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Lead recovery & response

Home Service Customer Lifetime Value Calculator

Works a home service customer's value, where the relationship runs for years.

Your numbers

$
jobs
yrs
%
referrals
Average number of new customers each customer sends you over their lifetime.
%

Result

Lifetime value with referrals $7,083
Direct lifetime revenue $5,208
Referral value $1,875
Lifetime gross profit $3,187
One customer is worth $7,083 over 6 years, $3,187 in gross profit. Referrals add $1,875 of that.

Referral value counts one generation only. Counting referrals-of-referrals compounds quickly and produces numbers that flatter more than they inform.

See review automation

How the calculation works

Average job margin times jobs per customer per year times years retained, plus the margin on referred customers. Home service relationships are long when maintained, since a household needs the same trades repeatedly, and the value accumulates in a way a single transaction does not suggest.

What moves the number

  • Years retained and whether contact is maintained.
  • Jobs per customer per year, including maintenance.
  • Average job margin.
  • Referrals generated.

Where this one goes wrong

The customer who was satisfied three years ago calls whoever they can find when the next problem arrives, which is frequently not the contractor who did the good work and then disappeared, and periodic contact is the entire mechanism for retaining the value. Stay in touch. Maintenance agreements are the structural version of the same thing, since they create a scheduled reason to be in the property and the additional work follows from being there.

Before you quote

  • Maintain periodic contact rather than waiting to be called.
  • Consider maintenance agreements as a retention structure.
  • Count referral value, which is substantial in local trades.

Questions

About this calculator

Why do home service businesses lose repeat customers?

By disappearing. The customer satisfied three years ago calls whoever they can find when the next problem arrives, which is frequently not the contractor who did the good work. Periodic contact is the whole mechanism.

Do maintenance agreements help?

They create a scheduled reason to be in the property, and the additional work follows from being there. That makes them a retention structure as much as a revenue line, which is the stronger argument for offering them.

How much are referrals worth?

A substantial share of lifetime value in local trades, since neighbours ask each other and a visible job generates enquiries. A satisfied customer who refers is worth several who do not, and asking is what makes the difference.

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How to use this calculator

  1. Average job value ($). Enter your own figure; the page starts at $620.
  2. Jobs per customer per year (jobs). Enter your own figure; the page starts at 1.4 jobs.
  3. Average retention (yrs). Enter your own figure; the page starts at 6 yrs.
  4. Gross margin (%). Enter your own figure; the page starts at 45%.
  5. Referrals per customer (referrals). Average number of new customers each customer sends you over their lifetime.
  6. Referral close rate (%). Enter your own figure; the page starts at 60%.

The result updates as you type, so you can try a figure, see what it does to lifetime value with referrals, and change it back. Nothing you enter is sent anywhere or saved.

A worked example

These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.

What goes in

InputValue
Average job value$620
Jobs per customer per year1.4 jobs
Average retention6 yrs
Gross margin45%
Referrals per customer0.6 referrals
Referral close rate60%

What comes out

ResultValue
Lifetime value with referrals main result$7,083
Direct lifetime revenue$5,208
Referral value$1,875
Lifetime gross profit$3,187

One customer is worth $7,083 over 6 years, $3,187 in gross profit. Referrals add $1,875 of that.

How sensitive the answer is

Holding everything else steady and changing only average job value, this is what happens to lifetime value with referrals. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.

Average job value ($)Lifetime value with referrals
$310 $3,541
$465 $5,312
$620 example above $7,083
$930 $10,624
$1,240 $14,166

Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.

What each figure means

Average job value ($)
A money amount, starting at $620.
Jobs per customer per year (jobs)
Measured in jobs, between 0 and 52, starting at 1.4 jobs.
Average retention (yrs)
Measured in yrs, between 0 and 50, starting at 6 yrs.
Gross margin (%)
A percentage, between 0 and 100, starting at 45%.
Referrals per customer (referrals)
Average number of new customers each customer sends you over their lifetime.
Referral close rate (%)
A percentage, between 0 and 100, starting at 60%.

What the results tell you

ResultWhat it is
Lifetime value with referralsThe headline result. A money figure.
Direct lifetime revenueA money figure.
Referral valueA money figure.
Lifetime gross profitA money figure.

Retention is a follow-up problem

Customers do not leave. They forget. Reactivation and review automation keep you in front of them.