickle down to impact each of our businesses in unique ways. We saw this during COVID, when we gratefully rode the wave, and watched our profits go down again the last two years as inflation rose.
After 17 years of working in this industry, we have ridden more than one roller coaster and now can often anticipate the dips and rises that occur — stomach drops and all. What comforts us more than anything, and what we have put into practice for ourselves and our clients, is a reliance on the sturdy earth of data beneath our feet.
Data is fact, driven by reporting on hard numbers that tell us far more than the media, customer behaviors, or even rising costs do. If you haven’t incorporated metrics reporting on data for your organization no matter how small, you’re missing out on a secret weapon that could potentially be a superpower for your longevity.
Data and reporting are especially critical for anyone dipping their toes into (or completely immersed in) marketing strategy. With all the options available in this ever-changing, technologically driven market, you have to search through the methodologies offered and find one that works for your business model, your customer demographics and your products. Doing that one bit of research alone is time-consuming and can be daunting. We are not all born marketing experts, we are not all technologically minded. No matter how skilled we are at building a pool from start to finish or balancing water chemistry, that doesn’t necessarily mean we understand which platform, offer or follow-up process is going to move the needle.
In the next few issues of Pool and Spa News, we will present a host of topics on marketing meant to help you sort through the options, and empower you with actionable takeaways that can be applied towards business of any size in our niche industry. This installment focuses on data, metrics and reporting — What you need to have in place and where to start.
Data 101
Let’s walk through a couple of foundational items, and then we’ll get into the details of what to really focus on.
First, some definitions:
► KPI - Key Performance Indicator
As the name implies, these numbers indicate performance in any area of your business. They include straightforward data such as “number of new daily leads,” or something with combined data points such as “marketing cost of a new customer by product and lead source.”
KPIs also can be used to track certain employee metrics such as “average number of sick days per person,” or “number of phone calls to close a deal, by the sales person.”
► Qualified Leads
We see a lot of businesses get bogged down arguing over the quality of leads coming into their system. Leads are great, but if they don’t (eventually) turn into customers, then you’re doing something wrong. We usually count a lead as “qualified” if we get all of the following pieces of information:
First name — full name is ideal
Phone number, preferably with an opt-in to send them SMS messages
Email address
Zip code
Some sort of buying intent. This generally means they’ve requested a brochure, pricing, or a phone call... something to show they’re beyond the research phase of buying.
► Google Ads vs. Google Analytics
People may confuse these terms, but they are two very different data sets and need to be treated differently.
Google Ads is how you spend money to get visitors to your website (and it has its own world of data/metrics). On the other hand, Google Analytics tells you not only how all visitors landed on your website, but what they did once they got there.
There are a lot of ways to advertise your business, but Google Ads is where 99% of businesses should start. You can add all of the social media platforms once Google Ads is running, but start there. When it comes to tracking what happens with your website, Google Analytics is really the only game in town.
Sales KPIs
It is no longer enough just to be aware that sales are happening and that your company shows a net profit.
You need to track every sale from the moment the customer enters your business as a lead, then all the way through the sale. Note every interaction, every objection.
You can only really do this with a good Customer Relationship Management (CRM) software such as HubSpot.
Specific Sales KPIs that we like to watch include:
- Number of activities directed to leads (such as calls, emails, meetings, and texts) by salesperson
- Ratio of meetings booked to number of activities, by salesperson
- Total pipeline value, by month and quarter
- Raw number of leads by month, quarter, and product
- Average time from lead to customer, by source
- Close rate by product, by source
One other very important metric is your total ad spend to acquire a customer. To get this data point, take all monies spent on advertising, then divide by the number of customers you’re gotten. (This should also be calculated against gross revenue).
However, there is a really critical thing to understand: You can’t calculate this number over the past 30 days, or even the past 90. The typical life cycle of a lead can be six to 12 months for hot tubs and two to three years for pools.
When looking to understand your true cost of customer acquisition, you need to start your data 90-plus days ago, if not more. For example, you can expect money spent in January to bring in revenue during all 12 months of the year. If you only look at performance in the past 30 days, you’re going to be very disappointed.
Once again, only a great CRM can pull these numbers together in an instant.
Marketing KPIs
These KPIs let you gauge the effectiveness of your overall marketing plans and systems.
At the end of the day, marketing and advertising efforts should result in qualified leads for your business. That said, it’s important to understand and track the different ways that a lead can come into your business.
In Google Ads, for example, you can break down the different types of pathways into your business, which Google calls “conversions.” These could be form fill-outs, phone calls, store visitors, etc.
Here are some marketing KPIs that we find useful. Note: When we use the term “lead,” we mean qualified lead as defined above.
- Cost per lead, by conversion type and by source (i.e. Google, Facebook, etc.)
- Website bounce rate by source
- Average number of pages visited by source
- Average time on the site by source
- Number of phone calls by source
- Number of new vs. repeat phone calls
Most of these metrics should be compared year-over-year.
We can’t emphasize enough how all of these metrics need to be viewed through the lens of “what are these numbers telling me, and what decisions can I make based on these numbers?” For instance, website bounce rate by source can tell you that you’re driving a bunch of useless traffic from Facebook, if you see that 95% leave immediately after arriving at your site. Spend less money there.
Or, you may find that a certain postcard campaign is converting into leads at twice the rate of any other campaign. Send more postcards.
You get the idea.
Garbage Metrics and KPIs
The most important thing to understand about business metrics is that you need to know what data points to focus on that actually help you make a decision in your business. There are a ton of metrics that are neat or flattering, but these gained the name ‘vanity metrics’ years ago because that’s what they are. They don’t help you make a decision.
This is an area of particular passion for us. When we look at reports from other marketing firms, many are chock full of meaningless metrics. These numbers don’t allow you to make informed decisions, and they almost always go up perpetually.
Examples would be:
- Total website visitors this year. It’s just cumulative, so this number will always go up
- Total number of leads generated
- Basically anything cumulative
- “Fixes” or “Updates” made to a site with little-to-no substantiation.
- Social shares this year
Also, be aware of aggregate metrics such as “total website visitors” or “bounce rate” without attributing a source. The raw bounce-rate number for any website is completely meaningless without knowing how the bounce rate changes based on the source of the website traffic. But many reports will include this metric with no further explanation. We include it as a “gut check” number to make sure that analytics is installed properly, which is about all it’s good for on its own.
Final Word
Simply put, if you’re not tracking every aspect of your marketing and sales efforts through a capable CRM, then actually understanding what the metrics mean — and, finally, making decisions on that data — you’re never going to truly understand how to scale or maintain your current revenue structure and your business.
If you want to stay in business in the coming years or you want to receive the full value of the business you have built when you sell, you must learn to rely on more than your gut instinct and referrals.
The world is changing, and more competitors are popping up every day in your community and showing themselves to be agile in using social media, the web, discounted pricing models and customer loyalty to their advantage. Most of these new companies are driven by metrics, and many are owned by groups who come from the investment sector.
If you want to compete and keep your advantage as a company of lasting stability and reputation in your community, you’ll need to continue to adapt and learn how to incorporate and rely on the data that is available to guide you into the next decade.
