When running a landscaping company, understanding your customer lifetime value (CLV) is crucial for gauging the overall profitability of your business. This value helps you make informed decisions on customer acquisition, retention, and pricing strategies.
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Understanding customer lifetime value (CLV) is essential for the long-term success of any landscaping business. By evaluating how much a customer will spend over the duration of their relationship with your company, you can make strategic decisions to optimize profitability.
To help you grasp the full picture, we’ll break down some key metrics and data points that determine CLV for a landscaping business. This includes average revenue, customer retention, and acquisition costs, among others.
You’ll find detailed market insights in our landscaping company business plan, updated every quarter.
The average revenue from a landscaping customer and how long they remain a client significantly impacts your company’s customer lifetime value. Below is a breakdown of the key metrics you’ll need to understand this value.
| Metric | Value/Range | Source |
|---|---|---|
| Average first-year revenue per customer | $1,200–$3,000 | Big Orange Marketing |
| Average annual spend per customer | $542–$616 (general), $2,000–$5,000+ (affluent) | Insurance Bee |
| Typical customer duration | 3–7 years | Green by Nature |
| Annual retention rate | 70–80% | Dojo Business |
| Upsell/cross-sell % and value | 30–50% buy add-ons; +$500–$2,000/year | Dojo Business |
| Net profit margin | 10–15% (maintenance), 25–40% (design/build) | Leap to Digital |
| Customer acquisition cost | $200–$640 |
What is the average revenue generated per landscaping customer in the first year of service?
The average revenue generated in the first year of service for a landscaping customer typically ranges between $1,200 and $3,000. This figure is mostly reflective of recurring maintenance contracts.
If the client opts for additional services like hardscaping, tree care, or irrigation systems, the first-year revenue can be much higher. Additional services increase the total revenue by an average of $500 to $2,000+ per year per customer.
For new business owners, focusing on upselling can significantly boost first-year revenue.
What is the typical duration that a landscaping customer remains active with the company?
On average, a landscaping customer remains active with the company for about 3–7 years, depending on the nature of the services and client retention efforts. Contract-based customers tend to stay longer, often due to the ongoing maintenance services provided.
High-touch service, diverse offerings like design and installation, and consistent service quality can extend customer relationships to 10 years or more.
Maintaining customer satisfaction and offering periodic service upgrades are essential for maximizing customer retention.
What is the average annual spend per customer, including recurring maintenance contracts and seasonal services?
The average annual spend per landscaping customer is approximately $542–$616, with affluent clients spending upwards of $2,000 to $5,000+ annually. These numbers include regular maintenance, seasonal services, and more advanced landscaping services like design and hardscaping.
Recurring maintenance services alone typically generate around $1,200 to $3,600 annually, but many customers opt for additional seasonal or one-off services that can increase their annual spend.
Targeting affluent customers with premium services is an effective way to increase your average annual revenue.
What is the retention rate of landscaping customers year over year?
Landscaping companies generally see a retention rate of 70–80% annually for contract-based services. Retention is higher when clients feel they are getting consistent, quality service.
Customer retention can be influenced by many factors, such as service pricing, quality of work, and customer communication. Offering loyalty incentives can also help improve retention rates.
Retention rates should be monitored regularly to identify areas for improvement.
What percentage of customers purchase additional services such as irrigation, hardscaping, or tree care beyond the core offering?
Around 30–50% of landscaping customers purchase additional services beyond the core offering. These services can include irrigation, seasonal color enhancements, mulching, tree care, and small hardscaping projects.
Offering these additional services increases the average revenue per customer and helps solidify long-term relationships.
Incorporating these services into your marketing efforts can boost your company’s profitability.
What is the average profit margin on the most commonly purchased landscaping services?
The average profit margin for routine maintenance services in the landscaping industry is typically around 10–15%. However, design, build, and hardscaping projects can yield much higher profit margins, typically ranging from 25% to 40%.
To maximize profitability, consider focusing on high-margin services like design and large installations. These services also tend to have more significant upselling potential.
Having a diversified service offering allows your business to capture both steady income from maintenance and higher margins from specialized services.
What is the customer acquisition cost, including marketing, sales, and onboarding expenses?
The customer acquisition cost for a landscaping company can range from $200 to $640, depending on the marketing channels used and the nature of your services. This includes all costs related to acquiring a new customer, such as marketing campaigns, sales efforts, and initial onboarding expenses.
Investing in effective online advertising and optimizing word-of-mouth referrals can lower customer acquisition costs over time.
Tracking your acquisition cost is essential for managing your marketing budget efficiently.
What is the typical referral rate, and how much new business does each customer generate through word-of-mouth?
Referral rates for landscaping businesses are typically between 20% and 40%. This means that each satisfied customer will likely generate 0.2–0.4 new customers through word-of-mouth over their lifetime.
Word-of-mouth referrals are a cost-effective method for acquiring new customers. A strong referral program can help encourage satisfied customers to recommend your services to others.
Focusing on customer satisfaction is key to generating quality referrals.
What is the churn rate, and what are the most common reasons customers stop using landscaping services?
The annual churn rate for landscaping services is usually between 20% and 30%. Customers may leave due to price increases, dissatisfaction with service quality, moving homes, or delayed service during peak seasons.
To reduce churn, consider offering incentives or loyalty programs to long-term customers. Communicating clearly about any price changes and maintaining consistent service quality are also essential for retention.
Understanding the reasons for churn can help you make improvements to your service and customer relations.
What is the average upsell or cross-sell value per customer over the full lifecycle?
Over the full lifecycle, upselling and cross-selling additional services can increase the total customer value by 25–50%. This can include services such as seasonal color updates, tree care, irrigation installation, and hardscaping projects.
Maximizing upsell opportunities is a powerful strategy for increasing the lifetime value of each customer.
Offering packages or discounts for additional services can also incentivize customers to purchase more over time.
What is the net promoter score or customer satisfaction rating, and how does it correlate with repeat purchases?
The Net Promoter Score (NPS) for landscaping businesses typically ranges from 35 to 55. A strong NPS correlates to higher repeat business and better upselling opportunities.
Regularly surveying customers for feedback and using this data to improve your services can help boost your NPS and ensure customers continue to return.
A high NPS is a clear indicator of customer satisfaction, which directly affects retention and profitability.
What is the expected total profit contribution of an average customer over their entire relationship with the company?
The total profit contribution of an average landscaping customer over their lifetime typically ranges from $1,000 to $3,000. For top-tier clients who purchase premium services or have large estates, this value can rise to $8,000 to $20,000.
By focusing on high-value clients and offering additional services, you can significantly increase this number.
Maximizing customer retention and upselling to existing clients are key factors in boosting total profit contribution.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.
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