Do you know what a customer costs you? I recently read a story about a guy who had a friend ask him for a reference to a good roofer. He responded and said no problem you need to call “this guy” and even called his roofer friend and told him that the friend was expecting his call.
His Roofer friend did call and set up an appointment to check out the roof, but about a week or so later when he asked his friend to see how it went with his “Roofer” his friend said your roofer called and set an appointment and never showed or ever followed up so I already had another guy do the job. Can you imagine the embarrassment of him being the one who recommended the roofer and then having him drop the ball like that.
So it got me thinking what did that customer cost that roofer?
Not the profit he loses, but the actual lead acquisition cost for a customer. We all have them but few know the actual cost associated with it.
Quality Contractors actively market their roofing companies using Direct Mail, Digital, Shows, Web site, Social Media & More.
That all amounts to some sort of annual $ spent on marketing. Now I know this customer was basically a freebie but since he dropped the ball lets run some numbers for your business.
- First: lets take the total $ you spend annually on marketing.
- Secondly: Let’s take that number and divide it by the total number of jobs closed in that same year.
Here is an example:
Digital Ad Spend: $5,000
Web Site: $3000
Direct Mail: $7500
Trade Shows: $2500
Social Media Ads: $4000
Total Spent: $22,000
This is definitely not a huge ad spend, I know companies who spend this on strictly digital media.
Now let’s look at the total number of customers acquired in that same time period.
Let’s assume you did 1 job every week in the Midwest Roofing season which is about 30-36 weeks so lets assume that is about 20-25 commercial roofs & 15-20 repairs, for a total average of 40 clients.
So $22,000/40 clients = $515.71/client cost.
So using this analysis that guy lost $515 not to mention the profit that he left on the table by just not showing up. This is a unique way to look at your marketing so your team understand the importance of following up in a timely fashion. So when anyone on your team does something to lose a customer you can put a dollar figure on what it cost your company.
So when you are looking at new marketing methods you can do an analysis with this method to see what kind of numbers you are going to need to see an ROI. Marketing is expensive and not only can it drive profits, but it can cost as well, you just need to know how much so you can evaluate and adapt.
Chad Hedrick
Roof Coating Life