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Cost of Attracting New Business

Discussion in 'Business Operations' started by Az Gardener, Apr 19, 2008.

  1. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    Does anyone have a cost for signing up new clients as it pertains to dollars spent on advertising.

    For example after 4 years of advertising you know that on avg. if you spend say 3000 on advertising you can expect to sign up 30-K worth of work for the year as a result of that advertising campaign.

    I am most interested in this as it applies to residential maintenance but I will take what I can get.

    I am trying to figure out how much I should pay for new accounts either from a salesman that delivers a signed contract or from a lead passed on to me to bid and close the bid.
  2. bill8379

    bill8379 LawnSite Senior Member
    Messages: 778

    I don't figure such things out but I do remember that D F W guy (who figures out everything), he was saying that it costs him $50 or there abouts per customer with putting out door hangers.
  3. leafitalawn

    leafitalawn LawnSite Member
    Messages: 108

    Previous years it was approx. $40/customer. This year it's around $55/customer. I feel the season in our area is running about 2-3 weeks later than usual. Our percentages per amount of fliers is definitely lower than ever. I'm sure as the season nears July my cost/customer will get more in line...
  4. cpel2004

    cpel2004 LawnSite Bronze Member
    Messages: 1,415

    Az I would imagine that the cost would vary depending on the type of lead and if that lead turns into a customer. Was it a warm lead generated by the business or was it a cold lead and did someone had to prospect for it, did that lead turn into a contract customer or just a one time customer. Im confused about your question, are you talking about how much it takes you to get a lead or what you should pay someone for signing up a customer? Can you give us a few examples.
  5. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    So these customers that cost $ 40-50 to get, what kind of revenue do they generate per month? Is it 50 to get a 40 per cut account? So if my average account is a 1200 per month account I could expect to spend about 300 to get it. As far as industry standards go? This is the answer I am looking for.
  6. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    I am not too interested in doing fliers adds etc. I would much rather pay a good salesman a reasonable commission to sell for me. I only service high end residential maintenance accounts so that is what I would need to sell.

    My train of thought went something like this: If when buying accounts from an existing company one months gross is the industry standard. I think that a new signed account would have at least the same value to me. I don't want to and can't afford to pay that the first month. I thought if I could offer a 10% commission for the first year paid monthly when paid that it would be a win win situation. This way the salesman has a nice residual income. His pay is not a burden on me and I can focus on running the business not chasing tire kickers.
  7. BCFLawnLandscape

    BCFLawnLandscape LawnSite Senior Member
    Messages: 333

    Flyers/doorhangers etc. is the cheapest way to advertise, a good color flyer will get you phone calls and estimates. Why pay someone 10% commission on every job he sells, when you can go and buy 3k flyers for about 500 bucks, pass them out in neighborhoods and keep your money in your pocket? You being the owner should be able to sell your business better than any person you could possibly hire could.

    Just my thought!

    Good Luck
  8. leafitalawn

    leafitalawn LawnSite Member
    Messages: 108

    In our case, generally they are around 36 weeks avg. cuts per season for a total of $900 gross for the year (if at $25/cut...our minimum).

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