Hi this is Eric Barstow; I’m the cofounder of Painter Choice and the founder of Painting Business Pro. And in this video, this is our third video in a series the six videos teaching you how to step by step grow your painting business, grow your revenue, grow your income because that’s why you’re watching this video.
So the first two videos, we talked about kind of the overview of the process and the second video, we talked about production and how to set up a production system that frees up a lot of your time, how to create a production system that really takes care of customers without a ton of your own time and energy, so that we can put that time and energy into sales and marketing.
In that last video, we also talked about how there are different tasks that we spent a lot of our time doing as painting business owners and how to slowly get rid of those task giving them to our painters, our crew, our foremen and delegating those task and as we delegate those tasks to other people that frees up time for us, and in that time, we can begin spending that time doing marketing and sales.
So the trouble is, oftentimes people have trouble making this transition because you have to stop doing something that you were doing before and sometimes that’s a loss of income for people. For example, if you’re painting twenty hours a week and you stop painting, that’s going to cost you a few hundred dollars a week, so in the last video I mention some stuff, some tricks that make that transition a little easier but the point is as you start to delegate some of these tasks and you have free time, we need to start making money like right away so that you can fill that income gap and start to grow your business. So we want to start doing sales but in order to start doing sales, we also need to start doing marketing, so there’s so many options out there for marketing, so where do you spend your marketing dollars? And my best advice initially starting is to use a paper lead service. So I recommend using a paper lead service for a number of different reasons and before you get into that, there’s several different paper lead services available. So Painter Choice, we do paper lead and I’m bias to us, I think we’ve offered great leads, Craft Jack is another good option, Thumbtack is another potential option, Home Advisor is another potential option, Networks is another potential option, so we have a lot of different services that we can use and depending on your geographical location and how many leads you need, you might need to sign up for all five those services or maybe you only need to use one of them.
But the nice thing about paper lead is you only pay when you get a lead, so that’s really nice especially when you’re just starting to transition into growing your business. Imagine we’ve delegated just some of our tasks and we have five hours a week free, in those five hours a week we can only do an estimate in each of those gaps. So we only have room for five estimates, so we don’t want to go and spent tons of money that’s going to bring us 30 leads a week or 20 leads a week, we want to just get what we need. So with the paper lead service, you’re only paying every time you receive a lead and you could always pause your leads, so let’s say we activate a service, we start generating leads, you know let’s just say Painter Choice, we’re using Painter Choice and we’re getting leads from Painter Choice and we get our first six leads, we set up five estimates into these spots, now I just, I pause my account. So now I’m not getting any more leads, I’ve paid for the six leads I’ve received, that’s it, now I’m not paying any more marketing and I perfectly got my schedule full. So I think that’s a great way to start, it also doesn’t take time, if you start trying to do stuff with your website or online or yellow pages or directories or review web sites like Angie’s List, a lot of those types of marking services can be really really good but they also take a lot of time, you know to start getting your website, getting you more and more leads, it could cost you like in the thousands of dollars before you start see a good return on that. Angie’s List and review sites can start to take a while because you actually need to get reviews before it’s really starts going. Paper lead, you can just start getting leads right away, so that’s why I recommend you start to start filling those gaps.
Now we’re going to get into more marketing options and how you continue to just scale that up and we’re going to list a ton of them in another video coming up but we want to actually take a moment now and talk about sales because marketing, you can’t talk about marketing services without talking about sales. And I want to kind of show you how important sales actually is because it’s going to come down to it that sales is the most important skill for you have in your business if you want to grow your business. So we’re going to use a couple different examples, so let’s say that we spend a thousand dollars on a marketing service. Alright so we spend a thousand dollars on a marketing service, so we spend a thousand dollars on this service for marketing, how do we determine if this is a good service or not? The way we determine that is to find out how much work this thousand dollars got us. So let’s just say for example this thousand dollars turned into ten thousand dollars’ worth of work. Okay so we spend a thousand dollars on marketing, we sell ten thousand dollars’ worth of work from it, so that would be 10%. This is the number we want to calculate, is this percentage, what percent that we spend on marketing for our company and what I recommend to people is not just spend more than 10%, like if you’re spending much more than 10% to get a job, it’s starting to get pretty pricey. Some of our best converting sources were getting jobs for about 3% and that’s actually with Painter Choice, we’re anywhere from 3 to 4% is what we spend on marketing to get a job. So this is how we calculate if marketing is good or not.
Okay so we want to take this just a little bit further, so with Painter Choice, our leads are about $35 per lead and we have some free leads but let’s say its $35 a lead. So if we spend a $1,000, we’re going to get about thirty leads, so let’s say those thirty leads turns into however many estimates we’ll say we get twenty estimates set up from that and with those twenty estimates, we book $10,000. So that’s how we get $10,000 sold to 10%.
Now we want to talk about how important and what a huge difference your sales ability is. So if we say we have twenty estimates, so we get thirty leads, we turn them into twenty estimates, let’s say we can only book 10% of our jobs, like we book one out of ten and our average job is $3,000, so in that case, we would booked two jobs for 3,000 each so that would be 6,000. Now if we do 6,000 over 1,000, we’re spending about 15% on marketing. So if we’re spending 15% on marketing, this is not a very good marketing source for us. So if we can only close two out of twenty estimates for $6,000 total, we can’t use Painter Choice, it’s just not profitable for us.
Now let’s look at that example again and let’s see if we do it with 20%, if we have a 20% closing rate in a $3,00 job site, so now we do twenty estimates, 20% close rate, we book four jobs and four jobs at 3,000 is 12,000, alright so $12,000, now we’re like under 10%, then we have 30%, so at 30%, we do twenty estimates, we booked six jobs at 3,000, that’s $18,000 sold and then if you start to get really good and you can close half of your estimates, you’re going to do like 10 jobs, 3,000 job we’re at thirty grand. Now if we do the math on these, 18,000 we spend a 1,000, book 18,000 that’s about 6% is what we’re spending on marketing. Here we book 30,000 by spending a 1,000, we’re 3.3% spent on marketing. So using this example you can see that if this let’s just change these numbers and let’s say we had to pay $2,000 to get thirty leads, so that’s a much more expensive service than Painter Choice, it’s twice as expensive but down here, if we have a 50% close rate, we’re still spending six and a half percent on marketing. So this, even if it’s twice as expensive, this is still a great returning leads source for us. So you can start to see that this sales number right here makes an enormous difference, so I’m going to show you one more way that that really starts to compound and why sales can be so important.
Okay so let’s just assume right now that there’s twenty different like if we added up all the different marketing opportunities available to a painting business owner, let’s just say there’s twenty of them. So we’ve got these 20 you know different marketing opportunities out here, now if we only have a 20% close rate, then we can’t afford any these or any of these, but if we have a 30% close rate, we can afford you know maybe this many. If we have a 35-40% close rate, maybe we can afford this many and if we have a 50% closing rate, we can afford all the marketing available to us. So the reason this matters is at the end of the day, the size of our business is actually a function of our leads and our sales. So if you get you know however many leads you get, turns into estimates , turns into total sales, if we can only get half as many leads as are available, then right there our sales is cut in half. And then we have a lower close rate then you know 50% for example, so we have half as many leads and we are closing them at a lower rate which is even lower in the revenue section. So you can see how if we have really good sales, we can afford more marketing and if we have more marketing, we get more leads and we close them at a higher rate and the business really starts to take off and grow.
So in the next video, we’re going to start to talk just a little bit about sales and I could talk about sales for weeks but we’re going to talk just a little bit about sales and start to give you some direction on how do you start to set yourself apart from the competition and how do you start to get that sales rate up. So that’s what we’re going to cover in next video, we’ll see you there.
