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Your marketing agency sends a report every month. It probably includes impressions, reach, engagement rate, click-through rate, followers gained, and a dozen other metrics that look impressive on paper. The charts trend upward. The percentages seem healthy. But when you look at your bank account and your job schedule, nothing has changed.
Here is the uncomfortable truth: most marketing metrics are vanity metrics. They measure activity, not results. They tell you something is happening without telling you whether that something is making you money.
This guide focuses on the only four metrics that actually matter for service businesses. Master these, and you will always know whether your marketing is working.
Why Most Marketing Reports Are Useless
Marketing agencies report what is easy to measure and what looks good. Impressions are easy to inflate. Engagement sounds positive. Reach keeps growing as long as you keep spending. These metrics serve the agency's interest in appearing valuable, not your interest in growing revenue.
The disconnect between activity metrics and revenue metrics is where most service businesses get burned. You can have a million impressions and zero new customers. You can have high engagement and no phone calls. You can have growing reach and declining revenue.
Vanity metrics share a common problem: they measure what happens to your marketing, not what your marketing makes happen.
The four metrics that matter all connect directly to revenue. They tell you how much you are spending to acquire customers, whether that spend is efficient, and what your marketing actually contributes to business growth.
Metric 1: Cost Per Lead (CPL)
Cost per lead measures how much you spend in marketing to generate one potential customer inquiry. This is the most fundamental metric for any service business because it directly shows marketing efficiency.
The formula for cost per lead is total marketing spend divided by total leads generated. If you spent $3,000 on marketing last month and received 50 leads, your cost per lead is $60.
CPL should be calculated separately for each marketing channel. Your Google Ads CPL, Facebook CPL, SEO CPL (based on estimated content and optimization costs), and referral CPL may all be different. Knowing channel-specific CPL tells you where to invest more and where to cut.
Here are benchmark CPL ranges for common service industries:
Water damage restoration: $75-150 per lead Fire and smoke restoration: $100-200 per lead Mold remediation: $60-120 per lead HVAC repair and installation: $50-100 per lead Plumbing services: $40-80 per lead Electrical services: $45-90 per lead Roofing: $100-250 per lead General contracting: $80-175 per lead
These ranges vary significantly based on geography, competition, and service mix. A restoration company in a competitive Florida market will have higher CPL than one in rural Nebraska. Use these as starting points, not absolute targets.
When is high CPL acceptable? If your average job value is $15,000 and you close 30% of leads, a $200 CPL might be perfectly efficient. If your average job is $500 and you close 20%, that same $200 CPL is disastrous. CPL only matters in context of what those leads are worth.
When is high CPL a red flag? If your CPL is climbing month over month without corresponding improvement in lead quality, something is wrong. If your CPL is significantly higher than industry benchmarks and you cannot explain why, investigate. If CPL spikes suddenly, check for wasted spend, bot traffic, or targeting problems.
Metric 2: Lead to Customer Conversion Rate
Lead to customer conversion rate measures what percentage of leads become paying customers. This metric reveals whether your marketing is attracting the right people and whether your sales process is working.
The formula is number of new customers divided by total leads, multiplied by 100 to get a percentage. If you received 50 leads last month and 12 became customers, your conversion rate is 24%.
A healthy conversion rate for service businesses typically falls between 20% and 40%, depending on industry and service type. Emergency services tend to have higher conversion rates (people calling with an urgent problem are ready to buy) while planned services and larger projects have lower rates (more shopping and comparison).
Why this metric reveals more than marketing effectiveness: A low conversion rate can signal marketing problems (attracting unqualified leads) or sales process problems (failing to convert qualified leads). Before blaming marketing for low conversions, analyze why leads are not converting.
Common reasons leads do not convert:
Price objections suggest either marketing is attracting budget-conscious customers who do not match your positioning, or your pricing communication is unclear.
No response to follow-up indicates leads were not urgent or your follow-up is too slow. Speed to lead matters enormously in service businesses.
Chose competitor means your sales process or offering is not competitive. This is a sales and positioning issue, not a marketing issue.
Not actually ready to buy suggests marketing is reaching people too early in their decision process. This is an audience targeting issue.
Fake or spam leads point to ad targeting problems, bot traffic, or form vulnerabilities.
Track why leads do not convert, not just that they did not convert. The reasons tell you what to fix.
Metric 3: Customer Acquisition Cost (CAC)
Customer acquisition cost is the total cost to acquire one new paying customer. This is different from cost per lead because it accounts for all leads that did not convert and all costs involved in the sales process.
The complete CAC formula is total marketing spend plus total sales costs, divided by number of new customers. Sales costs include sales team compensation, CRM software, proposal preparation time, and any other costs directly related to converting leads to customers.
A simpler version for businesses without dedicated sales staff: total marketing spend divided by number of new customers. If you spent $3,000 on marketing and acquired 12 customers, your simple CAC is $250.
Why CAC matters more than CPL: CPL tells you how efficiently you generate interest. CAC tells you how efficiently you acquire actual revenue. A campaign with low CPL but low conversion rates might have terrible CAC. A campaign with high CPL but excellent conversion rates might have great CAC.
The CAC to customer lifetime value ratio is the ultimate efficiency metric. Customer lifetime value (CLV) is the total revenue you expect from a customer over your relationship. For service businesses, this might include repeat services, maintenance contracts, referrals, and additional service lines.
A healthy CAC to CLV ratio is typically 1 to 3 or better. For every dollar you spend acquiring a customer, you should receive at least three dollars in revenue over time. If your CAC equals or exceeds your CLV, you are losing money on every customer even if individual jobs are profitable.
Example calculation: If your CAC is $250 and your average customer spends $2,000 over three years (including referrals they generate), your ratio is 1 to 8, which is excellent. If your CAC is $500 and your average customer spends $600 once and never returns, your ratio is nearly 1 to 1, which is unsustainable.
Metric 4: Marketing-Sourced Revenue
Marketing-sourced revenue is the total revenue generated from customers who came through marketing channels. This closes the loop between marketing spend and actual business results.
Tracking marketing-sourced revenue requires attribution, which means connecting each customer back to the marketing channel that brought them in. For service businesses, this typically requires asking "how did you hear about us?" at every inquiry and recording the answer in your CRM or job management system.
Common attribution challenges and solutions:
Multiple touchpoints: A customer might see your ad, read your blog post, then call after seeing your truck. Ask what prompted them to call today, not every interaction they had. First touch and last touch attribution both have value.
Referrals from marketing-generated customers: If a customer you acquired through Google Ads refers their neighbor, that referral is ultimately marketing-sourced. Track referral sources back to original acquisition channel when possible.
Phone calls versus form fills: Use call tracking numbers specific to each channel. A different phone number on your Google Ads versus your website versus your direct mail allows you to attribute phone leads accurately.
Why last-click attribution lies: Most attribution systems give credit to the last interaction before conversion. But a customer who clicked your ad today might have found your business through SEO last week, saw your social media last month, and received your direct mail piece six months ago. The ad gets all the credit, but every touchpoint contributed.
Perfect attribution is impossible. Good-enough attribution that consistently tracks sources over time is valuable. The goal is not perfect accuracy but consistent measurement that reveals trends and allows comparisons.
How to Build a Simple Dashboard
You do not need expensive software to track these four metrics. A spreadsheet updated monthly is enough for most service businesses.
Create columns for:
Month Total marketing spend Marketing spend by channel (Google Ads, Facebook, SEO/content, etc.) Total leads Leads by channel Total new customers New customers by channel Total revenue from new customers Revenue by source channel
From these inputs, calculate:
Overall CPL and CPL by channel Overall conversion rate and rate by channel Overall CAC and CAC by channel Marketing-sourced revenue and revenue by channel CAC to revenue ratio by channel
Review monthly. Look for trends over three to six months rather than reacting to single-month fluctuations.
Questions to ask your marketing agency if they do not report these metrics:
Can you provide cost per lead broken down by channel? What is our lead to customer conversion rate for marketing-generated leads? What is our total customer acquisition cost? How much revenue have we generated from marketing-sourced customers this quarter?
If your agency cannot answer these questions, they are not tracking what matters. That is a serious red flag.
The Single Most Important Number
If you track nothing else, track this: revenue generated per marketing dollar spent.
Take your marketing-sourced revenue for a period and divide by total marketing spend. If you spent $10,000 on marketing last quarter and generated $80,000 in revenue from marketing-sourced customers, your return is 8x.
A healthy return for service businesses is typically 5x to 10x. Below 3x, your marketing is barely breaking even after accounting for service delivery costs and overhead. Above 10x, you might be underinvesting in growth.
This single number answers the only question that really matters: is marketing making you money?
Moving From Vanity to Value
Shifting from vanity metrics to revenue metrics requires a mindset change. Stop celebrating impressions. Stop obsessing over engagement. Stop letting agencies distract you with activity metrics when results metrics are weak.
Every marketing conversation should start with: what did we spend, how many customers did we get, and what revenue did they generate?
Agencies that resist this conversation are hiding behind activity because results are not there. Agencies that welcome this conversation have confidence in their ability to deliver actual business outcomes.
You deserve to know exactly what your marketing investment returns. Not in impressions. Not in engagement. In dollars.
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*Want help setting up tracking for these four metrics? We can audit your current reporting and help you build a dashboard that shows what actually matters. Reach out to start the conversation.*
