Resources
/
Blog
/
Article

Marketing During COVID-19: A Pricey Lesson

As multiple headlines and newscasts urged Americans to stay home in March, businesses began reducing expenses and ditching plans. One common area for cuts is marketing during COVID-19.

Even Facebook and Google, “which have roughly tripled in combined size over the last five years, may be headed for a rare stumble.”
The New York Times
(April 14, 2020)

For the time being, the pandemic has changed our daily lives and short-term plans. Many industries, such as travel and entertainment, have pulled campaigns and ads. Since most every event is canceled, and people rarely are traveling, this reduction makes sense. However, not all businesses should follow this trend, but instead should continue to advertise. The consequence of pulling ads could be costly.

Cutting Expenses during COVID-19

One HVAC company that Convirza works with runs a direct mailer every spring. The mailer promotes air conditioner tune-ups and repairs.

Last year, after the direct mail ad, the company had 1,796 calls during April. More than half the callers were qualified leads, and 33% of all the callers booked service appointments.

2019 leads and conversions
As the coronavirus was erupting, the HVAC company pulled its direct mail campaign and saved $10,000. The decision seemed wise for marketing during COVID-19.

Over the last four weeks, some unexpected things have happened. First, other marketing activities that keep running continue to generate calls. (Convirza connects the phone calls with the ad source, so the HVAC company knows what triggers each phone call.)

This chart summarizes the latest call data for the HVAC company.

The numbers are from the first three weeks of April 2019 and April 2020.

PHONE CALLS # of LEADS LEADS % CONVERSIONS CONVERSION %
April 2019 1,796 1,064 59% 601 33%
April 2020 1,254 789 63% 473 38%

 

 

Last April, they sent the direct mail ad and answered almost 1,800 inbound phone calls. This April, they did all the same marketing except cut the direct mail piece.

Phone calls dropped by 550. Now, we can blame the pandemic for fewer calls, but the other data tells a different story.

Artificial intelligence indicators document that last year the percentage of leads was 59%. This year, the leads from inbound phone calls were up 4%, totaling 63% of 789 new leads.

Not only were the HVAC calls turning into more leads, but conversions were also up 5%. We did not expect this during the outbreak of the coronavirus.

The advertiser said, “repairs are more noticeable. It’s easy to schedule maintenance since so many people are working from their homes and apartments.”

 

Home Services Marketing During COVID-19

The higher conversion rate is good news. On the flip side, the number of people calling the HVAC group has shrunk from 2019 to 2020. From a marketing and sales strategy standpoint, the difference between this year and last year is the direct mailer.

2020 HVAC marketing
Phone calls fell by 30% and leads dropped 26% from 2019 to 2020. Based on this year’s conversion rate of 38%, the home services company lost 128 customers.

To put things into perspective, the average new customer value is $2,575. Multiplying the ACV (average customer value) by the 128, likely customers equates to $329,600 in new revenue.

Lost Customers Average Customer Value Lost Revenue
128 $2,575 $329,600

One $10,000 advertising expense had the potential to generate about a third of a million dollars.

Even if we cut the number of calls, leads, and conversions in half because of COVID-19, the company still missed 64 new customers and $164,800 in April earnings.

The ROAS (return on ad spend) for the direct mailer was $33 ($32.96 to be exact). For every dollar spent on advertising, the company would have made $33.

For comparison’s sake, if we cut the data in half, the ROI would have been $16.48. Either number is impressive.

During times of a pandemic or peace, an ROI between $16 to $33 is substantial. It’s a return on ad spend marketers celebrate.

Marketing Costs Less Than Ever

For home services companies, there’s another opportunity for marketing during COVID-19. Many media companies have lowered their ad rates. The prices reveal it has never cost less to run Facebook ads. Their digital advertisement rates are at record lows.

You have the chance to continue marketing and advertising at historically low rates. Which means your ROIs will be even higher.

Using your data right now has never been more necessary. Real opportunities exist.

Stay safe and stay the course.

Get the latest and greatest educational resources from Convirza.