Work Out What a Trade Lead Is Actually Worth in NZ

Most tradies judge their marketing by what it costs. A lead came in and it cost forty dollars, so forty dollars feels like a lot or a little depending on the mood you are in that day. That is the wrong way to look at it.

The only way to know if a lead is cheap or expensive is to know what it is worth to you. Once you have that number, every budget decision gets easier. You stop panicking over ad spend and you stop under-investing in the channels that actually make you money.

This post walks you through how to work out the value of a lead for your trade, using numbers you already have in your head or your accounting software. No spreadsheets full of jargon. Just the maths that matters for lead generation NZ businesses can rely on.

Start with the value of a job, not the cost of a click

A lead is not worth anything on its own. It is worth a share of the job it might turn into. So the first number you need is your average job value.

Pull the last twenty or thirty invoices and add up the totals, then divide by how many jobs that was. Use the figure before GST, because GST is not yours to keep. That gives you a rough average job value.

Some trades have a wide spread. A plumber might do a fifteen minute tap washer one day and a full bathroom the next. If that is you, work out two averages: one for small callout jobs and one for bigger projects. You will use them differently when you decide where to spend.

Do not use your best ever job. Use the boring middle. That is what most leads turn into.

The two numbers that turn a job into a lead value

A lead is not a job yet. It is a phone call or a form that might become a job. Two things stand between them, and you need to know both.

• Your close rate. Out of every ten genuine enquiries, how many do you actually win? If you win three, your close rate is 30 percent. Be honest here. Guess high and every number after this will lie to you.
• Your profit margin. Of the money that comes in on a job, how much is left after materials, subbies and your time? A rough percentage is fine.

Now you can work out what a lead is worth. Take your average job value, multiply it by your profit margin, then multiply that by your close rate. That last step matters because you have to answer several enquiries to win one job, so the value gets spread across all of them.

Here is the shape of it. Say an average job is worth 2,000 dollars, your margin is 40 percent, and you close one in four leads. That is 2,000 times 0.40 times 0.25, which comes to 200 dollars. Every genuine lead is worth around 200 dollars in profit to you, on average.

Now you know what you can afford to spend

This is where the number pays off. If a lead is worth 200 dollars in profit, paying 40 or 50 dollars to get one through Google Ads is a good trade. You are turning fifty dollars into a couple of hundred, on average.

It also tells you when to walk away. If a channel is costing you 180 dollars a lead and each lead is only worth 200, there is almost nothing left. That is a channel to fix or drop.

A few things to keep in mind when you use this figure:

• Repeat work makes leads worth more. A tidy new customer who calls you back every year is worth far more than one job. If your trade gets repeat and referral work, your real lead value is higher than the single-job maths shows.
• Your capacity sets the ceiling. There is no point paying for leads you cannot service. Know how many jobs you can actually take on before you turn up the spend.
• Averages hide the extremes. One dream job can carry a month of small ones. Do not chase big numbers, plan around the middle.

Not every lead is equal, so split them by source

Once you know what an average lead is worth, the next move is to see which sources send you the good ones. A lead from someone searching your exact service in your area is worth more than a random Facebook enquiry, even if both count as one lead.

To do this you need to know where each enquiry came from. That means asking every caller how they found you, or setting up proper tracking so you are not guessing. If you have not sorted this yet, learning to track where your trade leads come from is the single most useful thing you can do this month.

Split your close rate by source too. You might close half your Google leads but only one in ten from a cheap directory. That changes the value of each source completely, and it might explain why one channel feels like hard work.

Your next step this week

You do not need software to start. Grab your last month of invoices and work out three things: your average job value before GST, your rough profit margin, and your honest close rate. Multiply them together and you have your lead value.

Write that number down and stick it somewhere you will see it. Next time an ad or a marketer quotes you a cost per lead, you will know in seconds whether it stacks up.

If you want a hand pinning down these numbers and building lead generation that pays for itself, that is the sort of thing we sort out for trade businesses at Click n Call every day. Start with your own figures first, then the marketing decisions get a lot simpler.