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What's a new customer worth?

11/8/18 12:45 PM

You probably have a good list of contractors and other customers that you can rely on to keep your fleet busy. And if you're looking for new work, you're probably thinking more about job size and margin than anything else.  After all, for all the time you put into finding a new customer, it should result in a big payday when you find one, right?

Would you be surprised to know it might make as much sense to look at small jobs as well?  In business outside of hauling, it's generally a good strategy to diversify the customer lists and welcome small new jobs that have the promise for either 1) access to bigger jobs down the line or 2) a steady and predictable stream of small work in the future.

The important consideration is simple:  what's the "Lifetime Value" of a new customer to you and how large does that figure have to be to merit the effort it takes to land it (calls, lunches, low-bids, etc).  Calculating the value the way large corporations do would involve formulas and a calculator.  But for our purposes - illustrating the worth of finding small new jobs - we can make it very simple.  Just take the total profit you'd expect to get per job (revenue minus all expenses, including wear and tear on your machinery) and multiply that by the number of jobs you'd expect per year from that source.  For the "lifetime" part, just multiply the earlier sum by an arbitrary period like 5 years (with the high turnover in construction firms, a short lifetime like this is probably reasonable).

Does that money look like it's worth the effort?

What if that effort was very minimal?  Like almost no work at all?  Would that make it look more attractive?

If you're looking for a source of new business that takes very little effort to acquire, take a look at the TruckIT Hauling Marketplace.  This is a website where contractors post job offers - some large, some small - at a specific rate and haulers have the option of accepting that rate or proposing something higher.   Because location is a critical driver of hauler profitability, and jobs are spread widely across your area, you generally won't find a ton of other haulers bidding against you for work that's nearby.  And on the other side, there won't always be a job near you that makes sense.  But haulers that make a regular effort to check the job boards - like once a week - generally find a new customer or so per month.  With ZERO real investment in the effort.

There are a lot of ways to learn whether a firm is good to work for or not over the long-term, but one of the easiest is to test new customers in action - see what it's like to actually work with them.  And when you do perform your first work, talk to them about what other work they do, trade cards, and try to stay in touch with an email every now and then to make sure they're keeping you top of mind.

Topics: Haulers

The TruckIT Team

Written by The TruckIT Team

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