CAPSTONE MARKETING — FIELD REPORT NO. 02

Prepared for operators of $2–10M home service companies
Rev. 2026.06 · The Capstone operating framework

One ratio governs
the budget.

Cost of marketing as a percentage of revenue. One number that replaces gut feel, ends vendor theater, and settles every argument about whether a channel stays or dies. This report is the full framework — the definition, the bands, the math at three revenue sizes, and a real ledger from our own books.

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A

Exhibit A — The definition

Count everything. Divide. Face it.

COM% = total marketing cost ÷ revenue produced

Run it two ways: company-wide (everything you spend on marketing ÷ total revenue) and per channel (what a channel costs ÷ the revenue attributed to it). The company-wide number tells you whether marketing is sized right. The per-channel number tells you where the money is working and where it’s burning.

Count everything. Ad spend, agency retainers, lead fees, sponsorships, software, print, wrap jobs — and the payroll of people whose job is marketing. Contractors who only count ad spend run a flattering number and make decisions off fiction. The honest version stings once and then governs well.

B

Exhibit B — The bands

Target. Flag. Kill.

Target band10–15%
Flag — investigated this month25%
Kill line — no channel survives it50%
10–15% — the target band. Where a growth-mode home services company should live. Below 10% usually means underinvestment — you’re coasting on word of mouth and calling it efficiency. Inside the band, marketing is a working asset: meaningful spend, held accountable.
25% — the flag. Any channel crossing 25% gets investigated this month, not this quarter. Sometimes it’s a launch ramp or attribution lag and the number earns a stay. Sometimes it’s a leak — bad targeting, missed calls eating paid leads, a vendor coasting. The flag forces the question while it’s still cheap to answer.
50% — the kill line. No channel survives it. At 50%, half of every dollar the channel produces goes right back into producing it — before labor, materials, and overhead touch the rest. Busy phones make this line hard to enforce; that’s exactly why it has to be a standing rule instead of a judgment call. We enforced it on a $20K/month broadcast TV test in a new market. That market produced about $2M that year — but across every channel, not the television. Attributed honestly by source, the TV test drove only about $100K against six months of spend, and its COM% ran past 100%. So we killed it at six months instead of eighteen. The lesson wasn’t that TV can’t work — a multi-year broadcast presence in our home market earned its budget for years. It was that a channel has to be judged on the revenue it actually produces, not the revenue that happens around it.

A channel that needs the whole market’s revenue to look good isn’t working. It’s hiding.

The asymmetry the bands exist to manage. Paid channels hold a roughly flat COM% forever — every lead is re-bought at market price. Owned channels (reviews, search visibility, local pages) cost the same whether they produce ten calls or a hundred, so their COM% falls every month they compound. The bands aren’t just a leash on spend. They’re a map for migrating budget from rented attention to owned.
C

Exhibit C — The asymmetry, drawn

Same dollar, two destinies

Paid re-buys every lead at market price; owned infrastructure costs the same while its output compounds:

COM% BY CHANNEL MONTHS → High Low PAID — every lead re-bought OWNED — same cost, compounding output Illustrative — the shape of the math, not a specific dataset.
D

Exhibit D — Receipts

The framework on a real ledger

What a channel living inside the target band actually looks like — the 2021 ledger of a door-to-door canvassing program we built and ran, every dollar of payroll, management, and materials counted:

Payroll included. The flattering version of this number excludes it. We don’t run the flattering version.

Net revenue produced$1,991,130
Fully loaded channel cost($308,543)
Leads generated at the doors5,108
Demos set794
Cost per demo — the steering wheel$389
Cost of marketing15.5%

Same company, same years, same operator: the TV test in Exhibit B failed the framework and died; this program passed it and got fed. That’s the entire point — COM% doesn’t care which channel you’re emotionally attached to. Full story: The Best Channel I Ever Ran Had No Dashboard.

A measurement system you only apply to your failures is a confession booth. Applied to everything, it’s a budget.

E

Exhibit E — The math at three sizes

The bands in dollars per year

$2M contractor → $200K–$300K target

A single channel producing $200K in attributed revenue gets flagged at $50K of cost and killed at $100K. At this size, one bad vendor relationship can be the difference between a profitable year and a flat one — which is why the per-channel number matters more than the company-wide one.

$5M contractor → $500K–$750K target

This is the size where marketing stops being a line item and becomes a department — and where COM% discipline matters most, because there’s finally enough budget to waste invisibly. Channel-level tracking is non-negotiable here: a company-wide 13% can hide one channel at 8% and another at 40%.

$10M contractor → $1M–$1.5M target

At this scale the question shifts from “can we afford marketing” to “what is each dollar’s job” — which channels are acquisition, which are brand infrastructure, and what blended COM% the mix should produce. The bands still hold; the portfolio thinking sits on top of them.

One honest caveat: the bands are operating targets for established home services companies, drawn from running budgets at this scale — not a law of nature. A startup buying its first customers or a company entering a new market will run hot on purpose. The framework’s job isn’t to forbid that; it’s to make sure you’re running hot on purpose, with a date attached, instead of by drift.

Field notes — what inflates a COM% when we actually calculate one

Branded search wearing a paid-channel costume. “Google Ads drives 60% of our leads” — except a large share are people searching your company name, who already knew you. Strip those out and the channel’s true acquisition cost often runs about double what the owner believed.
Intake eating the spend. Roughly a third of leads never get a callback; web leads sit for four-plus hours. Every one of those was paid for. The channel’s COM% looks bloated when the channel is fine — the leak is between the ring and the booked job.
Three vendors billing for the same work. An SEO agency, a content shop, and a web developer all “doing SEO” — overlapping invoices, blog posts aimed at the wrong keywords, technical problems nobody owns. The COM% counts all three; the revenue only counts once.
No tracking at all. “Marketing’s working — we’re busy.” Busy isn’t a number. Without channel attribution, some channels are quietly crushing it and others are quietly burning cash, and the budget can’t tell them apart — so it feeds both.

Procedure — how to run it this week

Pull twelve months of marketing cost — all of it. Ad accounts, retainers, lead fees, software, sponsorships, marketing payroll. If you’re debating whether something counts, it counts.
Divide by revenue. Face the number. Most contractors land somewhere surprising — under 8% and coasting, or over 20% with no idea which channel did it.
Split it by channel, even roughly. Perfect attribution doesn’t exist in the trades; honest approximation beats none. Ask every customer how they found you and write it down — that alone gets you 80% of the way.
Apply the bands. Schedule the conversations. Anything over 25% gets a meeting this month. Anything over 50% gets a termination date. Anything under 10% company-wide gets a growth conversation — that’s headroom, not virtue.

Inquiries — COM% questions

Why revenue percentage instead of a fixed budget?+

Because a fixed budget goes stale the moment revenue moves. A percentage scales with the business automatically, makes channels comparable to each other, and makes this year comparable to last year. Budgets get defended; ratios get answered.

Does marketing payroll really belong in the number?+

Yes. A $70K in-house marketer is a marketing cost exactly the way a $70K retainer is. Excluding payroll makes in-house look artificially cheap and agencies look artificially expensive — and the framework exists to kill exactly that kind of distortion. The 15.5% ledger above counts the program’s payroll; that’s why it’s worth publishing.

What about channels you can’t attribute, like branding or TV?+

Hold them to the company-wide number and to directional evidence: branded search volume, direct traffic, “saw you around” mentions on intake. Unattributable isn’t unaccountable. And when a channel’s cost runs past the revenue it can honestly claim — not the revenue that merely happened around it — that’s what the kill line caught in our TV test.

Is a lower COM% always better?+

No. Under 10% usually means the company is harvesting reputation instead of building pipeline — fine until the referral well runs dry, which it does quietly. The target is a band, not a floor to race toward.

Where do this report’s thresholds come from?+

From operating marketing budgets inside an eight-figure home services company — the 15.5% canvassing ledger and the killed TV test published above are both ours. They’re Capstone’s operating framework, not an industry survey.

Compiled by

Austin Rohleder

Founder, Capstone Marketing Group · Wauseon, Ohio

Every figure in this report traces to a cited source or to our own operating records. If you find an error, flag it — corrections are made and logged in the revision line above. This page is built to be printed.

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