Our remodeling company has been using lead sheets —
simple printed forms on which we record information about
potential clients who call our office — for several years
now. We described the process in a previous Business column
("Save Time With a Lead Sheet," 8/07); here, I'll explain how
we use the data we gather to better focus our sales efforts on
those clients and projects that best suit our company.
At the initial call, we fill in the lead sheet, then store it
in a binder. Once every quarter, I enter the data from the lead
sheets into a spreadsheet that has been set up to produce a
number of graphs. The nice thing about a graph is that you can
look at it and know immediately whether the trend is up, down,
or steady. If we looked only at raw numbers, we might not see
the larger trends.
Coding the Leads
One key piece of information we collect during the initial
phone call is the source of the lead: Who told the potential
customer about our company? Not only do we want to know where
the leads came from for jobs we did get; we also want to track
this data for jobs we didn't get (see table, below).
The author compares past and present projects based on the
source, progress, and ratings of the lead and job. If the lead
becomes a client, the value of the design and construction
contracts is added.
To record the source, we use a two-letter code that starts with
an R (for referral): RF if one of our friends or family members
made the referral, RA if the referrer is an architect, RT for a
trade subcontractor, RC for a current client, RP for a past
client, and RO for any other source. If the potential client is
a repeat client, we use RR.
We also add the name of the person who made the referral; if
it's our friend Joe Patterson, for instance, we code the lead
Although most of our clients are referred to us, we do get
leads from other sources: job-site signs, newsletters,
mailings, our Web site. We have codes for all these things, but
what the numbers tell us is that they are not good sources of
business; they may bring in some leads, but rarely result in
Following the lead. Every project starts out as a
lead, which we indicate with the letter L. But if the lead
develops, we change the code as the job goes through its
phases. If we meet with the potential customer and decide we
want to work with them, we change the letter to a P. When
potential clients sign a contract for us to design the project
and develop specs and an estimate, the letter becomes a D; and
when they sign the construction contract, it becomes a C.
Simple ratings. We rate leads on a scale of 1 to 5. A
lead who seems unlikely to become a client is a 1. A lead who
seems very likely to become a client is a 5. We also grade our
projects after they're done. If the project was neither
profitable nor particularly attractive, it's a 1. If it was
either profitable or nice-looking, we give it a 3. Projects
that are both profitable and good-looking score a 5.
So why do we record all this information? To begin with, it's
not much trouble and it's very useful. Here's one example: Say
we analyze the data and find out that in the last five years
our friend Joe referred 10 different people to us. That's good
to know — maybe we should do something nice for Joe. On
the other hand, what if none of Joe's referrals progressed past
the lead stage, or those that did became problem clients?
That's good to know, too; maybe we should proceed cautiously
with any referrals we get from Joe — or even avoid them
Leads by Year
Now that we have several years of data, there's enough
information to provide meaningful feedback on how our lead
numbers and sources have changed over time. Our "Leads by Year"
graph (below) provides a year-to-year view of how our leads
migrate through the sales process and how many ultimately
convert to job contracts. According to this graph, we sign one
construction contract for every three to four leads. Because
that ratio has held true over time, it puts us in a good
position to know whether we are generating enough leads to
provide our desired volume of work.
This graph shows the yearly number of leads, leads that
became potential clients, potential clients that signed
contracts for design and specification services, and the number
that signed contracts for construction work. Tracking this
information indicates how many leads the company needs to
receive to support a given volume of work.
The graph also shows that we sign about two design contracts
for every construction contract. This helps us forecast the
amount of design work we're likely to do in the coming
Leads by month. Many of our graphs validate trends
that we already suspected, but sometimes they surprise us. Our
"Leads by Month" graph is a good example (below). We expected
to find that January and September were our biggest lead months
— January because homeowners have just finished with the
holidays, and September because the kids have returned to
school. But seven years of lead data suggests that homeowners
take a while to recover from the holidays and summer vacation.
Our peak months are actually March and November — two
months later than we expected.
The flow of leads is a good indicator of the flow of work
to come. If there are fewer leads than normal, the company will
probably land fewer jobs than normal.
To maintain an even flow of work throughout the year, we may
need to increase our efforts to generate leads during certain
months. This graph helps us decide which months to focus
Back to the Source
When it comes to planning a market strategy, our most important
graph is "Leads by Source" (below). It shows us which sources
are responsible for the leads most likely to go to construction
(family and friends), and which ones produce a lot of leads
that don't result in construction contracts
To identify the company's best source of leads, the author
tracks where leads come from and which ones result in paying
This particular graph confirms that we should continue
encouraging referrals from family and friends, and that time
spent following up these leads is well spent. At first glance,
we also may be inclined to concentrate less on architect leads,
since so few go to construction. However, if we look at the
details we see that a high percentage of leads from architects
are classified as potential clients. This means architects are
a good source of leads, and the fact that we're not getting
those jobs indicates there may be a problem with our sales
Worthwhile effort. Once the lead-tracking spreadsheet has been
set up, generating the graphs doesn't take much time. Capture
the right information and you'll be more effective in making
your leads contribute to the success of your business.
Amy Cracco manages the office for Modern
Yankee Builders, a residential remodeling company in