Before I ask you a single question about your leads, I want to tell you what a lead is to me, so you understand why this block gets handled with more care than any other.
I started in this business in 1986, in Charlotte, selling siding for a company you met earlier in this book. Back then the leads came across the teletype, and every salesman drove to the office every morning because that machine was the only place the future arrived. A lead was the whole economy. It was the reason for the sales meeting, the reason for the 5 o'clock sit and the 8 o'clock sit, the reason a grown man put a phone in his car and paid a thousand dollars a month in roaming charges to talk about how the appointments went. And when that company died, years later, part of what killed it was executives faking the one sacred object in the building — fictitious sales leads, entered into the books to fool Wall Street. The men upstairs counterfeited the thing the men downstairs drove through the dark for.
And I'll tell you something else about that company, because it's where I learned my first lesson in lead accounting — years before I knew that's what it was.
When I came back from sales training in Dallas, broke, with a binder and zero tenure, new guys didn't get real leads. New guys got what the company called plus leads. A plus lead was a lead with something off about it — wrong phone number, husband out of town, address didn't match, something. And here's the detail that matters: plus leads didn't count against your closing percentage. Nobody expected you to sell off them. They were a courtesy. A break-in. The flawed leads had been quietly laundered out of everybody's math — the company had institutionalized the denominator trick I'll spend a whole chapter fighting you about later in this book.
I sold off the plus leads.
Not all of them. But enough of them, often enough, that the manager started slipping me real leads, and within a few months I was the guy the new rookies were getting introduced to. And what I took from that — what took me decades to fully understand — is this: every one of those "bad" leads was a lead somebody had already paid for. The husband being out of town didn't refund the marketing dollar. The veterans upstairs waited on clean leads while the flawed ones went to the kid, and the kid found out the flawed ones were half inventory the company had written off in its head. A discarded lead isn't a bad lead. It's a spent dollar nobody's assigned to anybody's number — and the shops that let leads quietly exit the count are running the same courtesy program AMRE ran, without ever having decided to.
So no — I don't think leads are a line item. I think the lead engine is the most emotionally loaded, least honestly measured department in your entire company. Forty years of watching contractors spend money has taught me that owners audit their production twice as hard as their marketing and their marketing not at all, and every dollar of waste in the building hides in exactly that shadow.
Block Three drags it into the light. Five questions, and for this block the owner mostly listens, because these questions go to whoever runs marketing.
What are your lead sources, ranked by volume?
What's your cost per lead, by source?
What's your cost per acquisition, by source?
Which channel do you swear by?
Which one do you keep funding that you're not sure about?
Sources ranked by volume. The list is the easy part; every marketing manager can produce it. What I'm listening for is what's on it. Somewhere between four and ten sources, usually — a lead vendor or two, the home show, referrals, the digital spend, maybe canvassing, maybe radio. Write them down in volume order. That order is the marketing department's version of the owner's identity line from Block One: the source at the top of the volume ranking is the one everybody organizes their life around, and volume, as we established two chapters ago, is the vanity number. The whole rest of this block exists to re-rank that list by what the sources actually return, and the two rankings almost never match.
Cost per lead. Now the temperature in the room starts to change, because CPL is the first number in the exam that somebody in the building is graded on. The marketing manager knows his CPL by source, or says he does, and I write each number down — stated, to verify — same court-reporter face as always. CPL is where the fog usually starts. Does the stated CPL include the agency retainer, or just the media spend? Does the referral program's CPL include the reward checks? Does the home show number include the booth, the drayage, the weekend labor, or just the space? Almost nobody loads these numbers honestly, not out of dishonesty — out of habit. Every source gets to keep its own accounting method, which is how a $90 lead and a $450 lead end up next to each other on a spreadsheet looking like teammates.
Cost per acquisition. This is the number that matters, and it's astonishing how many shops can't produce it. CPL tells you what it costs to make the phone ring. CPA tells you what it costs to get a signed contract — leads divided by closes, with the real dollars loaded in. The distance between a source's CPL and its CPA is the closing math, and it's where cheap leads go to die. I have watched owners feed a bargain lead source for years because the CPL was half of everybody else's, while the sets that never showed and the sits that never closed quietly ran its true CPA to triple the "expensive" channel they kept threatening to cut. Cheap leads that don't close aren't cheap. They're expensive leads with good PR — and they cost you twice, because the second cost is your salesmen's nights. Every dead sit is an evening a closer spent at somebody's kitchen table instead of at a real opportunity, and your best people notice which sources burn their evenings long before your spreadsheet does. There's a version of this that shows up in recruiting, by the way: the shop that "can't keep good closers" is very often the shop feeding them junk sits. Your lead engine is part of your compensation plan whether you meant it to be or not.
The channel you swear by. Here's the belief question, and remember — the owner already answered a version of it in Block Two. Now I ask the marketing manager the same thing, separately, and I'll tell you why: when the owner and his own marketing department swear by two different channels, that's a finding all by itself, before a single book gets opened. It means the company's money and the company's conviction are being steered by two different maps. Happens all the time. Nobody's ever noticed, because nobody ever asked them both on the record on the same day.
The reality pair for the sworn-by channel is the same king metric as everything else: we take the jobs that channel produced and score their gross profit per crew-day, loaded costs in. Not "did it produce revenue." Did it produce profitable work. Because a channel can hit its CPA target all year and still be feeding you your worst jobs — the grinding installs, the discount-hungry customers, the change-order profiles. A lead source doesn't just have a cost. It has a taste. It brings you a certain kind of customer and a certain kind of job, and the books can characterize that taste job by job. No marketer you've ever met has offered to run that math on their own channel. Ask yourself why.
The one you keep funding on faith. And then the confession question. Every company has one — the source that's been on the budget so long nobody remembers approving it, the vendor contract that renews itself, the "we've always done the home show." I ask it straight: which one are you not sure about? And here's what I've learned — the marketing manager always has an answer ready. Always. He's been not-sure about it for years. It survives because killing it requires proof, proof requires the contribution-per-dollar math, and nobody in the building has ever been asked to run it. Faith is cheaper than arithmetic, right up until you total what faith has been spending.
The reality pair is contribution per dollar spent — every source, same loaded math, one ranked list. And I'll tell you what the list does the first time an owner sees it: it ends three arguments and starts one. It ends the CPL argument, the volume argument, and the "but it keeps the phones ringing" argument, because contribution per dollar eats all three. And it starts the only argument worth having: why is next month's budget still allocated like last year's beliefs?
So you know I'm not asking you anything I never had to answer myself, let me open my own engine from the peak years — because it also demonstrates the last lesson of this block: your best channel isn't a company-wide answer. It's a per-line answer.
For sunrooms, print was by far our best channel, and I worked it like a commodity trader. The Sunday newspaper had a large-format piece they called the wrap — the sheet that went over all the ads. You could buy the inside or the outside. The outside was seriously expensive, even back then. The inside was almost a throwaway — and I loved it. I bought a year's worth at a time. I owned them. Then I went a step further and had the newspaper overprint the same piece and deliver 150,000 copies a week into the surrounding local papers. All together we were putting about 350,000 pieces a week into the market for under four thousand dollars a week, all-in. Was the tracking clean? No — this was before the internet made everything auditable, and I'll be honest about what I couldn't measure. But the sits came, the rooms sold, and the load-in cost per thousand was so low that the math forgave a lot of fog. That, and sunnyroom.com — which was a great site years before most contractors knew they needed one.
Windows were a completely different animal, and this one I could measure, because it was direct response television. We pounded Wheel of Fortune and Jeopardy on Monday and Tuesday, and the four and five o'clock news the same days — the couch where our window buyer actually sat. About thirty thousand a month in TV spend, and it consistently brought back $250,000 to $300,000 a month in window business. Month after month. That's not a belief; that's a gauge you can read.
Notice what those two stories mean side by side: same company, same owner, same market — and the best channel for one product line was nearly worthless for the other. Anybody who tells you "what's your best lead source?" has a one-word answer is selling you their channel. The real answer is a grid: source by line, contribution per dollar in every cell.
Let me close this block with the sentence I promised you in the Author's Note, because this is the chapter it lives in.
No marketer you've ever spoken to has asked you any of it.
Think about the parade. Decades of reps, agencies, lead vendors, home-show sales guys, digital people with the case studies and the dashboards. Every one of them asked about your budget. How many asked for your close rate to issued lead, by source? Your collection speed by source? Your callback rate by source? Your gross profit per crew-day on the jobs their channel produced? Not one — and it's not because they're bad people. It's because they sell volume into whatever machine you already have, and the questions in this chapter measure the machine. If the machine loses money on every third job, more volume just loses it faster, and there is no marketing product on earth whose pitch survives that math being on the table.
Which is exactly why it's never on the table, and exactly why we just put it there.
The lead engine fills the funnel. The next block follows the work out the other end — onto the truck, into the field, where the crews live and where the margins actually get made or lost. Time to talk to your production manager. He's been sitting there quietly this whole time, and I promise you: he knows things.
WORKSHEET — BLOCK THREE: The Lead Engine
Stop here. Marketing manager's turn — and if you don't have one, that's an answer too; the owner fills it out and finds out what the glue-work costs. Full-size sheet at myeasysystem.com/worksheets.
In the room: Marketing Manager (or whoever the marketing actually is).
12. Lead sources, ranked by volume: ______________________________________________ 13. Cost per lead, by source: ______________________________________________ 14. Cost per acquisition, by source: ______________________________________________ 15. [BELIEF] Which channel do you swear by? ______________________________________________ 16. [BELIEF] Which one do you keep funding that you're not sure about? ______________________________________________
Questions 13 and 14 are where most sheets go blank. If yours did, you now know what every marketer you've ever hired was counting on.
From The 48 Questions No Marketer Ever Had the Guts to Ask You. Read Chapter One free →