One of the easiest ways to waste money on online marketing is to assume the problem is the marketing.
When sales feel light, you spend a bit more on Google, put more into Meta, buy a few more leads and hope the numbers pick up.
But if the leads are already coming in, you’re paying for more enquiries while losing money somewhere between the enquiry and the bank account.
After 30 years in finance, including leadership roles at multibillion-dollar companies, Michael Reaves took that way of looking at the numbers into Kestrel Metrics, where he works with home-service businesses.
In this guest post, he uses real cases to show how money goes missing after the marketing has done its job, from quotes that aren’t followed up to work that never gets invoiced. 👇🏻
Revenue is hiding where you're not looking
A business owner told me last year he was spending about $8,000 a month on leads and wanted to know how to get more of them. Before spending more money, he needed to know what happened to the quotes he'd already sent.
The marketing was working and the bank balance at the end of the month still felt light. Nobody could say exactly why. When part of your lead spend leaks out through broken processes, buying more leads is the most expensive way to grow.
Before spending on another lead, look one level down. ⬇️
Every department is its own business
Here's the story that taught me. One food service department looked strong on paper, and its waste numbers looked amazing. Almost nothing was thrown away, and management was proud of it.
After the process changed, revenue increased by an average of about $1,200 a week. Annualised, that's roughly $62,000.
The production schedule didn't match item sales, so the best sellers ran out every day. Customers walked in, saw empty shelves where the popular items should have been, and walked out. The waste numbers looked great because there was nothing left to waste. We were celebrating efficiency while the top sellers sat at zero.
That one taught me something I've never forgotten: a small amount of waste is a good sign. It means you found the top of your sales on each item. In that department, zero waste on a hot seller exposed the problem: we never had enough to sell.
Small businesses work the same way. Your company has departments too, even if you don't call them that: sales, jobs and bookkeeping, for example. Give each one its own number and the leaks show up one level down.
Hiding place 1: Sales follow-up
The number: quotes sent compared with quotes closed.
A drywall repair owner I worked with was closing about 10% of the quotes he sent, or one in ten. He interpreted a homeowner's silence as a "no" when the customer had simply got busy.
Once he started watching the gap, he put in an automatic quote follow-up sequence, nothing fancy, just a system that refused to let a quote die in silence.
Here's what "watching the gap" means in practice. Keep a simple log of every quote: the date, the amount and the status. Then age them like receivables. Anything open past seven days gets a touch. Anything past fourteen gets a call. You'll be stunned how many "lost" jobs were never lost at all. They were just waiting for someone to ask again.
His revenue went up almost 16% over the following year after the automatic quote follow-up sequence went in, using the same leads and crews. He stopped letting quoted work evaporate.
By then, you've already paid for the lead and spent the time on the estimate. The money is sitting in your sent folder, waiting for a second touch.
Hiding place 2: Job process
The number: parts bought compared with parts billed.
At a small plumbing company, the owner bid the jobs and a seasoned lead technician picked up the parts. The tech built from experience, not from the parts list in the bid. The bid's parts list never reached the supplier, so the extra parts the tech grabbed on the way never made it onto the customer's invoice.
Across the jobs we studied, the average retail value of unbilled parts was about $120. Scaled to 150 jobs a year, that put the annual gap at about $18,000.
Nobody stole anything. The tech was doing good work and grabbing what he believed the job required, while the owner was bidding honestly. The billed parts were within the authorised scope. What was missing was a reconciliation between the quote, what the supplier sold and the final invoice, so legitimate costs never became billed revenue.
The fix is as unglamorous as the leak. The parts list from the bid goes to the supplier with every job, and before the invoice goes out the office reconciles it with what was actually purchased for the authorised work. The tech keeps using his judgment on site, and that judgment now has a record for the office to bill against. One level down: parts bought against parts billed. That's the whole investigation.
Hiding place 3: Bookkeeping
The number: work completed compared with invoices sent and collected.
This is the department nobody wants to audit because it feels like accusing your own office of something. The point is arithmetic. Jobs get finished on Friday and invoiced "next week," and next week has a way of becoming never. Deposits and final balances drift apart. Approved change orders never reach the person raising the invoice. The customer has the finished work while the money sits in a spreadsheet nobody reconciled.
Run the comparison: every completed job for the last 90 days, matched against an invoice sent and paid. Split the gaps into three piles: never invoiced, invoiced but never followed up, and invoiced with the deposit collected but the final balance still open. Each pile is a different fix, and all three are yours to collect.
Run the three comparisons this week
1️⃣ Sales: quotes sent compared with quotes closed, and how many of the open ones got a follow-up.
2️⃣ Jobs: parts bought compared with parts billed.
3️⃣ Bookkeeping: work completed compared with invoices sent and collected.
If you're buying leads, these leaks make each one worth less. You paid to create the opportunity, then the process failed to capture all of it. Fix the handoff and more of the demand you already paid for reaches the bank account.
The revenue was never invisible. Nobody was counting it.
👤 Michael Reaves is the founder of Kestrel Metrics, where he helps service businesses find revenue lost between leads, jobs and invoices. He spent 30 years in finance, including leadership roles at multibillion-dollar companies. Connect with Michael on LinkedIn.
