Parker Terle
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Memo: Where our lead spend should go

Writing & Memos, 2 min read

Lower cost per recurring customer
~60%
What this is
A one-page memo on a real decision at MaidThis: where our lead spend should go. It starts with the recommendation, then covers what I found, the plan and the risks.

Skills Memo writing, financial modeling

Recommendation

Move our Google Local Services Ads budget to Thumbtack, set up to bring in recurring customers only. From now on, judge every marketing channel by what it costs to get a recurring customer, not what it costs to get a lead.

What I found

  • Google LSA cost about $195 per lead. On that number alone, it looked like our best channel.
  • When I followed those leads through to customers who booked at least two cleans, LSA cost about $650 per recurring customer.
  • Thumbtack, set up for recurring customers only, cost about $250 per recurring customer. That is about 60% lower.
  • Recurring customers bring in about 88% of our revenue, so they are the customers our marketing decisions should be based on.

The plan

  1. Move the LSA budget to the recurring-only Thumbtack setup.
  2. Add cost per recurring customer for each channel to the weekly scorecard.
  3. Review each channel every quarter. Fix or cut any channel that takes longer than 90 days to pay back what we spent to get the customer.

Risks and what would change my mind

  • Thumbtack can change its pricing or how it sends leads. If its cost per recurring customer rises above what LSA cost, we move the money back.
  • Fewer total leads could leave team schedules short during busy season. If that happens, we would add LSA back for those months only.

What happened

We made the switch. It is a big part of why our cost to get a recurring customer dropped from about $1,280 in year one to about $545 in year two. The full numbers are in MaidThis in startup terms: gross margin, CAC, payback, LTV.