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Top 5 Ways to Add New Customers to Your Home Service Business

TL; DR

You can grow your business two ways: i) adding more net new customers or; ii)  more revenue from existing customers.

  • Segment customers based on monthly revenue and job count to identify risk and customer value.
  • Determine which customers are better for your business based on their profile: ease of dealing with them, profitability, ability to capture more, location, job type
  • When you’re analyzing the ability to capture more of the ‘best customers’ assess market size and growth potential (including churn rate), competitors, and any special requirements
  • Optimize profits by figuring out who are your best customers and asking them to refer business

You want to grow your business, there’s two ways to do that:

  1. More net new customers - new names that are added to your customer list
  2. More revenue from existing customers - new revenue added from your current customer list

In this post we’ll look at how to add more net new customers. We break down the top 5 things to look for so you can add customers for your home service business, and how to do so most effectively.

Not all New Business is Created Equal, Segmentation tells you about your customers so you can identify the ones you want more of

All business is good business right? Not always, we know it. Some customers are better to have than others. And what makes them better is a combination of items, from size of account to location to the relationship. Segmentation gets you the insights you need to better understand your customer makeup. And you can know what customer profiles you want to attract. 

Segmenting your customers shows you:

Customer types

  • list out all your customers and make note of frequency of jobs by month, job type, zip code, annual revenue by customer; eg if you’re a cleaning service, you could segment your customers by their average monthly spend and the number of jobs they book. 
  • You can then tier customers based on spend. Eg you could have 3 tiers of customers: those who spend between $100-$500 per month and book 5 jobs per month; those who spend between $500-$1000 per month and book 6-10 jobs per month; and those who spend more than $1000 per month and book more than 10 jobs per month.
  • you can sort on each of these data points and you can see the count for each. And you can set customer types based on the findings aboves as well as activity: active (e.g. used your service within the last 90 days), at-risk (e.g. haven’t used your service within the last 90 days) and lost customers (e.g. have not used your service within the past 180 days).

Revenue distribution 

  • see how your revenue is distributed across all of your customers, sort by customer type and see how revenue is distrubed by customer count revenue weight;
  • you can see the percentage of your revenue by customer and customer type. Eg you might have 300 customers and 70% of your revenue comes from 60 of them. And you might have 3 types of customer types based on revenue and 90% of your revenue comes from one customer type.

Desired and non-desired attributes

  • By listing out your customers you can make note of attributes about them you may not have previously considered, eg. attrition, speed of payment, referrals sent, time as a customer, etc.
  • This exercise can help you identify attributes that are desired and non-desired. This exercise can also highlight patterns that consider attributes, your customer type and revenue distribution.

Segmentation Shows Most Valuable Customers and Risk

After you’ve segmented your customers you’re able to see two core aspects of your customers, from a global perspective:

  1. Customer value - > a factor of customer type, revenue and attributes. It’s the value the customer type brings to your business based on a combination of factors in your segmentation. Eg customer type 1 may be $3,000 in annual revenue and churn at a rate of 25% annually and be last to pay whereas customer type 2 may be $2,000 in annual revenue at a churn rate of 5% annually and be first to pay. 
  2. Risk -> segmenting your customers also highlights any risk, risk takes one or more forms: too much revenue distributed against too few customers; revenue in customer types that are contracting; revenue in customer types facing greater competition; revenue in customers at risk or inactive; etc..

Best Customers, Top 5 Factors to Add More of Them

  • Value - value is a blend of revenue, cost to acquire, and cost to manage and maintain; and the costs to manage and maintain are both hard and soft costs. Eg obtaining payment, handling cancellations or complaints, managing that customer, etc.
  • Location - areas that are adjacent to each other, ease to navigate (traffic), density of other customers in that area, etc.
  • Job type - ease of doing the job and tools required/skills required to do the job, 
  • Ability to capture more - assess market size, growth potential (including churn rate), special requirements, etc.
  • Competition - number of competitors vying for the business and their ability to capture. This ability is a blend of brand and marketing efforts.

PRO TIP: Optimize Profits through Referrals

Optimize profits by building more ‘A-list customers’. In other words, after you’ve assessed who your best customers are based on value to the business and identified risk. Then build your ‘A-list’ by asking for more of them from A-list customers and targeting A-list customers.

LoyalAs is referral software that gets and tracks referrals automatically for home service businesses. Signup at loyalas.com, for a free 7-day trial, no credit card required.


Cheat notes, watch the video summary of the blog!



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