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Do you know what the lifetime value of your customer is?

Discussion in 'General Industry Discussions' started by localsurgemedia, Oct 18, 2011.

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  1. localsurgemedia

    localsurgemedia LawnSite Member
    Messages: 2

    Any input is appreciated!

    I own an seo company and I build websites to generate leads for lawn service companies. I am doing some due diligence to figure out what the average length of time you keep a lawn service client and what the average charge is every month for your average residential customer.

    This can give me an approximation of the lifetime value of a lawn service client.

    So if the average length a customer stays is 2 years and the average bill per month is $160 then we can approximate the lifetime value of the customer is 24 months x $160 = $3,840.on average.

    Is this a realistic number? If not can anyone give me real numbers to work from? I am trying to figure a fair price to deliver new clients to area service providers.

    Thanks in advance for any help or figures you can offer.

  2. Total Lawn and Sprinkler

    Total Lawn and Sprinkler LawnSite Member
    Messages: 27

    The average lifetime value of a customer is hard to judge seeing as though every lawn is it's own unique cost structure. For example: you're not going to charge the same for a $200k home sitting on three acres that you would for a $50k home that cover a half acre or less.

    Sorry I don't have an answer to your question, but maybe with a few more details I can nail down a better solution.
  3. Agape

    Agape LawnSite Bronze Member
    Messages: 1,644

    the avg value of a customer that pays $160 a month, is closer to $60-80 per month (varies- give or take) after expenses and before taxes. and then $60-80 the next month if they don't loose their job or have a looser nephew etc...

    No one's going to pay a lot to get maint. customers.
  4. Agape

    Agape LawnSite Bronze Member
    Messages: 1,644

    and why do you need our figures? is your service worth more if we make more?, cause no one is going to pay you based on a % of what a customer can potentially pay. and that's with a guaranteed customer. I don't even wanna think of what people would do if you suggested that for a lead.

    I know you thought this was a good place to do your research, but people here play their #'s pretty close to the vest.
  5. localsurgemedia

    localsurgemedia LawnSite Member
    Messages: 2

    Hmmm, not the type of responses I was expecting but thanks for taking the time to respond anyway.

    Ok, to clear up one thing...

    I am not looking for anyone to post "their" numbers in public.

    I understand that you charge differently for a 2 acre lawn than a 1/4 acre lawn, but if you have 50 customers of all sizes and types you would have an overall average based on gross billings divided by # of customers. There is no way to know who is going to call you for service right? So this is the only way to get an overall average for all residential service averages.

    Also, I am not asking anyone for your profits, I am looking for average billing amounts per month.

    One more question for Agape who replied:

    "the avg value of a customer that pays $160 a month, is closer to $60-80 per month (varies- give or take) after expenses and before taxes. and then $60-80 the next month if they don't loose their job or have a looser nephew etc...

    No one's going to pay a lot to get maint. customers. "

    When you sell your business aren't you selling based on the future viability of your accounts and the continued revenues from them? If you can only keep a customer for 2 months it would be hard to sell it to anyone.

    Maybe I am missing something?

    Also, how do you know what "everyone" is willing to do? I have learned through the years that some people are good business men or women and others are just in business to get by. I am not saying you are either, just saying maybe "your" point of view may not be the same as others who are very interested and motivated to grow their businesses.

    I already have one lawn service co. willing to pay me one month of gross revenue for each new account I get him. I am just trying to figure out what the "business people" in your industry are willing top pay to grow their business to become major service provider in their city instead of one or two crew operation.

    Thank you for your input and any further information would be appreciated.
  6. Glenn Lawn Care

    Glenn Lawn Care LawnSite Silver Member
    Messages: 2,645

    I have had the some of the same customers since I started, and I hope to have them until the end.
  7. cut level

    cut level LawnSite Senior Member
    Messages: 295

    I have 3 that have been with me for over 25 years 450 per month on those
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  8. ed2hess

    ed2hess LawnSite Fanatic
    Messages: 14,283

    We would be interested in participating.....get your use on lawnsite up so we can pm you in private.
  9. GMLC

    GMLC LawnSite Platinum Member
    Messages: 4,345

    I do a lot of "return on investment" calculations for my marketing. For a mowing customer only I average $1350.00 per year. This does not include extras like spring/fall clean ups, fertilizing, mulch etc. etc. Full service clients, which most of mine are are much higher and more loyal. Also keep in mind my season(27 weeks average) is shorter than down south.
    Last edited: Oct 18, 2011
  10. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    Interesting thread. This seems to be one industry where prices are all over the map. I think it really is just what you can get someone to pay and you know how that goes. I guess I don't understand how you can assess a companies value based on volume alone. Secondly given the unsophisticated accounting methods of many in the industry I don't know how you come to any conclusions without an independent audit.

    The simple fact is many green industry "businesses" are in reality jobs that people own. Without that person they have zero value so you can't use traditional matrix's for business valuation.

    Well after re reading the original post my contribution is off track but I believe it has merit so I am going to leave it. Because there is no avg. client or even an average residential maint. company. To my knowledge there is no exclusively residential maint service company in the country that does more than say 1.5 million per year in revenue. If there is I would love to hear about them. If you had a good sized business to use as a model you could gain some insight and have confidence in those numbers. I don't think you will get any consensus here.

    You have a very difficult chore, good luck with that. My clients and accounts are anything but avg. so my numbers would not help you at all.
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