Measuring Marketing ROI: What's Working and What Isn't

The Problem: Most Small Businesses Guess

Ask a small business owner which marketing channel generates the most leads and you will usually get one of two answers: "word of mouth" or "I'm not really sure."

Neither answer is good enough when you are spending real money on marketing. If you are investing $1,000-$3,000 per month across Google Ads, social media, email, and other channels, you need to know which dollars are working and which are wasted.

Marketing without measurement is gambling. Marketing with measurement is investing.

The Basic ROI Formula

Marketing ROI is straightforward:

ROI = (Revenue from Marketing - Cost of Marketing) / Cost of Marketing x 100

If you spent $1,000 on Google Ads and generated $8,000 in jobs from those leads:

ROI = ($8,000 - $1,000) / $1,000 x 100 = 700%

That is a great return. But the challenge is connecting revenue back to specific marketing channels. That requires tracking.

Setting Up Tracking Infrastructure

Step 1: Ask Every Lead "How Did You Hear About Us?"

The simplest tracking method. Train everyone who answers the phone or responds to inquiries to ask this question and record the answer. Options should include:

• Google search
• Google Ads
• Facebook / Instagram
• Referral from [name]
• Yard sign / truck signage
• Nextdoor
• Yelp / Angi / HomeAdvisor
• Repeat customer
• Other

Track this in a spreadsheet, your CRM, or even a simple tally sheet by the phone. This alone gives you more insight than most small businesses have.

Step 2: Use Dedicated Phone Numbers

Assign different phone numbers to different marketing channels:

• One number for your website
• One for Google Ads
• One for your truck signage
• One for your yard signs

Services like CallRail ($45/month) or Google's free call forwarding in Google Ads make this easy. When a call comes in on a specific number, you know exactly which channel drove it.

Step 3: Set Up Google Analytics

Google Analytics is free and tracks:

• How many people visit your website
• Where they come from (Google search, ads, social media, direct)
• Which pages they visit
• Whether they submit a contact form

Install it on your website (your web developer can do this in minutes) and check it monthly.

Step 4: Use UTM Parameters

UTM parameters are tags you add to URLs to track where traffic comes from. When you share a link in an email, social media post, or ad, add UTM parameters so Google Analytics can attribute that visit to the correct source.

Example:

yourwebsite.com/contact?utm_source=facebook&utm_medium=social&utm_campaign=spring-promo

Most email marketing platforms add these automatically. For social media, use Google's free Campaign URL Builder.

Key Metrics to Track

Lead Metrics

| Metric | What It Tells You | Target | |--------|-------------------|--------| | Total leads per month | Overall marketing effectiveness | Growing month over month | | Leads by source | Which channels generate leads | Identify top 2-3 channels | | Cost per lead (CPL) | Efficiency of each channel | Varies by industry ($20-$150) | | Lead-to-estimate rate | Quality of leads | 70-90% | | Estimate-to-close rate | Sales effectiveness | 30-60% |

Revenue Metrics

| Metric | What It Tells You | Target | |--------|-------------------|--------| | Revenue by source | Which channels drive the most money | Focus budget here | | Average job value by source | Lead quality by channel | Higher is better | | Customer acquisition cost (CAC) | What it costs to gain a customer | Below 10-15% of job value | | Customer lifetime value (LTV) | Total value of a customer relationship | 3-5x acquisition cost | | Marketing ROI by channel | Return on each marketing dollar | 3:1 minimum |

Website Metrics

| Metric | What It Tells You | Target | |--------|-------------------|--------| | Monthly visitors | Reach and visibility | Growing steadily | | Bounce rate | Content relevance | Below 60% | | Time on site | Engagement quality | 2+ minutes | | Conversion rate | Website effectiveness | 3-10% for service businesses |

Building a Monthly Marketing Dashboard

Create a simple spreadsheet with these columns, updated monthly:

1. Channel: Google Ads, SEO/Organic, Facebook, Referrals, Yard Signs, etc.
2. Spend: Total cost for the month
3. Leads: Number of leads generated
4. Cost Per Lead: Spend / Leads
5. Jobs Closed: Number of leads that became paying customers
6. Revenue: Total revenue from those jobs
7. ROI: (Revenue - Spend) / Spend

After three months of data, patterns emerge. After six months, you can make confident budget allocation decisions.

How to Analyze and Optimize

The 80/20 Rule in Marketing

Typically, 80% of your leads come from 20% of your marketing activities. Find that 20% and double down.

Common findings for service businesses:

• Google Business Profile and organic search generate the most consistent leads at the lowest cost
• Google Ads generate high-intent leads quickly but at a higher cost
• Referrals generate the highest-quality leads (biggest jobs, highest close rate)
• Social media generates awareness but fewer direct leads
• Print materials (yard signs, door hangers) are hit-or-miss but cheap

When to Cut a Channel

Stop spending on a channel if:

• After 90 days, it has generated zero or near-zero leads
• The cost per lead is more than 3x your other channels with no offsetting quality advantage
• The leads it generates close at a significantly lower rate
• You have tried optimization (new ads, new content, new targeting) and results have not improved

When to Increase Spend

Double down on a channel if:

• It is generating leads at a cost per lead below your target
• The leads close at a rate equal to or above your average
• You have capacity to handle more work
• You have not yet saturated the channel (there is still room to grow)

Attribution Challenges

Marketing attribution is imperfect. A customer might see your truck, Google your name, read a review, visit your website, leave, see a Facebook ad, and then call you. Which channel gets credit?

For small businesses, do not overthink this. Use "first touch" attribution: whatever the customer says when you ask "how did you hear about us?" gets the credit. It is imperfect but actionable.

For Google Ads and digital channels, trust the platform's conversion tracking for digital touchpoints. Use call tracking for phone-based attribution.

Common Measurement Mistakes

1. Not tracking at all: The most common and most expensive mistake.
2. Tracking leads but not revenue: 100 leads from Facebook means nothing if they all want free estimates and never hire you.
3. Judging too quickly: Give each channel at least 90 days before making major decisions.
4. Ignoring offline channels: Yard signs, vehicle branding, and door hangers are harder to track but can be highly effective.
5. Vanity metrics: Website visitors, social media followers, and email open rates feel good but do not directly measure business impact.
6. Not accounting for lifetime value: A channel that seems expensive per lead might deliver customers who hire you repeatedly over many years.

Getting Started This Week

1. Start asking every lead how they found you. Record the answer.
2. Set up Google Analytics on your website (or verify it is already installed).
3. Review your current marketing spend and list every channel and its monthly cost.
4. Create a simple tracking spreadsheet with the columns listed above.
5. Set a calendar reminder to update it on the first of every month.

You cannot improve what you do not measure. Start measuring today, and within 90 days, you will make smarter marketing decisions than 95% of your competitors.