Mike Andes discovered his lighting service actually costs $150 per customer to acquire, not the $50 blended average he thought. He breaks down why calculating customer acquisition cost separately for each service matters: landscaping and lighting grow at different rates and have different margins, so mixing them hides which offerings are actually profitable to advertise.
Like, it was really fun up to about like $800,000 in revenue. And so right now it's still about 60% landscaping, 40% lights from a revenue perspective?
Right around there. Yeah, maybe getting closer to 50/50, but yeah.
So lights is really the thing that's growing more right now?
Yeah. Oh yeah. I think light fill grew like 30-something percent last year and landscaping was like 15%.
So when I'm looking at the service mix and I'm looking at the growth rate, the thing I'm thinking in my mind is what's the customer acquisition cost for both of these different services? If you have a customer acquisition cost in your business, but you can break it down by service instead of just as a blended average, a lot of times that will give you a lot of direction in terms of where should you be growing the business. Because obviously I want to grow my most profitable services. But a lot of times people blend their customer acquisition costs together and then think that they're getting customers for $50, when in reality for the service that they're trying to grow, it's $150. But they're blending it with the other services inside their business. Being able to have a customer acquisition cost, or how much I spend to get one new customer by service, is a huge unlock to be able to know what services I should be promoting and spending advertising dollars on.
