In a previous post about Thumbtack.com I got to wondering how much you folks are spending to get leads and how much it costs to get a gig.
If you don't know how much you spend, it might be a very good idea to figure it out. That information will be helpful in determining what forms of advertising you want to invest in.
To figure out what your cost per lead you need to take into consideration a variety of factors:
1. Direct costs per lead. This is like Thumbtack.com or WeddingWire or some other lead generating service.
2. Indirect costs. This is usually much bigger than people realize. Not only does this include things such as Yellow Pages, coupons, radio, fliers, or any other form of advertising. It also includes things like business cards, kick backs for referrals (I will give someone either a few bucks, movie tickets or some other form of reward to say thank you for a referral), signage on your vehicles, Thank you cards, and anything else that might be involved in getting your name out there as a DJ.
Total up all the direct and indirect marketing costs, divide it by the number of leads you are getting, and you have the cost per lead. Once you have figured out how much you are spending on average to get a lead, then divide it by the number of gigs and you get your average cost per gig. Just so you know, this only really works well if you have a long period of time to get your numbers from, a year preferably.
One other thing that is always good to track is how much each type of advertising is costing you per lead. If someone calls you to get a quote, I hope you are asking them how they heard about you and them keeping track of it. Over the course of the year you might find that the yellow pages are more expensive per lead than what you realized (or the reverse). When I had my construction company I spent over $11,000 per month in yellow pages advertising every month. Many people that that was way too much money to spend on something like that but because we kept track of the number of leads I got from the yellow pages, I was able to justify the cost. I was creating enough leads each month that the $11,000 was very reasonable.
You should also keep track of the percentage of a kind of lead to convert to a sale (gig). Thumbtack.com may bring in lots of leads but if your conversion of leads to gigs is very low with Thumbtack it may not be worth using in the long run.
Information is your friend. The more information you have about how your business runs, the better decisions you can make.
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