How to Budget Marketing in 2026 (Without Wasting Cash)

Summary

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Podcast Summary: "How to Budget Marketing in 2026 (Without Wasting Cash)"

Owned and Operated – A Plumbing, Electrical, and HVAC Business Growth Podcast
Host: John Wilson
Guest: Sam Preston, CEO of Service Scalers
Episode Date: January 27, 2026

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Episode Overview

In this episode of Owned and Operated, John Wilson and guest Sam Preston dive into the practicalities and strategies behind marketing budget planning for home services businesses in 2026. The conversation, grounded in their experience with HVAC, plumbing, and electrical companies, explores not only how much to spend, but critically, how to think about spending – focusing on profitability, adaptability, and measurable results. They break down budgeting frameworks, common mistakes, and actionable tactics for both new and established operators, emphasizing data-driven flexibility over outdated rules of thumb.

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Key Discussion Points & Insights

1. Rethinking Marketing Budget Formulas

• Gross Profit vs. Revenue: John advocates for setting marketing budgets as a percentage of gross profit, not revenue.

  • “I think that marketing budget should not be a percentage of revenue. I think that it should be a percentage of gross profit.” (03:07 - John)
  • The traditional revenue-based percentage doesn't account for differing business margins, potentially leading to overspending or underspending.
  • Gross margin variations make budgeting needs unique for each business.

• Understanding Gross Profit: John provides a quick accounting 101:

  • If you do $10 in revenue and $5 is spent on labor, materials, etc., your gross profit is $5, or a 50% margin. Overhead (including marketing) comes out of gross profit, not revenue. (04:13–07:34)
  • Takeaway: Marketing is part of overhead and should be evaluated in context of actual profitability, not just revenue.

2. Separating Fixed and Variable Costs

• Marketing is Not a Fixed Cost: Unlike salaries or rent, marketing spend should flex based on market demand, seasonality, and channel performance.

  • “Marketing is like its own animal. So I like separating it out.” (08:03 - John)

• Baseline + Flexibility: Have a baseline marketing spend, but be prepared to adjust up or down as channels perform or market needs evolve. (09:53–10:11)

3. Budgeting by Business Stage

• New vs. Established Companies:
  • New companies will need to spend more to acquire leads due to lack of organic sources, memberships, and established reviews.
  • Older, established companies can rely more on recurring and organic leads, reducing needed marketing spend.
  • “If you're a new business, like you should expect to spend differently than a 10 year old business.” (00:07 - John; 13:14-16:48)

4. Determining “The Number”: How Many Leads Do You Need?

• The fundamental starting point for any marketing budget: How many leads do you need each day?
  • “The short answer is what does it take to fill your board?” (13:59 - John)
  • Many businesses don’t know this basic number and struggle needlessly as a result.
  • The “raise your floor” concept: Build up recurring/organic streams to reduce the number of paid leads needed daily. (16:08-18:21)

5. The Five Budget Buckets (Sam’s Framework) (18:21–20:27)

1. What worked last year: Double down on channels with proven ROI.
2. Wasted spend: Identify and eliminate unproductive campaigns.
3. Discovery: Money set aside to test new channels or tactics (“willing to lose it all” bucket).
4. Emergency: Reserve for crisis moments when lead flow drops unexpectedly.
5. Investment: Long-term bets (SEO, branding, social), paying off over time.

• “If you can back into how many leads you need, that's when you're really winning.” (20:27 - Sam)

6. It’s Usually Not a Lead Problem

• Most operators misdiagnose their problems—it's often booking rate or sales process, not lack of leads.

  • “I'm always convinced that companies don't have a lead problem. Something else is broken out there in the chain.” (20:27 - John)

• Example: A company with plenty of leads but a call center failing to book appointments. Improving scripts and outbounding doubled bookings overnight. (21:39–24:02)

7. How Much Should You Spend?

• Industry standard: 10% of revenue is common, but John finds 7-8% more realistic as businesses scale and gross margin becomes the guiding factor. (24:40–29:00)
• A $10M company might spend $80k/month on marketing, but allocation varies (direct lead gen, salaries, branding, software, etc.).
• Channel breakdown and clarity on what’s included (personnel, agency fees, direct spend, field marketing, software). (27:38–30:46)

8. Discovery & Testing: Don’t Spread Thin, Scale What Works

• For new businesses: Discovery is most of the budget—test LSA, Google Ads, etc.
  • “If you knew what worked, you wouldn’t be small.” (32:30–32:39 - John)
• For midsize/large: Try new channels, but don’t fragment budget across too many simultaneously; maximize one, then move to the next.
• “The more channels you have driving leads, the safer your business is...” (33:18 - Sam)

9. Robust, Binary Method for Testing Campaigns

• “Kill vs. Scale” (36:29–38:34, John):
  1. Did the source give 100 leads?
  2. Did you close a sale?
  3. Was ROI positive? (5x ROI = acceptable, 8x = great, below 5x = kill)
• “I want to put in energy or dollars...and I want to have a rough idea of what I should expect to get out of it.” (38:34 - John)

10. Emergency Budgets & Tactics

• Have tiers of emergency response for slow days: quick wins (outbound calling, SMS, door knocking) versus ramping up ad spend.
• “The shorter the time period [for results], the less budget, because budget doesn’t work...” (39:55–43:27 - John)
• Real morning example: Board was empty; direct actions filled it in hours.

11. Tuning Paid Campaigns

• For existing PPC campaigns, flex budgets by +/-20-30% in response to demand, rather than totally on/off or radical swings.
• But don't expect instant results from cold start campaigns. (43:46–45:02)

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Notable Quotes & Moments

• John: “I think that marketing budget should not be a percentage of revenue. I think that it should be a percentage of gross profit.” (03:07)
• Sam: “What worked for you last year? What was wasted spend? What do we want to try this year?...what happens when your callboard is in the red?...and where are you investing for the future?” (18:21)
• John: “Most people don’t actually have a lead problem. Something else is broken out there in the chain.” (20:27)
• Sam: “You can’t hit a target if you don’t know what the target is.” (16:48)
• John: “[On leads from PPC] I would scale that. If I sold $10,000 and I broke even, I would not scale that.” (37:53)

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Timestamps for Key Segments

• [03:07] - The case for gross profit-based budgeting
• [07:34] - Overhead, gross profit, and what goes in each bucket
• [13:14] - How to advise a $5M-$10M business on spend
• [16:08] - The “raise your floor” approach for repeat/organic leads
• [18:21] - The 4 (turned 5) marketing budget “buckets”
• [20:27] - Why finding your “lead problem” often reveals a booking or sales process problem
• [24:40] - How much to spend: Rules of thumb and real numbers
• [27:38] - What’s included in the marketing budget—personnel, agency, direct spend, etc.
• [32:30] - Don’t spread ‘discovery’ budget too thin; max out channels then test new ones
• [36:29] - Kill vs. Scale: A binary method for testing new marketing channels
• [39:55] - Emergency budget strategies: fast vs. long-term levers
• [45:02] - Final takeaways and advice

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Big Takeaways

• Always Know Your Lead Number: You must know how many leads you need per day—otherwise, you’re flying blind.
• Build Budgets by Gross Profit and Stage: Use gross profit as a baseline, consider your business age, and adjust as you grow—not one-size-fits-all.
• Flexibility is Essential: Marketing budgets aren’t static; they flex with market, season, and winning channels.
• Systematize Discovery and Testing: Don’t scatter small bits across every channel—validate with real numbers before scaling.
• Have a Crisis Playbook: Emergency budgets and direct action tactics keep your board full when things get lean.
• It’s Rarely Just a Lead Problem: Address booking, sales, and operational process before assuming more leads are the answer.

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Coming Up Next

The next episode will tackle when and how to hire your first marketing manager, what their responsibilities should be, and how to maximize this key role as your business scales. (47:21–end)

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This summary captures the detailed frameworks, candid business insights, and the direct, sometimes lighthearted, exchange that make the Owned and Operated podcast a practical guide for every home services entrepreneur.

Transcript

[A]

Today we are talking budgeting for marketing in 2026.

[B]

Yeah, let's, let's talk about that money.

[A]

So if you're a new business, like you should expect to spend differently than a 10 year old business.

[B]

And then ultimately comes down to the magic answer of how many leads do you need? Because if you can back into that, that's when you really win.

[A]

I'm always convinced that companies don't have a lead problem. Something else is broken out there in the chain.

[B]

The more channels you have driving leads, the safer your business is. And one of the best things that you do when you have a budget is not manage it yourself.

[A]

It's really challenging to just like put a number on it.

[B]

How would you advise them? Consult them on what to spend?

[A]

I have a long and technical answer and I have a short answer. Which would you prefer? Welcome back to Owned and Operated. I am your host, John Wilson. Today we're diving deeper in our series Clicks to Calls with Sam Preston, the CEO of Service Scalers. Welcome back to the show.

[B]

Thank you. Excited to be back and excited to talk about money today.

[A]

Yeah, yeah, yeah. Today's today. Today we're talking about money. If you have, if you're a new listener to this series or to the show. And we've been getting a ton recently. This show's been doing really well. So we're excited about that. Make sure you listen to the past couple from our Click to Call series. We talked LSAs, we talked Google business profiles. We talked some entry level stuff. Can we talk some advanced stuff. So really informative content. So make sure you listen to the past couple episodes. Today we are talking budgeting for marketing in 2026. We're talking that cash, those stacks, those racks, baby, that grand. That's what we're talking about.

[B]

Yeah, let's, let's talk about that money.

[A]

Yeah, let's talk about that here to do.

[B]

Right. Like we're trying to make money and then keep as much of this money as we possibly can.

[A]

That is what we're trying to do.

[B]

Yeah. So let's talk about how to do that and what's the point?

[A]

I actually, I have like a fun.

[B]

I have a fun.

[A]

I don't know actually how useful this is going to be to a number of our listeners. Like, as in like my quick opinion, but I've had a revelation recently for marketing, budgeting for marketing and two different revelations and then we'll actually dive into like the real content here. Revelation 1, I think that marketing budget should not be a percentage of revenue. I Think that it should be a percentage of gross profit. Okay, so that's a big like, whoa. You know, because everyone says like, hey, how much are you spending on marketing? 8%, 10%. Here's my issue. If there's a company that's a 40% gross margin business and they're spending 10% on marketing, that is a very different marketing budget than someone that is 60% gross margin also spending 10% of revenue. Very, very different. And I think it just has to be approached differently. And the reason I'm starting to get passionate about this is we have, we're acquiring businesses right now and we just bought two. Let's go. And we're looking at more and more. We keep, I keep running into these businesses that have like 45% overhead. And I'm like, how do you have 45% overhead? And they're like, well, the, the, this book or this blog or this guru or this whatever told me I had to have 15% for salaries and 10% for marketing and 3% for rent. And I'm like, yeah, but that's. If you're a 60 plus percent gross margin business and you're a 46% gross margin business, so your net profit is 1. So, so that, that's one of my big like new counter takes is I think that budgeting for SG&A opex like marketing, salaries, fleet should be based on gross profit and not revenue. Because just businesses are so different. If you're 40% margin business if you're 50, if you're 60, very different budgeting.

[B]

Definitely, definitely. And just asking for a friend, what is gross profit for those people that may not know?

[A]

Okay, nice. So, yeah, so gross profit or gross margin. So If I do $10 of revenue and it costs like my labor, so the plumber to go out and do that cost $2 and the material to install that job was another $2 and I spent $1 on permits. Then I had $5 of gross profit or a 50% margin because 5 is half of 10. So that's gross margin and that is the cost of performing the work that you sell. So the labor, the materials, the permitting, the subcontractors, tool rental, all of that goes into grow the cost of goods sold, which is the name for it. So you subtract cost of goods sold from revenue and you achieve gross profit or gross margin, depending on which way you're looking at it. And then underneath gross profit is overhead. And overhead is things like marketing expense, office wages, software, fuel for your trucks, rent for your office. I'm trying to think what else benefits, payroll tax? There's a lot that gets baked into overhead. Yeah. And it's kind of a confusing bucket. We've, we've done some work on this, like content on this in the past, but it costs a lot to run a business. It costs a lot to run a business. And like a, a normal business that I look at a sort of a smaller size contractor, their overhead might be 40%. Like that's a pretty real number. I see that often might even be more. I see a lot of 40, 45%. But they might only be achieving a 50% gross margin. So that contractor would might be at a 5 to 10% net. And 10% is considered like, I think everyone thinks they're at 10% but when they dive in, they might actually only be at 2 or 3. So. So yeah, that's, that's how the piano breaks down. So marketing is inside overhead. And, and so that's my other sort of like, you know. Well, going back to my example, if you were a 10% of revenue marketing business, in my example of $10, you would spend $1 on marketing right now. If you're at 50% margin, that could work out perfectly fine. But what if you're at 40% and you're still spending $10? You have $3 left to get net profit, salaries, fleet, fuel, rent, everything out. So I like this idea of budgeting off gross profit because if you were, if you said, Hey, 20% of my gross profit is going to go towards marketing, then 20% of $4 is different than 20% of $5 and it'd be a less of a dollar amount. That would still allow you to have a healthy net profit at the end of the day. So super long explanation and maybe not very helpful to many people unless you're an absolute nerd, but this is how I'm starting to budget. All of our overhead is off of gross profit, not revenue.

[B]

That sounds like a very mature way to do that. Meaning when you're a smaller company, it's probably more of just like throw some marketing dollars out there, get some leads and close those deals. Just make it happen. And then as you mature, getting a bigger company, you're like, okay, well I need, I need to mature this. I can't just keep throwing a random 10% out into my marketing budget. Yeah. I need to figure out what numbers are we can actually use to scale this so that we're profitable and taking money back home, which I do.

[A]

My other thought that probably nobody cares about unless you're really into accounting is I think that overhead should be a separate bucket from marketing and I think that the PNL should be divided a little bit where marketing is not really a fixed cost. So as we start talking about budgeting for marketing it it's really challenging to just like put a number on it. Right. Like oh yeah, ten grand a month or fifteen grand a month or five grand a month. Who knows Right. Like so much of our volume comes from demand based lead sources. Which means that hey, in February If I'm budgeting $10,000 a month but no one's looking for me, I might spend one. And that's not a good thing. Right. Like that's a, that means I didn't get any calls and I'm really mad about it. So it's really hard to set a budget for marketing. Like so we have like a rough guideline. But I like separating it from office salaries, which office hours, $200,000 a month. Like that's what it is. It's a fixed cost. Rent is a fixed cost. Fleet is a roughly a fixed cost. But marketing is like it's its own animal. So I like separating it out. So you just look at it a little bit differently than your fixed costs. And those are my two budgeting. Accounting nerd. We'll get into the marketing stuff here. But like accounting nerd. There you go.

[B]

No, I absolutely agree. I think the problem with the fixed cost marketing idea is that things change. You know, for example, in my own business we launched Google Ads again for me to get my own leads and it's actually working out better than I expected. And so you're like well I want to kind of increase the amount. Even though like we just had this 2026 budget and we're like okay, this is what we're going to spend on Google Ads or paid media. It's already like, well it's working. So I want to throw more money at it.

[A]

Yep.

[B]

Which is a great problem to have.

[A]

But.

[B]

But on the flip side, if it wasn't working out at some point, I want to pull that money and try a different paid media or a different avenue to use that budget. So I think it's important to have at least a baseline of what you know you want to spend.

[A]

Yeah.

[B]

And then know that that's going to flex based off of, you know, market demand. What's going on, what's working, what's not working, things like that.

[A]

For too long I was letting the wrong marketing agencies set my money on fire and their marketing looked pretty Good. On paper, the reporting was attractive, but at the end of the day, it just wasn't driving leads. That's why I started using Service Scalers at Wilson. Service Scalers is a marketing agency built specifically for home service companies. They focus on the channels that actually drive leads, like targeted ppc, local service ads, SEO, Google business profile, so that you're showing up in front of your customers that are actively searching. They'll help you see exactly what's working so you stop wasting ad dollars on low quality leads. Right now, they're doing something crazy and they're giving the opportunity for one entrepreneur to get up to 12 months of marketing on them. So that's up to $100,000 in services for the right operator. If you are serious about tightening up your marketing in 2026 and want to see what this could look like for your business, go to service scalers.com and book a free strategy call and let them know that I sent you. All right, cool. Well, let's dive in. So marketing budgets in 2026 feels a little bit different to me. I'm curious what you're seeing.

[B]

Yeah, I mean, I, I think there was early 2025, a lot of hype went really strong and I think market kind of struggled back half of 2025. And so we started seeing a lot of people pulling back their budgets and getting a little, you know, just nervous to spend the money. That is not the, that's not what we're seeing. Early January, people are starting to get aggressive. They're tired of the slog of 2025. They were wanting to spend more and try to make things happen, which is cool. Like, that's. Yeah, that's how I like to play. I play my business aggressive. So I tend to like to play aggressive with other people's businesses. So we're seeing a lot of growth. We're seeing a lot of clients going, hey, how can we spend more money in a productive way? Not just right, you know, let's, let's not like light fire, light money on fire, but like, how do we spend this so we can get a good return?

[A]

I think I, I mean, that's, that was our own experience too. Like, we cut down on some branding over the summer because we weren't filling the board. So it's like, okay, well, I mean, branding is, is good and like, I'm a believer in it, but I also think branding is dealing. It's. You're solving six to 12 months from now's problems. Whereas, like, if your house is on fire, Today, like you need to solve it today. So we started, so we rolled back some branding, but we, you know, enhanced our lead gen efforts. So yeah, I agree with what you're saying. So marketing budget as a whole dropped, but we really focused in on the lead this January. I don't think much has changed for us. The weather's tough. The weather is tough, but I don't think it's changed like how we think about spend. But it is 50 degrees in January. I mean, that's a challenging way to sell H Vac. Yeah.

[B]

Yes. I guess the first question coming into 2026 and what you're going to spend, you're saying, I'm doing it based off of gross profit. So if somebody was who come to you and say, hey, I've got a call it a $5 million business or $10 million business, plumbing, H vac, electrical, and we want to spend next year, how are we coming up with that number? Is it just the 10%? Are we going based off a percentage of gross profit? Like how would you advise them, consult them on what to spend?

[A]

I have a long and technical answer for this and I have a short answer. Which would you prefer?

[B]

Start with short and let's see if we want to dive in more.

[A]

Okay. All right. So like the short answer is what does it take to fill your board?

[B]

Yeah.

[A]

So that's how we look at marketing budget. The long and technical answer is like, what's your cost per lead? How many appointments do you need a day? How many of those appointments come from organic resources on average? How many of those appointments come from recurring customers on average? Do you have memberships? Like there's a lot of things that funnel into how many leads a day and how many will just get taken care of. But the short answer is how many do you lead a day, need a day, and it can change quite a bit. So there's a company that we bought that is 10 years old and there's a company that we bought that is two years old and unsurprisingly, one of them has more clubs, more recurring customer base, more organic. It's a ten year old business. It just has been around longer. It has more club memberships to call it did, it has more reviews, you know, it's just been around longer. So. So if you're a new business, like you should expect to spend differently than 10 year old business because one of them just has more. So the way we're thinking about, a good way to think about it is how do you raise your floor so if my. If I need, I'm going to use 10 again. If I need 10 leads a day to fill up, my plumbers say it's like two plumbers and five appointments each. If I need 10 leads a day, how do I. How do I reduce that amount? And we think of it as raising the floor. So maybe the floor is four. So I can always get four leads a day by texting my customers or emailing them and reminding them that they have a service agreement appointment or outbound calling or direct mail or whatever it is. But we've raised the floor from, I no longer need ten, I now need six. Because my floor is now four appointments a day. And then you can continue to back into it. But I think that's a good place to start for most people is how many leads a day do we need? Which you'd be surprised how many people don't actually know that. That answer. The company we just. One of the companies we just bought, they didn't know. They didn't know how many appointments they needed a day. They should have gone to the Breaking5 workshop or the marketing workshop that you guys are about to host, but they didn't know how many appointments they needed a day. And how are you supposed to hit a target if you don't know what the target is?

[B]

You can't.

[A]

Yeah, you can't.

[B]

You can't.

[A]

Yeah. Simply are unable to. Yeah. I mean, maybe you hit it accidentally.

[B]

But a blind nut finds a squirrel every once in a while.

[A]

Yeah, that's funny. But, yeah, it was interesting because we started, like, unpacking it. It's like, well, how many leads do you need a day? And the reason they didn't know and to bring this out of just marketing into operations, they didn't know because their service guys also did install. And this is something we talk about a bunch at our workshops. But it's really hard to hit a target. You don't know what it is. So if you have guys flexing in between stuff a ton of. It's easier to hit 10 leads a day every single day than it is to hit 10 one day, 6 the next, 10 the next day for the next. Because then you just know you need 10 a day and you can create that new floor. Like, okay, I need 10 a day. I can always get four from outbound calling, and I just need to buy six. Yeah. Amazing. Yeah. There are a lot of places that you can get six leads a day if it's consistent and you can build the discipline into your business. So. So that's how we think about it is how many leads do we need a day? How many will we expect from organic, existing customers, memberships, all of those other things. And if you don't have any of that, that's fine too. Then you don't. Your floor is whatever. I need 10 leads a day and I have no floor. So it's ten leads a day. And then how much does a lead cost? 70 bucks. Okay, $700 a day is going to go towards paying for those leads, assuming 100% book rate.

[B]

No, I love that. When I'm talking to a company and I'm trying to help them figure out what their budget is going to be for that year, I really kind of break it down into four buckets. Bucket number one is what worked for you last year.

[A]

Oh yeah.

[B]

So hey, like did Google Ads spend work for you? Did lsa, was it GBP spend? What worked for you last year? Bucket number two is what was wasted spend last year. So we tried PPC and it just wasn't a good cost per lead.

[A]

Didn't kick.

[B]

Yeah, you know, we gotta figure that out. Cause we wanna eliminate waste. Coming into 2026, we want to spend our money really, really well. Third bucket is going to be discovery. What do we want to try this year? Any healthy business. If you're just like depending on the past things that worked, you're putting risk inside your business that you just shouldn't. So we want to figure out what that third bucket is of. What can we test out? Maybe it's TikTok ads this time or a billboard or something, you know, pizza box, QR codes.

[A]

Yeah.

[B]

But find, find a small budget where you can just go test things. You're willing to lose it all kind of bucket. And then that fourth bucket is going to be emergency situations. What happens when your cardboard is like in the red and you don't know where you're going to spend? This is. I don't plan on spending this, but if it does happen, where, where am I putting my money next? Yeah. And the only other bucket that you might think of in this, I throw an honorable mention. Five is where are you investing? So there might be something that didn't work. Like let's say you want to go, you know, social content or branding or SEO. It was a main lead driver for you last year. But you're like, I know if I continue to invest my money here, it will pay dividends in the future. So four buckets turning into five. Those are the five buckets that you want to take A look at to see how much am I going to spend over this next year? And then ultimately comes down to the magic answer of how many leads do you need? Because if you can back into that, that's when you're really winning.

[A]

I'm always convinced that companies don't have a lead problem. I think it's kind of interesting. I'll dive into. I'll dive into someone's like, maybe. Maybe we're like, they called because they're looking for help, or, I don't know, like, we're trying to buy them or whatever, but everyone thinks they have a lead problem. But then you end up digging a little bit deeper and, like, that's. That's not the issue. Right. So this. This, this one company that they didn't know how many leads a day they needed, we just. We just took them over like a week ago, and they didn't know how many leads a day they needed, but they're convinced that they had a lead problem. So we spend a little bit of time and we're like, all right, first off, you don't know how many leads a day you need, so how do you know if you missed it, Right? I don't know. And you don't know either. Like, nobody knows. Because, yeah, if you don't know what the target is, then, like, you can't win or lose. It's just whatever happens, happens. And. And the other one was they actually had an abundance of leads, but they couldn't book them for shit. So their call center was just not booking the damn lead.

[B]

Yeah.

[A]

And so, you know, call center was reminded that that is literally the only reason that they're employed. And suddenly they started booking more and more leads because, like, that's the one thing that call center has to do, is book the lead. Another example, this was two years ago, but there was someone, I don't remember his name. He's out in Phoenix, I think. I think he turned it around, which is really cool. But he was. He was really struggling for a minute there. New franchisee. And he was like, dude, I just can't get leads for anything. And we opened it up, and I was like, how many appointments have you run? Like, let's talk about this. Let's. Let's see what you got cooking. His guys were running like, four or five appointments a day. And I'm like, dude, that's. That's a lot. Like, you're currently running more than my guys are running every day. Like, what else is going on? And his average ticket was. Was $150 in his trade, it should be like $800. Like it should be four or five times that of the amount that it was. So again, often I do, I think most people don't actually have a lead problem. Something else is broken out there in the chain. Hey, like if your revenue's not up, it's not leads. It's you're not selling stuff or you're not booking the appointments. Like, we doubled the booking rate from some of the lead aggregators at that company last week just by installing one singular standard operating procedure, which is outbound. The outbound these leads from this lead aggregator and their booking rate on those went from like 15 to 30. A huge win. And all it took was five phone calls a day, which is crazy. But they were convinced they didn't have any leads.

[B]

Absolutely. Definitely see this all the time when you're talking about like, hey, I just need more leads. Like, well, what are you doing with the leads that you have now? Let's make sure that your SDRs are actually calling or actually like receiving and trained on the phone to get that appointment. You mentioned the event that we're having early March, it's called Book Loaded. Well, we, we have marketing. We'll be talking about all the different things, training you on all the different services. But I'm trying to get Jack there to come in and like teach. Like, well, what do you do after the lead happens? Like, how do you. Oh yeah, how do you sell the appointment in a way that it actually helps you close more deals? Yeah, yeah, because it's so important.

[A]

No, yeah, I totally agree. It was really eye opening seeing because they were just so convinced they had a lead problem. And we opened it up and we just showed them. It's like, hey, there's actually 50 leads here that you guys just haven't even contacted yet. Like, you have 50 leads and you're telling me you don't have any leads? Like, I, that's not what's happening. It was, it was crazy. So how much, how much are you imagining or how you're talking to these clients about budget, like what they're doing, these four or five sort of boxes. How much are companies spending? Like, I know how much we spend, but how much, how much is a normal company spending?

[B]

You know, we don't get into your clever math equation of gross profit. We stick with the basics, 10% and that changes depending on the client. But if you are a million dollar client then, or 83amonth, then we want to see that you're spending eight grand a month on your marketing. And as much of that is going into driving leads. And so you just, you scale that up. So if you're a $10 million company, then we want to see that you're, you know, you're spending 80 grand a month, generally speaking. Right. There are reasons why you should spend more, reason why you have to spend less. But it's like, it's just a good like baseline rule. And then you got to figure out from there what's your actual number.

[A]

We have never spent 10 regularly. So we have crossed 10%. It's normally like not on purpose. Maybe it was like a super. And this, this is back to my point of like, it's really hard to budget for because budget can flex. So our leads budget per month is $90,000, which like, really is not that much for like a two to two and a half million dollar month business. Ninety grand's like not crazy. We tend to feel tight the closer it gets to a lot more. And that's where we came up with that. Like, hey, should I really be basing this off gross profit versus revenue? So we're, we're, we're like 49 to 51% gross margin a month. Like, we're a pretty consistent machine. On slow months, we're 48. On good months, we're 52. But like, we're, we're really consistent. And when we start carving out 10% of revenue, that's 20% of our gross profit. That's a lot of money. So it feels pretty tight. As Wilson has grown into a regional powerhouse, I have stopped having the time to be able to babysit our Google business profiles. And that's why we started using Big Reputation. It turns my Google business profile into a dependable lead engine without pulling me back into the weeds. Within the first 30 days of using Big Reputation, call volume from our Google business profiles went up nearly 27%. Jobs booked from Google also went up 20%. Without us spending any more time to manage it. It helps us keep our profile active, manages reviews, responds fast, and shows Google a business that's trusted, alive and worth ranking. You also get real visibility into what is happening. Your review volume, your sentiment trends, which tax locations or teams customers are actually talking about. There's no more guessing. So it's less babysitting, it's more signals to Google, and most importantly, it's more inbound calls. If you want Google working for you without becoming another job, check out BigReputation.

[B]

AI let me ask you this, is this you Know when you talk marketing budget, are you including your marketing manager, your call center team to call past clients, are you counting agency fees? Like what are you counting in that bucket?

[A]

Yeah. And that's a really good distinction. So like how, how do we break it down? So our, our channels that we break down our budget. So we have personnel and personnel is like my director of marketing, we have someone, our social media coordinator, agency fees, direct spend. And direct spend is like lsa, Google lead aggregators modernize, you know that type of thing. Uh, and that's I think that's 90,000amonth is what we expect to spend. Some months we do way better. Some months it's like we spent 60 and it was good or 60 and it was bad. And some months we've spent like 130. So it's definitely like it's a moving target on purpose. But we roughly as we put together an annual budget we're like ah, 90.

[B]

So nine is including all of that.

[A]

No, no, that is lead gen directly there's direct lead.

[B]

God, that makes more sense to me. I would assume if you're the size of company you're at and you're spending 10%, that's including all those other factors.

[A]

Yeah. So we're like seven and a half is typically where we land. But we also have a canvassing team that does events and they do like we just signed a retail partnership. So we're like inside a store helping generate leads, which is awesome. And that's inside marketing budget because that's a direct lead cost. That individual is driving us leads. So and that's I think 35,000amonth. Trying to think what else Software. There's some marketing specific softwares in there that we believe are driven by marketing contractor. Commerce is one of them. Like it sits on the website. Our website costs are in there. Yeah. So yeah. So salaries. Field field marketing salaries. Software is directly gen Branding is its own bucket. So radio, tv. So that's how we break it down on an average month. I think in December we spent.

[B]

I.

[A]

Want to say 140, maybe 150,090 ish of that was direct lead costs.

[B]

I think that makes sense that I, that feels about right when I'm talking to other companies out there about what they're spending. I think that makes. That's right up there.

[A]

Yeah. And I think I, you know, just putting this out for the listener. I would stay tuned because I think Sam and I's next conversation we're going to be talking about when do you hire an internal Marketing manager or coordinator or like, and what does that position look like? So obviously a chunk of my marketing budget is an internal, like my director of marketing and like what's the roles and responsibilities there? My social media coordinator and like, how do we think about that? So stay tuned. Make sure you check out the next one.

[B]

It's gonna be a good one.

[A]

But that's my. Yeah, that's my channel level breakdown. So direct leads, canvassing in person, some branding activities, people, agencies, software. Yeah, that's how we get to 150 grand a month. So much money. Oh my God. I try not to, I try not to think about it as the amount of money that it is, but it's definitely, it's definitely a lot of money.

[B]

There's definitely a disillusionment, if that's even a word. I'm gonna use it though.

[A]

Yeah.

[B]

Between like what you're spending in your business and then like what you spend in your personal life and suddenly you look at that like, you know, thousand dollar item in your personal.

[A]

I had to stop managing our personal budget.

[B]

That's not that much money.

[A]

If you're wondering. If you're wondering. I did because it was, it was very. What's a lot of money? Really changes. Yeah, it's like, ah, that's only $200,000. And versus like no, no, shut up.

[B]

Yeah, I get on my wife's phone to get on Amazon and buy stuff.

[A]

Yeah.

[B]

Because you know, and just. It's healthier. I'm too optimistic. I'm like, yeah, we're all good. We're gonna be fine. She's the weeds detailed person and yeah. Saves me from. That's funny. So.

[A]

Well, let's talk about, you know, that's our channel. Let's talk about budgeting and like testing. How are we, how are we budgeting for testing for growth? Talked a little bit about emergency situations. How are you thinking about. How are you thinking about that?

[B]

Yeah. So discovery budget. Discovery budget is going to be first off. This is if you're a small, it's pretty much your entire budget. Let's, let's see what works. Let's just throw some money out there. Let's try lsa, let's try Google Ads.

[A]

And the answer is like, you don't know if, if you knew what worked, you wouldn't be small. Like in a, in a respectful way because you would have already scaled that channel.

[B]

So if you're smaller, that's, that's everything you're doing, you're trying to find one. You're Trying to scale as much as possible. And then as soon as you can't scale in that single channel anymore, then you're moving some money over to a different budget. For the, I would say like medium size companies, you probably have one or two channels that are working. And so now you're going to go check, try out a third channel or a fourth channel. And so one thing that you want to be careful of, and I try to, you know, warn people off, is don't spread that budget too thin.

[A]

Oh, yeah.

[B]

So if you only have LSA going and you're like, oh, I want to try out Google Ads and SEO and, and Facebook ads, it's like, that's, you know, are you spending enough in each one to actually make a difference? So be careful trying to do too many things because you might like if you go into Facebook ads and you spend a thousand dollars a month, it, you might as well just throw that back into what you're doing in lsa. So find out what you are already spending, try to maximize that channel and then move on to the next one. Is kind of the approach I like to do. And with the caveat of as the more channels you have driving leads, the safer your business is from the algorithm making a switch. Specifically with what we're seeing in the market, SEO is like, we're seeing updates to the algorithm multiple times a year. Now, this used to be once every couple years. We're seeing this happening a lot and every single time it happens, we see.

[A]

A change, a dip. Yep.

[B]

Yeah, well, sometimes it's dip, sometimes an increase.

[A]

Oh, okay.

[B]

Well, it just, things change and somebody was gonna lose number one spot and one of our clients moves into the number one spot and they're like, you did a great job. We were like, yeah, thank you, Google.

[A]

Totally. Yes, we did. You are correct.

[B]

But also sometimes we drop a spot and we're inclined to like, what the heck happens? Like Google. So I mean, as long as you're doing the right things, you should be fine. You can get that place back. But we're making changes all the time, so just be careful with how you're doing that in your budget. Now, the third level, you've got your, your decent size. You have a handful of different channels that are already working. Now you have a discovery budget. And this kind of goes into two different buckets. One is a new channel, which you should always be trying to find a new channel to drive you leads, and the second is discovery budget inside those channels. I just talked about how Google Ads is working for Us right now for a marketing agency, right. We're spending more and we're going to increase that budget. But we also have different campaign ideas that we want to test out for services. So we're going to go after, you know, home service companies that are looking specifically for SEO and we want to see does that campaign work out. And if it doesn't, we're going to kill that one and we're going to try Google Ads and then Facebook. You can do the same thing on yours. So maybe you have a Google Ads campaign that's working really well on installs, and now you just want to try a service campaign to see if you can turn those into an install. And so that's how you would go about trying to use a budget to discover something. You're willing to risk it all. This is one of those. You're like, I don't actually know if this is going to work. We're going to test it out and if it works, phenomenal. You just got yourself another channel where you can drive enough leads to make sure you're hitting your daily lead goal. If it doesn't work, great, we're going to kill that. It's a good thing because we know we can rule that out and we're going to keep trying something else until we find that next channel, because there's always another channel. There's always another way that you can get more leads.

[A]

I'm curious how you guys think about it. So we have a measurement for it works versus it doesn't work. Which this is just how we validate testing because we're constantly testing. So it's really like kill ver scale is. Is the approach. So in the first, and there's a couple different ways to do it. We have an episode with AJ from Premier Home Pros where they say their version and their version is, hey, does this source give me 100 leads? Yes. No. Pretty binary, right? Black or white? Did I get 100 leads from this source? Yes. No. That's step one. Step two is, did I sell a single lead that I got? Again, very binary. Yes. No. I got 100 leads and I sold some amazing third and final step for kill versus scale is, was it a positive ROI? So I spent $10,000 on those hundred leads and I sold a hundred thousand dollars worth of stuff. So I got a 10 times return on my investment. I would scale that If I sold $10,000 and I broke even, I would not scale that. The way we think about ROI is like five times as acceptable, eight times as Great. And like kill anything below five. Basically five, six is like sort of on the bubble. Like we don't love it, but we'll, we'll keep doing it. So that's kill ver scale. So 100 leads. Did we sell a lead? Was the ROI positive? And like step one, two and three and that. And that's a good way to like validate. Yes. This test was successful. This marketing channel is a scalable marketing channel.

[B]

Yeah. No, I actually really like that. I've not heard that before, but that is a solid. Well, I like how binary that is. That's a solid way to figure out like very yes.

[A]

No. Yeah, it's very yes. No. And I think the more there's obviously like a lot of people are way more creative than I am and like just marketing geniuses. Like, I'm not that I want to put in an energy or dollars or something and I want to have a rough idea of the like what I should expect to get out of it. And it's, it's just more of a math equation to me. So that's a part of why I like it. But other people are just way more creative and maybe they're like super better at this than I am. But I like mine pretty clear cut.

[B]

And I think the last thing you mentioned real quick was the emergency budget. This is budget that you will spend but you should plan on not spending kind of thing. You hope.

[A]

I would say emergency budget or steps and we actually had to use one earlier this morning. So I can, I can walk through that. But yeah. What's your thoughts on emergency budget?

[B]

My thoughts on emergency budget is you should have different layers. There are definitely. Excuse me, different levels. So like, hey, we have no leads on the board. Or we have, yes, we have an okay day, but this is kind of a rough day. Or we're like 90 capacity.

[A]

Right.

[B]

Like there's somewhere in between those. And based on the severity of the lead drought that you're in that day.

[A]

Yeah.

[B]

Is how much you should be willing to spend to fill your board.

[A]

Yeah, that totally tracks with me. The way that we laid this out about two years ago was we put this. It's kind of like a matrix together and well, we're members of nexstar and nexstar has a concept called the three day call board, which was really helpful for us. But even before that we had this matrix and this matrix. The way that it works is we, we put all of the ways that we could ever possibly put a call on the board. And I mean all of them. It ended up being like 90 freaking things. Like I can call my mom and ask her if, you know, like our technicians could ask for referrals, we could offer a coupon when they call in so many different ways. And what we then did is we organized them to what could I do today that will make an impact today versus what can I do today that will make an impact next week? And anything in that spectrum. And that is what really drove the behavior here was understanding, hey, I have 90 levers. Yeah. But if my board is. And it's 5 in the morning and I don't have for 8am I don't have 90 levers. Yeah, I probably have three. Yeah. And what are those? Three. Yeah. So just really getting granular on. Here's everything we could possibly do. Here's the time period it takes for that to work. And sometimes there's budget and sometimes there's not. What, what I've tended to find is the shorter the time period, the less budget. Because budget doesn't work. Like if I kick off PPC today, maybe I'll get results today. But it probably take a day or two, right? Like it takes, PPC takes a second. If I pick up the phone and call my customers, I will get a result today. If I have someone go knock doors, I will get a result today. So, so sometimes it's emergency budget, sometimes it's emergency action. So. So we actually had that today. We had a software that was disconnected last night and that software broke a few of our lead channels. It was kind of on purpose. So like we expected it, but we still had to play catch up. So this morning at 6:00am we're hey, the board looks rough. Like one should have caught this yesterday. What the hell to what are we going to do this morning at 7 in the morning to make an impact for 9am? Like yeah, we can, we can mess with budgets, we can try to buy more leads, we can increase emergency budget. We did all those things, but we also went on an aggressive outbounding and SMS campaign and we filled our board by 2pm Are you still missing calls after hours or losing leads while your team sleeps? That's why we work with Avoca, AI owned and operated's exclusive call center partner. They answer 24, 7, sound like a real human and plug straight into your CRM to book jobs, send quotes and even revive old leads. There are plenty of AI call centers out there, but we trust Avoca because we've seen the results firsthand. More booked jobs, less wasted spend and no more Missed revenue. See it in action at the link below. Start winning more jobs today with voca.

[B]

The other things that I can think of that you can do, obviously you can't start a PPC campaign, expect more leads to come in, but you can't increase that budget. And I would do that around 20 to 30%. I probably wouldn't do it anymore because you're not going to get the result of that. You're just going to spend. It'll be wasted.

[A]

We're a big fan of like on off. So like, hey, if we need leads, it's on. If we don't need leads, off with ppc. What do you think about like modulating? So hey, I don't need leads today, but I don't, you know, campaigns take a second to learn. So like learn themselves and like learn behavior. So like what if you reduced budget to like a dollar a day? So that way the campaign was still going, it was still active, all the learning was still there. Like does that actually make sense or am I just being stupid?

[B]

That makes sense. On lsa, not ppc.

[A]

Okay, I was asking specifically about ppc.

[B]

Yeah. So ppc, it doesn't work. I would rather in that situation you just have a better lead source and that's where you should put your money.

[A]

Okay.

[B]

If you have, or if you already have a PPC budget, you're spending five, ten grand a month.

[A]

Yeah.

[B]

And you're like, hey, we need more leads. You can definitely increase that or decrease that, you know, depending on how full your board is by 20 to 25% is what I would do personally. But if you don't already have that going from like a dollar to obviously 20% of a dollar is just not gonna be enough. But a dollar to a thousand, a lot of that's just gonna be wasted spend. And you're in that critical time where you just need leads right now, not wasted spend. So I don't think that's a great idea.

[A]

What's your wrap ups here? What's the big takeaways that the audience should, should walk away with?

[B]

The big takeaway that you should walk away with is have a budget. You know, you, you need to go more like a direction with something, some sort of direction of this is what I want to spend. My personal opinion, it should be based off what's worked for you, where you wasted your money, what opportunities that you want to discover or take risks on, what's going to invest, where you can invest for the future and what you can do in emergency situations that should be the highlight of the budget and then adjust from there, pivot, make changes based on what's working and not working on the market, in the market, in your different channels and you know, do whatever is gonna, whatever it's gonna take to make sure that you can fill your call board and you have enough leads today.

[A]

Yeah, I love it. I think my big two takeaways, and I think you said this too, but how many deal, how many did you need a day? Like, you just actually do need to know that number. And if you don't, it's probably not a marketing problem. You probably have some operational stuff you just have to tighten up like business units on your board or departments or however you're thinking about that. Honestly, feel free to comment below if you feel like you need more help on that. Maybe we can do a video on that. But not knowing your number a day is really, you can't hit a target you don't know. Yeah. And then the second one is budget. Budgets are not one size fit all. I understand the simplification of 10% of revenue. I think that you should be a little thoughtful about your normal gross margin, the type of business that you're in. How old or new is the business before blanket spending? Because you could be underspending, you could be overspending. But it's really my budget at 7% is very different than a company that starts tomorrow that has no customer base. No, you know, they don't have 7,000 Google reviews or whatever the hell we have is just very different. So one, it's not one size fit all. I think, like make some accommodations for where you are in your journey.

[B]

Agreed. And one of the best things that you can do when you have a budget is not manage it yourself. Go hire yourself a marketing manager, which.

[A]

Is what we're going to be talking about next video. Stay tuned, stay tuned.

[B]

We'll tell you how to hire them, what to be looking for, how to manage them, what they should be doing in order to get the most out of your marketing so you can spend that 7% and grow like crazy in 2026.

[A]

Awesome. Thanks everyone for tuning in. Make sure you give us a like a subscribe, drop a comment with any questions and give us a five star wherever it is. You're listening to podcast Peace.

[B]

Peace.