This is a quick video on using our carpet cleaning marketing ROI (return on investment) calculator. This calculator can be used for any specialty cleaning service including janitorial, carpet cleaning, tile and grout cleaning, VCT floor stripping and waxing or any other specialty. The point is when we run advertising campaigns all these different services have different revenue, average tickets, profit margins and ad cost. Our goal is to find out which services are the most profitable and at what ad cost. In todays digital world of adwords, facebook, SEO, etc we have the ability to target ads for specific services and specific geographic areas. So which are the most profitable?
How the marketing calculator works is we keep track of what our average revenue is, minus the job cost percentage % to find the gross profit. If you know the net profit even better! To find gross profit take total revenue and minus all costs related to the job or COGS (cost of goods sold), labor-van-equipment-materials. For example if your revenue is $1000 and your gross profit is 60% then your job cost % would be 40%. After we know what the gross profit divide by the advertising cost or marketing cost to find the ROI (return on investment).
One place to easily get tripped up in specialty work is some of the niche high margin services. They might give us a fat gross profit margin but can be expensive to advertise for and the revenue is not always high enough to move the needle.
Marketing Strategy ROI Calculator
This blog is focused on running advertising campaigns for different services but using the same advertising dollar $. For example we are spending $200 month for four different services : carpet cleaning, tile and grout cleaning/VCT, carpet repair and carpet spot dyeing. The goal is to run different service ads to same audience. What we are doing is looking for marketing opportunities, we are looking for soft spots in the market and trying to determine the best ROI for our ad money in a specific audience and specific services.
You might find that tile cleaning profits are great with one audience, target but not soo much with a town say 3 miles over. This is what we are testing, what works in a sleepy suburb might not in an urban environment.
Tile and Grout Cleaning: first example is of tile cleaning. The average job ticket was $2000, the profit was 50% and we used $200 advertising spend for the month and ROI equaled 7.5.
Carpet Cleaning: average $1000, profit margin 60% (40% job cost or COGs) and ad spend was same $200 which equaled ROI of 3.
Carpet Repair– $500 was the average, profit margin 70%(job cost 30%), ad spend $200but the ROI was only 1.
Carpet Spot Dyeing: $700 average revenue, profit margin 80%(job cost 20%), ad spend $200 and ROI was 2.5
Looking For Marketing Ideas and Opportunities
We can see by using the marketing calculator that just because a service has great profit margins doesn’t mean it will lead to a great return on investment. I know, its confusing!!!
The challenge is this may not apply to the next audience, target but if the audience is similar I would definitely want to start the next campaign with tile/grout. My suggestion is to use some common sense, instincts, to try to find match ups but always test out to confirm.
What we are trying to do here is find opportunities our competitors haven’t thought of, look for soft spots in the marketplace. EVERY market in every service has opportunities, its our job to come up with some theories and then go out and test them.