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What & Why: Purchase Conversion Values in Google Ads

In Google Ads, we define purchase conversion values to measure how much profit we expect to earn when someone clicks on our ad and then completes a desired action, like requesting a service. This helps us understand which ads bring in the best customers and how much we can afford to spend on advertising to remain profitable.

New vs. Existing Customer Values

New Customer: For any business, a new customer isn’t just valuable for their first job—it’s about the potential for them to keep coming back. We figure out how much we earn from them on that first job and then add a bit more to account for their future business. In advertising, we’re willing to pay a bit more to attract these new customers because they could become long-term clients.

Existing Customer: These customers have already used our services. We know them, and they trust us. Their value is based just on the profit we make from their current job since they’re already factoring into our future business.

Installing a New HVAC System

Profit from a New Customer: Let’s say we make $2,500 in profit from installing a new system. We add an extra 20% to this when setting our value in Google Ads because they might use us for future repairs or regular maintenance.

Profit from an Existing Customer: For them, we just use the profit of $2,500 because they are already likely to come back to us for more jobs.

Repairing an HVAC System

Profit from a New Customer: If we profit $200 from a repair job, we add 20% in Google Ads thinking they might call us again later on.

Profit from an Existing Customer: We use the profit from the job of $200 because they’re already part of our client base.

How This Helps Business

By setting these values in Google Ads, we can:

Track our Spending: Ensure we don’t spend more on ads than what we would make from the job.
Make Smart Decisions: By knowing which ads bring in the best value, we can focus our budget there.
Grow Profitably: Attract new customers while making sure we’re making a good return on what we spend on ads.
In essence, it’s like telling our Google Ads, “This is how much a new repair or install is worth to us.” We set a higher value for new customers because they could become repeat customers. Analytics then uses this info to report back on how our ads are doing, guiding us to invest wisely in the ads that are truly helping our business grow.