The cost of a new customer?

Discussion in 'Business Operations' started by LawnLad, Feb 8, 2002.

  1. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    What's it cost to get a new customer?
    1) Cost of advertising piece (printing plus delivery method)
    2) Cost of receiving calls and qualifying them
    3) Cost to meet with prospective customer
    4) cost to produce estimate/bid
    5) Cost to follow up if necessary
    6) Cost to 'train' new customer and develop relationship
    7) Cost to train crews to understand what customer wants

    What does all this add up to? I suspect if you put a dollar amount on your time, you might find that it costs hundreds of dollars per new customer that comes to you through advertising.

    What if that customer stays with you for only a 1/2 season or only one season? How long does that customer need to be with you to make the cost worthwhile? Where is the break even point?

    What does it cost for referral customers?

    What does it cost to keep an existing customer?

    Just a few thoughts since we're all throwing around advertising ideas and the related advertising costs. We all advertise to some degree, just be careful that you're not wasting your dollars or fooling yourself that a method you are using or that someone is selling you is working or will work for you. Look at your time and all the costs associated with it.
  2. 65hoss

    65hoss LawnSite Fanatic
    Messages: 6,360

    Its always cheaper to keep a customer than it is to find new ones.

    Finding and getting new customers are usually hidden cost to some degree. The driving, estimating, time talking with them, etc is hard to calculate. The advertising $$ are easy to find.

    Once you get established enough to where "word of mouth" keeps you really busy your in much better shape. Cheapest form of finding new customers is keep existing customers happy and get them to refer people to you.
  3. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    We have steadily grown in size and database for the last 6 years and it amazes me how few referrals we get. Now that I've said that I'm gonna look.........73 referrals from other homeowners last year.......
    Wait though, we also get referrals from landscape maint. companies, realtors, p.managers, and many many more. Every time I debate this topic with myself in my head I realize that if I were smart I would be grooming these relationships and save the 1500-2000 dollars we spend monthly to get new customers in other ways.

    It is cheaper to sell something else to your existing customers. shouldn't it also be cheaper to get them to refer you?

    What if every customer you had referred you to one client......Wouldn't that be great!

    Sorry this is sorta confusing but the bottom line is referrals are much better that advertising. Question is how do we convince ourselves of that and implement ideas to make it happen more often?
  4. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    A suggestion... ask for a referral from your customers. Though not religiously, we ask our customers if they know anyone who would benefit from our service. We ask for their name and number, and our customers do give us names/numbers.

    Also, when you go on a sales call, ask them if they know anyone who could use your service. You'd be amazed how many neighbors are looking together - and then swap information. The more people you connect with, the better the chances of making a sale.
  5. Randy Scott

    Randy Scott LawnSite Bronze Member
    Messages: 1,915

    I've had a pretty good rate of referrals and it definately is the best way to get work. I also have a handful of customers tell me to my face they don't want to refer me and want to keep me to themselves. That is nice to know but doesn't help with getting more work.:)
  6. greensummer

    greensummer LawnSite Member
    from canada
    Messages: 93

  7. PaulJ

    PaulJ LawnSite Bronze Member
    Messages: 1,774

    I've thought of offering a reward for refarals. like $5-$10 off the next months bill after the refered customer has signed up for service. Not much insentive but it might help and since I wouldn't pay unless they actually signed up I should be able to come out ahead. Not saying I'm going to do this , just an idea .
  8. lbmd1

    lbmd1 LawnSite Senior Member
    Messages: 462

    LawnLad brought up an excellent topic that we have not discussed much in the past. To me, the thread shows in an unrelated yet related posts about how other members on the board feel about buying or selling a business, and what it's worth. How many times do people here say the client lists aren't worth anything, don't bother, just take the money and advertise. Lawnlads 1-7 lists in detail what we have spent or will spend in the future on existing or new clients. When I had purchased an existing LCO's client list (no equipment) about 4-5 years, I realized what this guy had to do to get these 40 some odd accounts and he should be compensated for it. As well as when the time comes for me to sell off, I would expect the same respect of what my time and goodwill with all my clients are worth for my efforts. I'm not saying that spending money on advertising doesn't give you a good result as well, it's just that Lawnlad's post on this topic show really what owners go through to get and keep clients.

  9. mike payne

    mike payne LawnSite Member
    Messages: 75

    I will usually mow a lawn free once for a good referal that last the entire year. I make their last mowing of the year free.
  10. garydale

    garydale LawnSite Senior Member
    Messages: 813

    I could use some guidance on purchasing a client list of about 50+/- from a local fellow going out of business.

    Neither he or I have any idea on how to price each account and what terms to apply.

    I would appreciate some input.

    ps: great site!

    thanks, gary

Share This Page