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Determining the Lifetime Value of a Lawn Care Customer

Understanding how much a lawn care customer is worth over the lifetime of your relationship is a crucial part of determining an appropriate budget to acquire them.

Jonathan from Lawn Care Millionaire & Service Autopilot (Lawn Care Software) join me on this lawn care marketing chat.

Andrew: Hey Jonathan How’s it going?

 

Jonathan: Good.

 

Andrew: It’s Andrew here in Miami.

 

Jonathan: Good. How’s it going? I’m good.

 

Andrew: Very good. Keeping busy down here. So, we decided to do, sort of, a joint call this month for your Lawn Care Millionaire members and from my Lawn Care Marketing Expert Millionaires. And where going to kind of combine some of the questions that we’ve gotten. Occasionally, we do get some of the same questions and there’s obviously – there’s a lot of information that both of our members want to know about. So, as if you want – I guess if you want to go ahead, introduce yourself for the members of my site, who might not know who you are. If you will tell them a little bit about yourself and then I’ll do the same.

 

Jonathan: Alright. Well, several things, I do a bunch of different things. These days I’m most focused on 2 things. One, I have a Lawn Care Company in Texas that takes care of thousands of weekly full maintenance clients. And then, I also have a company by the name of Service Autopilot where we basically have created the software that runs Lawn Care Companies. Everything from scheduling and marketing to managing their to-do’s and calls and billing and invoicing and all interfaces back in the quick book. So, it’s pretty sophisticated system concept is its one system that runs your entire company from any device from anywhere. And, along with that, I have a site called Lawn Care Millionaire where I just answer questions and give away a lot of free information and we, you know. So, that’s kind of what brought us here to talk about this. And so today, we were going to talk about several of those questions that came in and some that you’ve received as well through Lawn Care Marketing expert.

 

Andrew: Very good. And, I’m Andrew Pototschnik – obviously, it’s just a coincidence that we have a similar very strange last name. We’re not related at all. But, yes. So, I run a site called Lawn Care Marketing Expert, some of you might have come across it. If you’re a Lawn Care Millionaire member there’s a book that Jonathan and I developed that was about reviews and testimonials, I wrote a major portion of that. And, so what I do on my site is I help Lawn Care companies and landscaping companies market their businesses. So, really for me, the Lawn Care Marketing Expert site is all about teaching Lawn Care companies who during, aren’t necessarily incredibly technical, some of the really important things that they need to do to really have a successful Lawn Care business and get the majority of their Lawn Care customers online and I think that’s an important point. In today’s age, I know this is true for your [company signature advertisement], you get the majority of your customers online and a lot of the people who come to our site aren’t. They’re really struggling to kind of get new clients. And, so we show them how to get the majority of their clients online. So, Lawn Care Marketing Expert is essentially my blog. It’s my doorway to those customers. And then I also have a marketing agency which focuses specifically on this Lawn Care customers and we do all types of online marketing from PVC to SEO to everything in between. And, but one of the things that kind of keep, makes us different and that we do that a lot of other “sort of” SEO companies don’t do is we also trying to help them with some of the strategy stuff as well and that’s really a big part of why I do the Lawn Care Marketing Expert blog and that’s why you do Lawn Care Millionaire because there’s a lot of set that happens behind the scenes that’s not just about optimizing your website. It’s not just about paying for ads to appear on Google. And so, that’s all we do. So…

 

Jonathan: Hey, I’d like to interject the point there along the lines of what you’re talking about which I think makes for just a really good valuable lesson. So, with Service Autopilot, we work with literally now, hundreds and hundreds and hundreds of companies that use Service Autopilot to run their company. And so, I’ve probably in the last couple of years, talked to at least a thousand different Lawn Care customers, clients or potential clients. So, I have a really good feeling between the US and Canada of what’s going on in the industry. And, one of the things I’ve noticed that’s unique about My Lawn Care Company compared to most Lawn Care companies and I think this is a really valuable point. So, you’re very strong at marketing, you’re very, very strong at online marketing and we’ve used online marketing heavily for years and years. We used to do it all ourselves and of course now, Andrew manages all of our online marketing for us, he took it all over but we used to do it ourselves. And, it’s just so complicated and moving so fast that Andrew took it over but the point I want to make which I think is a really good valuable point is I made the point of the fact that I talk to so many companies and so many companies are not very strong at online marketing. They don’t invest the money in it. They ignore it. They think they should do it but it is complicated. It is confusing and they’re not sure how to do it. And so, I believe the strategy around online marketing is that you use online marketing once you build it up and it takes a while to drive where you’re going, it drives to you the clients that you’re going to serve. So, I’ll give you an example. In online marketing, you can’t control where you’re going to get your clients from because they’re going to find you on the web. You can control if you accept the work or not but they can come from any part of a city, any number of cities. And so, I believe the big behind the scene strategy on online marketing is because I don’t only believe in online marketing. You use online marketing to drive your new clients. So, you’re going to randomly get clients on this street in one city on a different street on another city. You didn’t pick them there. They came to you. And then, that’s when you do the offline marketing, the print marketing, the door hangers, the flyers, the postcards, the letter mailers, the temple cards, whatever it is you do, that’s when you use that to go back in laser focused target, the streets that you’ve sold clients through online marketing to build *6:11* yeah, make them really dense and try to own those areas. So, it’s a combined strategy that I believe in and Andrew believes in as well but he said that I predominantly use online marketing and that’s true. In the beginning it was predominantly, print then as we built up our online marketing strategy, it became so successful that, that became the primary way we drive new clients. But then we build real profits in the company through actual direct mail, through offline marketing techniques. So, I want to, yeah.

 

Andrew: It’s always best to have a very diverse approach. And that’s what we say in all of our videos, I mean, you want to have multiple pipelines. You don’t want to – you do not want to rely on just one thing. You know, I may give you an example. Google is changing its algorithms very frequently through the year. Probably, four major updates a year and your ranking can vary, up and down, you can be on the first page this month and you can be gone for 3 months. And, there’s often, times that you might be waiting for Google to put you back up. So, you don’t want to just have only an online marketing campaign because if you’re relying just only on online marketing and Google makes an algorithm change or for whatever reason your ranking should drop you’re, where are you going to get your customers, if you’re not showing up and you’re not visible to them online. Well, you need to be doing all the offline stuff. You need to be doing the door hangers. You need to be doing everything else that we talked about as well. So yeah, diverse approach isn’t always the best but just track the returns. So I think, one of the main topics I think we wanted to talk about today was, and this is something that I explain to a lot of my customers or a lot of people call us, asking us to do their marketing, which is what we do, handle their online marketing for them. But they don’t necessarily have any idea of what it would cost them a month to have an online marketing plan through us. We’re not the cheapest agency around certainly but there is an investment involved in us handling your online marketing. And, something that I realize that the majority of the people that I talk to in the phone, and I talk to a lot of people in the phone as well, is that they don’t really, necessarily understand what they need to be spending in order to acquire a new customer, whether it’s online or offline. And, so they need to really determine how much a customer’s worth in order to justify how much you’re spending to acquire them. And so, something I want to talk about today was in customer life value of a client. And let me show you this. This right here, if you can see my screen, you can see that Jonathan?

 

Jonathan: Yes.

 

Andrew: This right here, this is essentially what we are talking about right here but we’re not going to go crazy with the calculus. This basically, this mathematical formula here, this basically tells you how you determine how much a customer’s worth. And something that we’ll show you here in a little bit is we create a little utility, a little calculator that lets you determine this number a little bit better. But the point here is we determine your online marketing budget, you really need to know this number, you really need to know how much a customer’s worth and how much it’s going to cost for them to become a customer of you. When a lot of this, this is a look at a customer I think what they tend to do is kind of just look at the first sale like, “Okay, so I got a customer this month, it’s a $35 lawn treatment.” And that’s it. They look at it from one sale perspective. But generally, what I see, talking into my clients and this is true for your company as well. Generally, a Lawn Care Company is generally going to have a client for probably about 3 years, 3, 4 years I’d say. That’d be the general length of relationship until they move or for whatever other reason they don’t [honour] a client anymore.

 

Jonathan: It’s completely dependent on a lot of market force to sell. In my market for example, on the residential side of the market place, where we happen to be, it’s a very transient area, meaning that there’s a lot of corporations here that are moving executives in and out or employees in and out. And so, just one of the quickest ways you can figure out from a residential side of the business, what you can just count on even if you’re a perfect service provider from an attrition rate is how fast did the homeowners moved out of the homes in the market. So, in my market, the homes turn, 20% of the homes turn every year. Now that statistic could have dropped a bit here because of the down turn in the economy and such. But historically it’s always been a 20% turn. So, even if I never lose a single client because our service is impeccable, just on average we’re going to lose 20% of our clients every single year because that’s how the market turns. So then you say, you’re fighting that and then you’re also fighting, obviously, some clients come and go, some people have economic issues and they cut back service. So, there’s some average you’ll find within your business that creates what we would call lifetime value and the only way you can create, figure out as you’re saying lifetime value is to first understand on average how long does a typical client stay with you. When you’re a young new business, you can guess at it but that’s about as good as you can do and it’s worth guessing at it. But you start from figuring out the turnover in your market and work back. If that, does that make sense?

 

Andrew: It makes sense.

 

Jonathan: Unrealistic to say that you’re going to keep your clients on average 8 years when the entire market turns 20% every year.

 

Andrew: Makes sense. And, again, this is assuming that you are providing quality service.

 

Jonathan: Right. That’s why I said the best case scenario.

 

Andrew: If your service is crap and you – they’re going to stay with you a lot. So obviously, we’re assuming that you’re doing good work.

 

Jonathan: And we’d add to that too. In commercial, the larger the commercial, the more it’s rebid – more frequently it’s rebid, contracts vary from 1 year to 3 years, a lot of those contracts go back out to bid, so commercial’s even more susceptible in some cases to a frequent turn than is residential.

 

Andrew: Okay. So, why don’t I just kind of just give an overview of what this formula kind of means and then we create a little, we basically create a little calculator that we use to sort of determine how much a customer’s worth. So, if you look at the screen here, I mean, to say it in Layman’s terms, what this all means is an experienced business owner should know that the true value of a customer is not just their first purchase, it’s not just that first lawn treatment, it’s not just that first purchase, it’s every purchase that they’re going to make for the entire length of the time that they’re a customer with you. It could be 2 years, could 3 years, could be 4 years, it’s going to depend again, you need to determine, first of all, how long the average time is if somebody stays with you. And it also includes the 1-up services, the *13:25* services, the flats of colour that you put in if you’re weeding their lawn beds. All that stuff it includes that all the items that you’re up selling them to, which is where you can make a big chunk of your profit. That’s how you make a lot of money. And also, you need to factor in the average number of referrals that these customers are bringing to you, something that we’re really big on is putting in place a strong referral strategy where you’re actually going out and collecting referrals because as many of you know referrals are probably one of the best ways you can get clients and that’s how probably a lot of our clients that haven’t started online marketing, they’re depending on referrals. So, they’re very powerful but it’s something that you should be asking for, it’s something that we’ll go in to depth on another video but customer lifetime value, factors in all of these different things are your up sales, frequency of a service and it comes, gives you back in number and that’s the lifetime value of a customer. And, I think that’s really important that’s something, business owners need to understand and once you understand the lifetime value of a customer you can determine well, if I’m spending 50 bucks, if I’m spending 100 bucks to capture this customer, is it worth it? Well, if you factor that in to how much they’re worth over the long-term, which you should be looking out over the long-term. Yes, it might be worth it. So, Jonathan, we created a little calculator. Do you want to give a demo of that maybe?

 

Jonathan: Sure I will. So, and I think, just to elaborate a bit further on what you’re saying, I think, so, much, we’ll have more calculators here in the future, I’ve got several that I’m working on now but the over-arching theme in all of this is that, in a lot of ways, running a business is about understanding the math of your business. It’s all about math. It’s return on investment. It’s how much can I spend to get a new client. How much will that yield. And so, one of the core elements of understanding the numbers of your business and what you’re able to do and this is more than just investing in marketing. It’s how much can we afford to spend on hiring new people. How much can we afford to spend to go up sell our clients in the new work? All these different factors in your business, at the end of the day you can only make those decisions if you understand what a client’s worth to you. How much you can spend because there’s a, the guys that dominate and not just talking about lawn care but the guys that really dominate in any market, they truly understand what they can spend to get a customer and they can outspend their clients. That’s the key, you’ve got to be able to outspend your clients or I’m sorry, you got to be able to outspend your competitors not your clients. So, if you can’t outspend your competitors then they’re going to win at the marketing game. You have to understand the math to your business to know what you can spend and know when a market gets crazy when to stop spending. So, this is the core of so many decisions that will be made in growing a company. And, I’ve got another calculator coming that’s going to actually demonstrate what it cost to grow a company. So, but let’s take a look at this because this is a big deal. So, this calculator here runs through a number of common services in the business. And, just as Andrew said, what we want to look at here is we want to take into account several factors. One, what on average, do we sell a client per year. So, how much revenue will they bring in to the business per year? And then for that same client, on average, how long will that client stay with us? Is it 2 years? 3 years? 5 years? What’s the number? The math behind, basically multiplying the number of years that they’re with you times the amount of revenue you’ll generate off that client for each year. That’s lifetime value for that one specific client. Now, something Andrew eluded to was referrals. So, we actually, really believe that if you look at your business and you analyze every individual client. You might use an example I’ll use a maintenance example for residential accounts. So, you might look at 2 properties and one will have a weekly client that pays you to mow the lawn and trim the bushes and fertilization, we control all these other services and then you might compare that very same client to a bi-weekly client who you really don’t want because all they do is generate some bi-weekly revenue for you. It’s a relatively small contribution to your overall profit, they just don’t generate a lot of gross revenue or profit and you might, on the outside think, “You know, if this isn’t really a good client to have.” However, when you take it a step deeper and you look at, who they refer, it could be a completely different scenario than you’ve envisioned. And what I mean by that is you might find that that person that’s a bi-weekly client, though they hardly contribute profit, they might refer 4 clients a year to you that contribute significant profit, whereas the example I gave earlier of the fellow or the residential homeowner that is maybe a full service weekly client but doesn’t refer, they’re worth far less actually than the bi-weekly client. So on the surface you think the bi-weekly client isn’t the good one. Well, keeping that client’s concept in mind, the real value of a client is more than just the money they directly contribute to your business. It’s the referrals they bring in that contribute money to your business. So, for simplicity, what we’ve done here with the calculator is we have the value of a customer, that’s the lifetime value of the customer, once again is all the revenues they’ll generate for a year times the number of years they’ll still stay with you. Then the total lifetime value, what this is, is this is taking to account how many referrals that person makes each year. Now, there’s actually a flaw in our calculator here. But it’s a flaw that only makes the calculations better and the flaw is that we only go one level deep with your referrals. So meaning, for example, if your client refers one person, we demonstrate the value of it in this calculator. But we don’t demonstrate, if your client refers one person and then that one person refers another person and then that other person refers another, we don’t take that into account here in this total lifetime value that’s a pretty complex calculation, we kept it simple. So, the numbers demonstrated here are only better if in reality. So, this is, would you agree Andrew?

 

Andrew: Yeah, definitely. We kind of debated whether or not to go, how deep to go, how many sort of generations to go but figured this is sort of a good base.

 

Jonathan: Only getting better from here is the point. So, this is like your worst case scenario. So, let’s, so hopefully, did I explain that clearly? Does that makes sense Andrew?

 

Andrew: Yeah, makes sense to me.

 

Jonathan: Okay, perfect. So let’s actually run some – okay what do you got?

 

Andrew: Yeah, I was just going to comment, I mean, something that I really like about this calculator, it’s just a really easy way for both of our customers, just to kind of really see the small changes that they could make, you know. I think a great place to start with just, for a business owner to pluck in the values of their average customer, where they’re currently at and then go and add some of these things that they’re currently not doing like, putting in place a referral strategy and it’s pumping up the average number of referrals from 1 to 2 a year, I mean just, you can very quickly and easily see how little changes and little processes and things that you place in your business can greatly impact the average.

 

Jonathan: Well, let’s look at a couple scenarios. Okay, let me just use a real basic one. So, if one of the easiest things to sell would be, let’s just say you just sell mowing at 40 bucks for this particular client. So, if I was sitting down to build out my calculator here, I would probably think in terms of my average sell but you can run this for one specific client. But let’s just say on average I sell mowing for 40 bucks a cut and we’re going to cut the property, I know it varies by geography but, let’s just say 30 for easy math. So now, and that’s it, that’s all we sold this client. So, if we look down here now this client is worth to us $1200 per year. Now let’s just say in our market, we offer really good service, our quality’s good or we actually answer our phone, we communicate with our clients, everything about what we do operationally is sound, there’s of course room for improvement but it’s good. So, we’re keeping our clients on average for 4 years. This is not unrealistic if you’re running a really good operation. And so, now this client has become worth $4800. So, this one client is worth 1200 per year but they’re also worth $4800 over the life of their working with you over this 4 year time period. So, a couple of examples here, let’s use the biggest one first. Now let’s, let me take a step back and also say, let’s say you figured out that you can acquire a client for $100 per sell, just hypothetically. So, would you spend $100 to acquire a client worth $4800 to you? I mean, that math is so good that you do that all day, every day you’d spend as many hundred dollar bills as you could possibly spend.

 

Andrew:  It’s a no-brainer.

 

Jonathan: Yeah. It’s no-brainer. And a hundred maybe too low and realistically I hear a lot of guys talk about what they spend to get a new client. I usually hear pretty unrealistic numbers. In the beginning – well, I won’t even go there. Usually, it does actually cost money when you need a client. You’re not going to acquire a client to 20 bucks a pop. It doesn’t really happen. Your referrals are cheap to acquire but everything else cost money to get. Get the clients, especially when you’re going after your very ideal clients because you have to be more specific with your marketing but let’s say it was 100 bucks just for easy math. You would spend that all day long to bring in $4800 over the life of that client. What’s really fascinating is if you orchestrate a referral program in your company, that gets your clients to generate for you just one referral a year. You can quickly see how that $100 bill that you spent to acquire a new client now becomes worth $9600 to you.

 

Andrew: It’s huge.

 

Jonathan: This is that game of math. It’s huge! It’s absolutely huge. So, this demonstrates 2 things, one, the power of referrals, two, how incredibly important it is to understand your value of your client because on the surface just as Andrew said, what do we usually focus on, we focus on this 40 bucks up here. “Jeez! I just spent 100 bucks and this guy’s going to pay me 40 bucks and of that 40 bucks I’m really only going to put 10 bucks in my pocket because I’ve got to run the company and I’ve got expenses.” And so you start running those numbers and quickly you’re like, “This is too expensive. I can’t spend $100 or $200 a client to grow the business.” And that is, if you’re my competitor, my local market, that’s exactly how I want you to think. The reality of the scenario is that $100 bill’s really bringing $9600. That’s, if you’re getting your clients to refer one client per year on average. Even if you’re not, even if nobody refers you, the math is still so strong that this should point out to you what you can afford to spend on marketing. Take it one step further, it also determine how much you can spend and how much you can just, if I hired new people, investing in software, investing in online marketing, investing in all these other things. This is how you justify to yourself, buying, investing because you can see what the yield is for your business. So Andrew, do you mind if I keep going here for a second.

 

Andrew: Yeah, go for it.

 

Jonathan: Okay. So, let’s look at another scenario why this is so incredibly impactful. So, another thing to think about in most businesses is what happens. You know, you put out a door hanger or you get a referral and that client signs up for lawn mowing and maybe they sign up for something else, maybe they buy a couple services from you but generally what I see in a lot of businesses is they sign up for one or two core services and then all the additional services, there’s no proactive selling system in the company, meaning, if it’s time to trim the bushes you’re waiting for the phone call to come in. If they have an irrigation problem, you don’t proactively do an audit or an inspection or proactively offer to set the timer for them when the season’s change, you wait until they call and say there’s something wrong with my sprinkler system. And so, there’s just a massive amount of money just sitting out there on the table because there’s no proactive selling system. So now forgetting everything we talked about before in terms of referrals, let’s just look at the real value of going out and let’s say this is just, at 40 bucks, that’s obviously a small residential property. So, let’s just say you sell them weeding their beds for 8, hand weeding, of course you’re doing some round up applications but you’re just, once a week, grabbing any weeds out of the flowerbeds that happened to remain, you sell them that service for an extra 8 bucks each time you’re out there, 30 times a year and then you sell them, let’s say you sell them six $60 turf applications because again you are proactive, they signed up as a mowing a client and then you have a process, a selling system behind the scenes that starts educating them on why they need to take care of their turf not only from health standpoint but why it’s going to look better? Why it’s going to improve the resell value of their home? Why if they maintain it they’re going to save thousands down the road because they don’t have to go [resort] parts of the yard? You get the idea, you create a selling system where you proactively go back to your clients and you tell them about what you can do for them and you get them to buy additional pre-scheduled work. And, let’s just throw a couple of other things in there. Let’s say you trim bushes. Some of these numbers are really low. You trim their bushes for 175 a time, 3 times a year and let’s just find one more thing. Let’s say you offer a couple, $285 a year irrigation inspections, tune-ups, whatever the case maybe, I think that’s pretty low. We just took this one client all the way up to $9980 value or value to us by simply just having a system behind the scenes to sell them a few extra things. Now, if we go and put that one referral back in. Look at that, I mean, it’s now $19900. So, all we did in our business is, we only tweak 2 things we are doing. So, where I’m going with this is let’s say you left all your selling systems the same. You keep bringing in clients just like you always have but now all you did is you put into place a way to orchestrate referrals, just 1 a year from your clients. And, the only other thing you did is you put in maybe 3, 4, 5 mailings a year maybe one of your teams on the phone they ask clients if they need anything else and you’ve created a scenario where after the fact you sell your clients additional services. So, all you did at the end of the day is change 2 things in your entire business and you just took the value of a client over double. Was that, that’s double what it was before, isn’t it Andrew?

 

Andrew: Yeah, I don’t have everything but that’s about right.

 

Jonathan: Yeah. So, it’s $19960. That is a huge impact on the business. Well, generally, like I said earlier, we all focus on the $40 we would have sold the client for, we forget the real number that our math is based on that justifies our expenditures, that justifies spending several nights a week working on these systems to put into place in your company to sell more service to your clients. So, this is, I didn’t demonstrate the whole, this is the [jest] of the calculator and so we’re going to put this out. Are we going to put this out or?

 

Andrew: Not yet. Not yet. We have a lot of other things that have to happen first.

 

Jonathan: Okay. So, what you want to do is keep checking Lawn Care Marketing Expert and Lawn Care Millionaire all the time until we put this out because it will be released at some point. So just keep checking the site, watching the stuff we’re putting out. This is coming.

 

Andrew: Just sign up for the email and we’ll notify you of course.

 

Jonathan: Yeah, exactly. And we’ll tell you when it comes out but the point is you can kind of also create something like this internally and play with it a bit and think about it but most important is to communicate this concept of what the real value of the client is because this again leads to the ability to make all the big decisions in your business about what you’re going to spend. What would you add to that Andrew?

 

Andrew: I would say you’ve hit all of my bullet points, I mean, the main point here is not to shy away from, if it’s going to cost you 1500 bucks to get a new client and you actually know what their long-term value is then don’t be afraid to shy away from what you think might be a too high of a number. If you actually know what their value is, you’ll realize that it’s probably not that high of a value. If you’re doing all these other things, if you have your referral program, if you’re being proactive rather than reactive in your up selling then it makes a lot of sense. Then you can justify having a higher budget to get clients. And, you know, I mean when you do the math, if you’re spending, if monthly marketing efforts are costing you a thousand dollars and it’s, you’re approximately spending $50 a client to get somebody online but to their lifetime value is $4800, I mean, you’re getting about 96% return on that investment. So, I mean, if you look at things that way, I mean, it’s really no-brainer. This is something that I always try explain to my clients. If you know the value of a customer, if you know how long you’re going to keep them over the long-term, you shouldn’t shy away from spending the bucks to get down, that’s smart business sense. It makes sense.

 

Jonathan: And of course, you know like, with everything you can go blindly spend money and it doesn’t work, so you obviously want to be very aware of how you’re spending the money and really be careful with it. But this proves that you can spend the money in the right places. Andrew, let me say one more thing because I love the calculator because it proves so many business concepts. So, one of the things I think about a lot is there’s we’ve probably talked about this before Andrew, but there’s several ways to grow your company. You can go sell more work to existing clients. You can sell new clients or you could raise your prices. And so, most of us and I’ve been so guilty of this so many times, we really focus on selling more and more and more clients. And so, using the example I used earlier where I basically had a lawn mowing client here that was worth 40 bucks a week, 30 times a year, I could have just focused on, “Oh, I’ve got 400 clients, I need 700 and just sell more and more and more mowing.” But at the end of the day, if you analyze what a turnaround specialist do, so where I’m going with that is if you look at what guys that go in and they take over failing companies usually what they’re looking for is they’re looking for the hidden value in the company to extract all the company. They usually don’t go in to do company take-overs and say, “Well, we’re going to double the client based to sell ourself out of this problem.” They might try to sell themselves out of the problem but really when they go in, they’re not looking to just usually sell more clients to get themselves out of a crunch. They’re looking to cut cost and find all of the hidden value that’s locked up in the business, that’s never been extracted. This is the perfect example of what almost all of us have going on in our business and this calculator just proved it. The first example I showed you was that, this client was worth. I don’t remember what they’re number was, it couldn’t have been much more than a thousand buck, 1200 bucks. That’s all this client was worth to us per year. And, without any referrals, they were only worth, what probably about $4800 over the course of a 4 year time period. Instead of focusing on even getting one additional client, if all we do in our business is focus on getting our customers to buy more from us and maybe tell one of their friends about us. Look at the amount of value you unlock without doing anything to even go out and get more clients and I’m not saying you shouldn’t because you have to have a certain size core business to pull this off and it doesn’t take away from doing any of those other things. My point is, if you want to find money in your business to be able to afford online marketing or afford to have the best technology or afford to have the best employees, the fastest way to unlock it is go do a few of these things and you’ll have the money to pay for all those additional things.

 

Andrew: That’s a very good point. And selling more work to your existing customer basically is always going to be cheaper than getting a new customer. So, like I said, you always, you want to continue to grow your business and you should always be striving for new customers but don’t forget about your existing customers. They already know you. They already trust you. They are already giving you their money. So, put a plan in place that up sells, that gets more work for them, that sells them some of your secondary service in an aggressive way and when I mean aggressive, I mean, not like you’re forcing the client to buy but in an aggressive manner where you actually tell your customers that you’re selling products. For instance, I have a couple of friends that are in different businesses and often times they have their core business and their core service and that’s what their customers hire them to do but they do all these other things as well that are very profitable and sometimes even more profitable than their core service but their customers who are regularly buying their main service from them, they don’t know about them. And, I think that’s a probably pretty common thing I think in our industry.

 

Jonathan: Extremely, I think it’s extremely common.

 

Andrew: And if you just take some time, focus on that, put together a marketing plan where you can touch customers and up sell those services and inform them that you provide those services. It’s a great way to increase profits really quickly. And just kind of taking that a little bit further, I mean, something that we always say in our videos and stuff, you want customer you, the best customer to get is one that’s already pre-sold, referrals are generally pre-sold because it’s coming form an existing client, he already likes you, he already trust you, already gives you their money. So, referrals, the sweetest new client you can get. So, I think, honestly, up selling to an existing client is just another level above that. What’s better than getting a new client that already comes pre-sold and has been referred to you? Well, selling to your customers who already love you, already use you and selling them more work. And so, I think that’s a very good point and I think the calculator is a great way to demonstrate the different things that you can do internally to tweak just how profitable a client is and at some point we will be releasing it but not just yet.

 

Jonathan: Great!

 

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Andrew Pototschnik is the founder of Lawn Care Marketing Expert, the largest online marketing agency in North America specializing in marketing strategies for the lawn care and landscaping industries.

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  1. […] average client lifetime value of a lawn care client is $4800. That means, every time you miss a follow-up call and a client goes […]

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