Seeing The Earning Potential For Your Lawn Care, Landscaping, or Irrigation Business Based on the Value of Each Client
When a lawn service or landscaping business calculates its numbers, it gives them the clarity of raw numbers it needs to know which allows them to know how much they can spend to acquire leads/clients and this is what big businesses (not just the green industry such as TruGreen or Brightview, but Target, Best Buy, etc.) primarily focus on:
This Crucial Unknown Metric Most Lawn & Landscaping Businesses Don’t Know
One of the most important metrics in your business is knowing how much each client you obtain is worth to your business. Once these numbers are calculated, everything else (labor, materials, equipment, office staff, etc.) can be fit into place when it comes to budgeting.
Giving you an accurate picture to grow your business in all aspects – hiring employees, investing in new equipment, and more. It all begins with knowing how much a client is worth to you.
This cannot be stressed enough, these numbers are POWERFUL because they give your company the ability to know exactly how much can be spent to acquire clients.
One of the best ways to describe how essential knowing the value of every client is to your business is if you’ve ever seen advertisements (online and offline, generally from larger local & regional or even national companies) for services at prices far below the “going rate”.
Most green industry business owners will simply balk at this & lash out by saying…
“Man! How are we supposed to compete and make a living with prices this low?! I’m done!”
The most unfortunate part of this thought process is that it’s incredibly short-sighted! The biggest profits are in the higher ticket & higher-margin back-end services, for example in lawn maintenance this would be having the front-end service be weekly/bi-weekly mowing and the up-sell (back-end) services such as:
The same process can be replicated when advertising to acquire landscape design/construction clients (dropping margins to obtain sales) with the ever-present goal to sign on as many of those clients into recurring maintenance packages. This practice can also be done with any first service to entice a client to sign on and then up-selling them (ie. 1 free fertilizing application if they sign on for the season with 5 total fertilizing/weed control applications). . . the possibilities of these promotions is endless and requires testing which offers convert best (get the most clients) and the direction you want to take your company.
When a business knows the average lifetime value of a client, they know their numbers and how long it takes for them to get an R.O.I. on their advertising and then eventually make a profit after a certain point in time.
Calculating How Much Your Lawn Care or Landscaping Business Can Make
When a company is willing to run an ad promoting low-priced front-end at break-even or potentially lose money strategically (such as the free month of mowing when a client signs on for the season, or free spring clean up with signing on for mowing for the season are just some of many examples), the majority of the time they know their numbers and how long it takes for them to get an R.O.I. on their advertising and then eventually make a profit after a certain point in time because they know the average lifetime value of a client.
So many business owners don’t know these numbers and it really hinders knowing how much they can invest into advertising and worse, it prevents them from calculating how to grow strategically.
The company that’s spending more on advertising (for ex. beating their competition in the organic search rankings or bidding higher to pay more per click on Adwords/Facebook) is certainly well aware they may be losing money at their front-end (ex. deeply discounted weekly mowing for the first year or a landscape installation that’s 20% off, etc.) but they will make their money back & eventually become profitable from:
This puts your company in a powerful spot by purely being able to outspend and push out your competition (especially online with pay-per-click on Google Adwords & Facebook Ads) who is still complaining about your ad for a low-cost front-end service and how it’s “undercutting”.
Calculating Long Term/Lifetime Client Value
There are two main factors that must be determined right away: