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Lifetime Value of a Customer

leegodbold

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Hey Guys,

New to the forum and to the carpet cleaning business. Built a decent junk removal business in North Carolina over the last few years and potentially expanding into carpet cleaning.

Has anybody determined what the value of a new customer is in carpet cleaning over a 1, 5, and 10 year time frame? I use this to determine pricing as well as how much can be spent to acquire a new customer.

Any and all help is appreciated. Thanks.
 

Jim Davisson

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It used to be claimed by marketing gurus in the late 90's that the lifetime value of a customer was $39,000. Adjust for inflation for today's value and keep in mind opinions differ.
 
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leegodbold

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It used to be claimed by marketing gurus in the late 90's that the lifetime value of a customer was $39,000. Adjust for inflation for today's value and keep in mind opinions differ.
Thanks. Do you have a feel from personal experience that would validate that being close? I'm guessing that includes referrals in addition to repeat work. I'd be interested in knowing just the repeat figure.

Do you feel like most customers use you once a year, twice a year, etc?

Thanks Jim.
 
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rob allen

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Thanks. Do you have a feel from personal experience that would validate that being close? I'm guessing that includes referrals in addition to repeat work. I'd be interested in knowing just the repeat figure.

Do you feel like most customers use you once a year, twice a year, etc?

Thanks Jim.
Jim's answer is correct deferring to "industry claims". Putting a number on the what I call the 3 R's (repeats, referrals & reviews) fluctuates due to many factors. Major one is the quality of customer service, your cleaning performance level and customer retention abilities.

We try and get clients to clean every 6 months but most go every year on average. Again, this depends on you. We drip post cards back every 6 months. We use and love HouseCall Pro for CRM (customer retention management). Love being paperless and having the capabilities to manage client base on the fly. Give it a test run and get the TMF discount if you like it. It's simplified and made us a lot of money managing our client base. --> https://housecallpro.com/TMF
 
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Jim Davisson

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Thanks. Do you have a feel from personal experience that would validate that being close? I'm guessing that includes referrals in addition to repeat work. I'd be interested in knowing just the repeat figure.

Do you feel like most customers use you once a year, twice a year, etc?

Thanks Jim.
Rob said it exactly and online reviews were not a thing then. You need to farm your customer base pretty hard, but you can do well if you have high customer retention to start with.
 
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Scott W

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The lifetime value of a customer will depend in large part on how often your customer buys from, how much they refer your company and your pricing. So, to use a lifetime value for a customer without first knowing the price can influence and becomes circular reasoning.

Industry-wide, on average, most customers repeat avery 18 to 24 months, although as comments above indicate, with good marketing and the right target market, you may get that down to 6 to 12 months.

I first heard Steve Toburen discuss lifetime value of a customer almost 30 years ago. Inflation will have changed that figure somewhat, but carpet cleaning prices have not risen near as much as inflation. Many companies still at .30 sq. ft. or less for residential.