A £50 lead that becomes a £10,000 lifetime customer is worth more than a £10 lead that never returns.
Most service businesses obsess over their cost per lead (CPL) and ignore a far more important metric: Customer Lifetime Value (CLV). A plumber who fixes a boiler for £200 today might service that customer's heating system every year for the next 15 years, recommend them for a bathroom refit, and receive referrals from them. That one customer could be worth £15,000+ over their lifetime.
Calculating your CLV doesn't need to be complicated. Take your average job value, multiply by the average number of jobs per customer per year, multiply by the average customer relationship length in years. For a gas engineer with an average job of £300, 1.5 jobs per year, and an average relationship of 8 years, CLV is £3,600.
Once you know your CLV, your acceptable cost per lead changes dramatically. If your CLV is £3,600 and you convert 1 in 4 leads, you can afford to pay up to £900 per acquisition (4 x cost per lead). Suddenly, a £50 CPL that seemed expensive compared to a £20 CPL from a different channel looks like an absolute bargain.
Build your customer retention into your marketing strategy. Stay in touch with past customers through an annual service reminder, seasonal offers, and a referral programme. The cheapest lead you'll ever generate is from someone who already trusts you because you did good work for them before.