In the home-services industry, acquiring a customer costs $350-$500 just to get a phone call. Bill Brown initially thought marketing was wasteful when measuring ROI only on the first appointment, but now tracks Customer Lifetime Value instead of single-sale returns. He's built a model that shows how to evaluate marketing spend across a customer's full relationship.
I wanted to, I wanted to go over something as far as lifetime value goes. So I think that in this industry that when we look at, you know, customer acquisition costs, which we pay a lot of money to get into someone's home to get a new customer, right? David, what do you think you pay for a new customer?
Oh man, I used to, was it used to be like $350? So I think with, with everything now it's more, I mean, I think you're $400 or $500 per customer just to get the phone to ring. Yeah.
So, I mean, you You go out and you do that first appointment, right? And you kind of, what I found is, and I, I did this myself when I was spending a lot of money on marketing, I used to look at marketing as far as like getting in the home, getting, getting an appointment. I would look at the revenue that I got from that appointment as the ROI on the spend, right? So I'd go out and I'd sell $1,000 and I spent $800 to get in the home. I'd be like, well, this is a waste, right? I don't want to do this anymore. But then I thought, you know, the way that a software company looks at it and the way bigger companies look at it is they look at their customer acquisition cost. How much money do I have to spend to get a paying customer? And then how long do I have the customer? What's their lifetime value? Right. And so I put together, I'm going to share this with you if that's cool. All right.
