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Exactly how much are you willing to pay for a new mowing customer???

Discussion in 'Business Operations' started by walker-talker, Jan 19, 2011.

  1. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    You know, all our marketing and advertising efforts are really alomost a crap shoot. Crap shoot might not be the right words because there are things we can do that are better than others. What's working now and what's working in your area.

    I think everything boils down to "what would you pay for a new mowing customer"? I found an old thread of mine when I did a postcard campaign. I mailed out 2500, 4.25 x 6 postcards. I hit the customer twice. The cost was $2000 and I gained 4 mowing customers. It looks like I paid $500 per client? I did earn about $1000 in one time jobs, but we will pretend I didn't.

    If there was a store in your town that you could actually buy mowing accounts, ask youself, how much are you willing to pay for a mowing customer? Of course you don't know if it's going to be a $25 lawn or a $50 lawn. You don't know if they will stay with you 1 year or 10 years. But I am just curious what you would pay for a lawn? More or less, I think I would pay easily $100-$150 a lawn. That would be if they were on my or near my existing route.

    Do you ever ask yourself this?
  2. yard_smart

    yard_smart LawnSite Senior Member
    Posts: 590

    Basic business principals say 10% of CEV (clients expected value) aka what their gross sales will be so...

    A clients at $45 a week for 30 week season would be worth $1,350 so you could expect to pay $135 for them.
  3. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    So...every year they stay with you, that CEV is increased and cost you less and less. Now, I guess a person needs to figure what is the average life of a mowing customer to come up with a accurate CEV.
  4. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    While you have a point, you may be missing the big picture.

    Me Personaly have never been a fan of direct mail. Does it work ? well that's an Question that no one can answer, It Might. It depends, It, It, IT.... to many variables.

    direct mail reaches one Potencial Customer, But with your direct mail. You also are keeping your name out there,
    NOW. as you stated, I belive you recived 2 customers from 1000.00 OUCH.
    what would an 1/2 page done ? in your local newspaper ?
    or a bill board ?
    or an ad in your local restrunt menu ?

    You need to Not only get your name out there, BUT KEEP IT OUT THERE.

    The price of a customer is HUGE.

    Best of luck
  5. StihlBR600

    StihlBR600 LawnSite Senior Member
    Posts: 705

    I would pay $100 for a $25 lawn if i had a 2 year contract
  6. bcg

    bcg LawnSite Bronze Member
    from Tx
    Posts: 1,835

    2 -3 per 1,000 is normal for direct mail. 5 per 1,000 is the best we've ever done. It costs me about $100 - $125 to get a new customer and 90% of our customers come from direct mail, which costs me about $0.24 per door for the printing, mailing lists and postage.
  7. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,231

    I would look at it as a constant expense instead of how much for a customer. Let's say your advertising account is x% of sales. If you run $3k in ads one year and your gross is $100k/yr it ends up being 3% of sales. Every bid/sale should account for it. So in actually terms your oldest customer still cost you each visit. Advertising if it is product info/upselling/lettering on the truck/shirts/ads/flyers can be to new or old customers.

    Do you believe a referral customer cost you nothing? It cost something as you needed to do a sale sometime, send bills with a biz card etc.
    Posted via Mobile Device
  8. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    Well, look at this way. Yes, I picked up 4 mowing accounts at an orginal expense of $2000. I got $1000 from one time jobs. Lets say I profited $700 of that $1000. Now I spent $1300 for 4 accounts. Since I can only remember only 2 of those accounts, we'll split in half like you did before.

    Now it cost me $650 for 2 accounts. I held those 2 accounts for 5 years and both were full service accounts and brought in $1000 each every year. Now, let's break it down further.

    1 account cost me $325, but it brought in $5000. Far below the 10% somebody else mentioned. I don't feel so bad on this one. I don't remember who the other 2 accounts were, so I can't comment on what they cost me.

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