How to Decrease Customer Acquisition Cost as a Local HVAC Company

The average local HVAC company spends anywhere from $250 to $350 to acquire a single customer. Customer acquisition involves more than just ad spend, but that's what we'll focus on in this post — Google ads specifically.

Some of our own HVAC clients spend as much as $80,000 per month on Google Ads. Granted, the return on that investment is significant. An A/C install, for instance, costs anywhere from $5,000 to $6,000.

Spending $300 to acquire a customer is nothing if that customer books a $6,000 job. Right?

The competition is fierce

You're already painfully aware that you're not the only local HVAC company in town. You're competing with dozens of other businesses for the coveted top spot on Local Service Ads pages.

To illustrate, we've pulled industry keywords from a targeted location of Phoenix, AZ, where our company is based. The high end of the bid range for keywords like “HVAC company Phoenix” is around $50. Of course, you're targeting multiple keywords. Consider these keywords and their high-end bids:

• “ac repair Phoenix”: $75
• “HVAC repair Phoenix”: $75
• “heating and cooling Phoenix”: $65

Looking at these numbers, you might assume the prize goes to the highest bidder. But it doesn't always work that way, which is good news for small HVAC companies with limited marketing budgets.

Google's Quality Score is key for determining which ad gets the top spot. Pay special attention to what Google calls “The Big 3”: ad relevance, expected click-through rate, and landing page experience. If you're working with a limited budget, do everything you can to increase your Quality Score.

But you can bet your competitors are working hard to improve their Quality Scores too. So how do you stand out? Simple: don't put all your eggs in the Google Ads basket.

Customer retention > customer acquisition

Here's the problem: local HVAC companies are spending hundreds of dollars to attract a single lead who's likely never even heard of them.

Yes, brand visibility is important. But what are the chances that lead will convert into a customer?

Approximately 3%.

Once you've landed that customer, you'll want to hold on to them. Repeat business is vital for local HVAC companies.

Of course, increasing the number of customers you serve is the goal — to an extent. But there's an easier way to attract new customers: leverage your existing ones.

Keep those customers happy, and they'll return the favor by recommending you to their friends and family. Which generates new customers. Those customers already trust you to get the job done, because they trust their friend or family member's judgment.

Sound familiar? Just 10 years ago, word-of-mouth reigned supreme in home service marketing. Local service companies relied on word-of-mouth to survive.

Now, home service companies have tons of shiny marketing tools at their disposal. SEO, SMS, email, content marketing, local services ads. (To name just a few.)

But word-of-mouth is still just as important today as it was back then. Remember that client we mentioned that spends $80k on Google Ads? They also generate 70% of their revenue from returning customers!

As the old saying goes, if it ain't broke, don't fix it.

Clever ways to decrease customer acquisition costs and keep current customers happy

Staying top-of-mind is one of the best ways to retain current customers and gain new ones. Here are a few clever ways you can do both.

Text your customers. 

We're big believers in SMS marketing because it works. Text messages have higher open rates than emails. Your customers will appreciate text notifications on discounts, promotions, and reminders to schedule their annual service appointment.

Bucket your customers to create effective SMS campaigns. You might group customers by how much they spend ($200, $500, $1,000, etc.). Another option is to create a list of customers serviced within the past 2 years. Then, craft relevant, personalized messaging for each list.

Offer an incentive for referrals. 

Everyone loves a good discount. Consider offering your customers a credit toward their next service when their referral books a job with you.

A $100 credit sounds more enticing than a 20% discount. Why? Because it feels more like they've received $100 instead of saving $100. Plus, it saves your customers from having to do mental math.

A/B test everything. 

Landing page experience is a key factor in determining your Google Quality Score. If your ads or landing pages aren't converting as well as you'd like, experiment and test. Sometimes, increasing conversion is as simple as changing a word or two in your CTA.

Ask your customers for feedback. 

The easiest way to find out why customers choose you over your competitors is to ask them. Create a quick survey asking customers to suggest improvements and describe your strengths and weaknesses. Then apply those suggestions to your business. Don't forget to add an incentive to encourage responses!

Are Google Ads still a good way to market my local HVAC business?

There's a reason why local HVAC companies spend so much on Google Ads. HVAC enjoys one of the best Google Ads conversion rates (3.3% on average) of all industries within home services.

So yes, you should advertise on Google. It's a smart way to boost brand visibility, especially if you're new to SEO.

Just like every other marketing strategy, advertising on Google is only one way to get new customers and maximize brand visibility. Although it's a worthwhile investment, it's a costly one. Especially when the competition is already stiff.

Focus on generating repeat business and the rest will fall into place.

Need to get those trucks moving and those phones ringing? Check out our guide on generating leads for local HVAC companies.