So, how much should a home care agency spend on marketing?
My name is Frank, I’m the founder of Sagapixel. We are a home care marketing agency and that makes us pretty well positioned to talk about what we typically see as far as expenditure on marketing and what some of the surveys that we’ve seen basically say about what your competitors are spending.
The Most Common Monthly Advertising Budget We See is $500/mo-$1500/mo
As far as just a bottom line number on how much home care agencies typically spend on advertising, we pretty regularly see numbers in the $500 to $1,500 range monthly, but there are operators out there spending upwards of $50k to $100k a month.
Home Care Agencies Tend to Underspend on Marketing & Lead Generation
This is not typically how you talk about marketing budgets for any business, however. Usually marketing budgets are discussed as a percentage of revenue, and this is where things get interesting.
The last study that I was able to find from Home Care Pulse found that the average home care agency was spending 1.1% of its revenue on advertising. So let’s say for argument’s sake, if you’re bringing in $100,000 a month in revenue, you’re spending $1,100 on advertising.
That is a very low number.
I know there are several large franchises out there that require all of its owners to spend a minimum of 2% of revenue on advertising each month, but even that’s kind of low.
The Small Business Administration has a widely known number that a small business in particular one that’s just starting off should be spending anywhere from five to 10% of revenue on advertising and marketing, depending obviously on how aggressively they want to grow. And the Home Care Agency as a whole is really lagging behind. That is an opportunity for you. Industries that spend so conservatively on marketing and advertising are usually industries where it is really easy for someone that’s more aggressive to gain market share.
Unless you are operating in a market with multiple large players that are spending tens or hundreds of thousands of dollars a month on lead generation, you should be able to get pretty far with a Google ad spend, let’s say, of $5,000 a month, assuming, for example, that you have $100,000 of revenue monthly.
What Is a Typical Cost-Per-Lead with Google Ads?
So what can you expect from such an ad spend? Let’s talk about Google Ads first. We typically see a cost per lead of anywhere from let’s say, $80 to $150 for home care agencies doing Google Ads, so do the math.
Assuming you’re spending $1,500 a month, you can probably expect in the ballpark of around 10 leads. Then it’s a matter of what percentage of your leads can your sales team close, and then what is the average customer lifetime value when you bring on a new client? Ultimately, if you’re getting leads at 80 to $150 each, and you’re not turning that into a massive ROI, there’s just something that’s broken here. Maybe your customer lifetime value is low for your industry. Maybe there’s some sort of retention issue that you have.
But regardless of what the cause is, there is a solution and there is a path to getting something like Google Ads working for your home care agency.
If you’d like to sit down with me or someone from my team to see what would make sense for your home care agency in your market, given your budget. If you’re on YouTube, there will be a link to schedule a time with us. And if you’re on our website, just click on the contact button in the navigation and I’d be happy to sit down with you.