Know what a customer is worth
Take the average sale, multiply by how many times a customer buys in a year, then keep only the profit. A $1,000 job that leaves you $400 after materials and labor is worth $400 to this math, not $1,000.
Know what a customer costs
Add up what you spent on marketing in a month, including fees, ad spend and your own time if it is real. Divide by the new customers that month. That is your cost to get a customer.
Compare the two
If a customer is worth more in profit than it cost to get them, your marketing is paying for itself. If not, it is a cost, and something in the chain needs fixing.
Find out where each customer came from
Ask every new customer how they found you, add the same question to your contact form, and use tracked links in emails and ads. Without this step, the other three are a guess.
Judge each channel on its own clock
Ads can show results in weeks. Search and email lists usually take months to build, then keep working. Give each one the time it actually needs before you call it.
Worked example
The math on one page.
These are example numbers, not a client’s results. Swap in your own.
- A customer is worth $480. A lawn service’s average customer spends $1,200 a year, and 40% of that is profit.
- A customer costs $200. $1,000 in ads and fees brought in 5 new customers.
- Each customer returns $280 more than they cost. $480 in profit minus $200 to get them.
- That is a 140% return. ($2,400 in profit − $1,000 spent) ÷ $1,000 spent.
Straight answers
Common questions about marketing ROI.
What is a good return on marketing?
Anything above break-even puts money back in your pocket. How far above depends on your margins and cash flow. A business with thin margins needs a wider gap than one with high margins.
Should I count revenue or profit?
Profit. Revenue makes every campaign look better than it is. If a sale leaves you 30 cents on the dollar, a campaign has to bring in more than three dollars in sales for every dollar spent just to break even.
What if I cannot tell where customers came from?
Start today. Add a "How did you hear about us?" field to your contact form, ask on the phone, and write the answer down. A month of honest answers beats a year of guessing.
Do I need expensive software to track this?
No. A spreadsheet with the date, the customer, where they came from and what they spent is enough to start. Google Analytics and your Google Business Profile add the rest for free.
Next: how much to spend on marketing, worked out from the customers you want. Or run your numbers in the free ad budget calculator.
The Marketing Audit · free
Send me your website. I’ll tell you what I’d fix first.
A written review of your website, how you show up on Google and in AI answers, your email and your ads, with the fixes in order of what makes you money first. Yours to keep, whether or not you hire me. The prices are public, so you already know what the work costs.
jeff@sheltonstrategies.com · Weatherford, Texas