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What a lead is actually worth to you

Two numbers you already have turn advertising from a gamble into arithmetic.

4 min read

Most owners decide whether ads are working on feel. You can do better with two numbers you already know, and it changes every decision afterwards.

Number one: what a customer is worth

Not the first job — the whole relationship. If your average job is $400 and a typical customer comes back twice more over a few years, that customer is worth around $1,200. Take your profit on that, not the revenue. Say $400.

Number two: how many quotes become jobs

If one in four people who ask for a quote hires you, each quote request is worth a quarter of $400, or $100.

Now advertising is arithmetic

If a quote request costs you $30 in ads and is worth $100, you make money on every one. If it costs $140, you don't, no matter how good the ads look. You're no longer guessing whether it works — you're checking a number against a number.

What this changes

It tells you what you can afford to spend, which is usually more than owners think. People underbid their own advertising because they compare the cost of a lead to the price of one job instead of the value of a customer.

It also tells you when to stop. A campaign producing leads above your number isn't unlucky, it's unprofitable, and running it longer won't fix that.

If you don't know your close rate

Then that's the first thing to fix, and it costs nothing. Count quotes sent and jobs won for one month. That single number is worth more than any ad setting.

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