Judging a customer on their first job undersells them. Add in the repeat work and the referrals they send your way, and see what they are actually worth.
Customer lifetime value is the total profit a customer brings you over the whole time they use you, not just the first invoice. Multiply your profit on an average job by how often they come back and how long they stick around, then add the profit from anyone they refer. The total is often several times the value of that first job alone.
What an average job with this customer is worth to you.
Repeat work and word of mouth, over the life of the relationship.
A guide, not financial advice. Figures are estimates based on averages you provide, actual customer behaviour will vary.
Most trades price and market as if every customer is a one-off. Win the job, bank the profit, move on to the next enquiry. For plenty of work that is exactly right. But for the customers who come back, a boiler service every year, a fence today and a deck next summer, that first job is only a small slice of what they are actually worth.
Once you know a customer's lifetime value, a marketing cost that looked expensive against one job can look cheap against the whole relationship. This is the number that should sit behind decisions like how much to spend per lead, whether a slightly higher-cost channel is worth it for better-fit customers, and how hard to work at keeping existing customers happy rather than only chasing new ones.
A referred customer costs you nothing to win and often converts easily, because someone has already vouched for you. This tool counts a referral as one job's worth of profit to keep things simple, but a referred customer can become a repeat customer too, and refer people of their own. Word of mouth compounds in a way paid marketing rarely does, which is exactly why asking for reviews is worth the two minutes it takes.