716: Before You Spend Another Dollar on Marketing, Calculate This!
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Pet Sitters Associates. Use ‘Confessional’ at checkout
Pet Care Growth. Visit petcaregrowth.com and use the code PSC15 for 15% off.
Have you ever wondered whether a marketing expense is actually worth the money? In this episode, we explore three financial metrics every pet care business owner should understand before making decisions: client lifetime value, profit margin, and cost per visit. We discuss how these numbers remove guesswork from marketing, pricing, hiring, and growth decisions. We also explain how operational efficiency directly impacts profitability and long-term sustainability. By the end, we encourage you to calculate just one of these metrics so you can begin making more confident, data-driven decisions in your business.
Main topics:
Calculating client lifetime value
Understanding profit margin percentages
Measuring cost per visit
Smarter marketing investment decisions
Improving operational efficiency
Main takeaway: “If you’re not profitable at one visit, you won’t be profitable at a thousand visits.”
Growth doesn’t solve broken systems—it amplifies them. Before chasing more clients, more employees, or more marketing, make sure you understand what each visit actually costs your business. When you know your numbers, you stop guessing and start making decisions that build a business capable of serving clients, supporting your team, and lasting for years.
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A VERY ROUGH TRANSCRIPT OF THE EPISODE
Provided by otter.ai
Meghan 0:00
If you've ever sat down thinking about what ads you're going to run, or you just got a quote for a mailer, or someone in a Facebook group says just run ads, but with those options you're staring at a $500 a month price tag, wondering is this even worth it? Then you can relate to us. We kept looking at a lot of marketing options and everything felt more expensive, not because we're cheap,
Collin 0:26
although although I mean
Meghan 0:28
I am frugal, but because we didn't know what we were buying, we didn't know what a new client was actually worth to us, and that's something we're going to explore on today's episode. Hi, I'm Megan.
Collin 0:37
I'm Collin.
Meghan 0:38
We're the hosts of Petsitter Confessional, an open and honest discussion about life as a pet sitter. We'd like to thank our sponsors, Pet Sitters Associates and Pet Care Growth. We also want to shout out our Patreon members, who are dog walkers and pet sitters.
Collin 0:49
Yeah, they are,
Meghan 0:50
and have said that the podcast has helped their business grow. So they've gone to petsitterconfessional.com/support to see the ways that they can help out. When we wanted to find out what a client was actually worth to us, instead of guessing, because that's never a good idea, we went into our software and started pulling numbers, actual data and metrics and numbers. What we found didn't just answer the marketing question; it changed a lot about how we thought about our business. The first one is client lifetime value, or LTV. This is the number that tells you what one new client is actually worth to us, we wanted to know if we spent $300 acquiring a new client, is that a good investment or a bad one? Are we going to be wasting our money? And you can't answer that without knowing what a client is worth over time-not just the first booking, but for the long term of every time they book. Well,
Collin 1:38
because we know that there, yes, there are going to be these one-time clients that come in. They need you for one visit, one care because their mom couldn't do it, or their brother couldn't do it, or because this is the uber super emergency and they never travel otherwise. And they're just going to use that one time and leave. But there is also statistically a portion of clients that are going to use you again and again and again.
Meghan 1:58
And that's great. That's exactly what we want. We want that repeat business.
Collin 2:01
But what is that number on average? What is that number of how much one client spends over their time that they are with your company? And so, when in order to calculate this, okay. So if if you were not expecting math this today, just bear with us. We're going to break it down. So in order to calculate this, the client lifetime value is the total revenue that a client generates from the day they book to the day they leave. That's it. How much over time? And so the simple formula for this is how much do they spend per visit, times their number of visits per year, times the average years as a client, so in order to answer this question, you do need another piece of how many new clients do you get and how often do they churn? How how many times do clients come into your business and then how long do they stay with you?
Meghan 2:56
Now this is kind of difficult because sometimes clients move away and don't tell us, or they just stop using us, or they found an alternative. Their mom was available this time, and so they don't need you anymore. So it is difficult to truly get this number super accurate because clients leave for a variety of reasons, and we never know.
Collin 3:15
No, so you can just take a small sample size of your total clients because if you're staring at a list of hundreds of clients right now, and going, I can't do this for all of them. Do about 20-5% of them. A quarter of your total clients is going to give you a great snapshot in order to for this. And what you're going to do is you're going to take what was the date of their first booking, what was the date of their last booking, and then you're going to subtract those two. And that's kind of a down and dirty way to do this. And then each client gets an average time between bookings of first and last, and that's what you're going to use for this calculation of. And then you know how much did they spend with you over that over those eight. Let's say it's eight months. You calculate they booked with me in January, then eight months later that was their last one, and I haven't heard from them since. But in that time, they spent $1,000 with me, and you're going to find that for each of those clients that you choose to do this for, average spend per visit, average visits per year, times average years as a client. And if you don't have, if you, if you, you may find that in this process that the client lifetime with you is not a full year. Don't be don't be afraid of that. That's okay right now. You're just you'll just you point 8.9, whatever this is. So let's say that your drop-in visits are 20-$5 and they book three times a week. That's 70-$5 per week. If they're active for 40-eight weeks out of the year, they're giving you $3,600 that year, and if that client stays with you for three years, that person is giving you $10,800 Do that again. You you look at your math and you have a client. Okay, you charge $25 per dog walk, and that client books you for three walks a week. Every week, they're giving you 70-$5 If they're active with you for 40-eight weeks out of the year, then that means that they are giving you $3,600 per year. If that client has stayed with you for three total years, they've given you $10,800
Meghan 5:19
So when you go to look at that ad and it's $300 or that marketing spend and it's $300 or $400 because you have this one client who's giving you $10,000 over three years. It doesn't necessarily look that bad anymore or that scary of a number.
Collin 5:33
No, and then if you make that, if you calculate that average, okay, that was one client. We're going to do it for the second and the third and the fourth and the fifth. You're going to get that average. That is where the real power comes from because now you know on average what's my spend for new clients, and this is my marketing that I go in. This is the ads that I run. These are the flyers that I print off. This is my time to go door knocking. Don't discount your time to go door knocking or go to networking events or all of the gear, the branded gear that you buy, that's all considered part of marketing because you wouldn't put your name on it otherwise. Like you didn't forget what company you run. This is so other people know who you and your employees work for. Put all of that together, and then you can start to see: Am I actually getting ahead of this?
Meghan 6:18
So once you've calculated that, you have your LTV number, your lifetime value of a client. If it's $500 you can afford to spend maybe 50 to 70-$5 acquiring a new client. If your LTV is $5,000 plus, you can afford to spend 300 to $500 and it's still a strong return.
Collin 6:38
Roughly a 10% difference of what you can spend with what they give you versus what you want to put into that client to acquire them,
Meghan 6:46
and it all kind of depends on what kind of person you are and your market and how how comfortable and how comfortable you are taking risks really with your money. We can still look at these numbers and go, "I have to spend several $100 on a marketing thing. That's a little scary to me, but you have to put it in perspective of well, when clients are giving you a lot of money over their lifetime, you then need to go in and spend more money, you know, pay to play basically spend more money in order to get clients.
Collin 7:13
Well, I mean, if I put it to you this way, if if you give me $500 I will give you $5,000 Would you say yes? I I think most people would say yes to that. I would say yes to that. Now again, it's not a guarantee, and that's the thing about ads. It's all about statistics, and and there's still the is the ad copy good? Is the photos okay? Is the text clear? Do my shirts make sense? Is it too busy? All of that. This is goes into this, but from a dollars and cents perspective, this is how we have that conversation of what can I actually spend. Then I have to go and make that good and make it work. But this gives us a little understanding of what my budget is because we have talked to so many people who have wanted us to run ads or have wanted us to do these initiatives, and they've looked at us and they've said, "What's your budget? And we go. I don't even know where to start. I have no idea what would be a good number. Why don't you just tell me how expensive it is, and I'll say if I like that or not.
Meghan 8:11
So if you calculate this and you do have a low LTV, there are probably a couple reasons for that. The first being that your clients, you're taking on too many one-time clients. They're not become. They're not coming back, and this could be for a myriad of reasons. Maybe you live in a snowbird town where people only come in for a season and then they leave, or you're doing a lot of hotel bookings where these people are just coming in for one trip and then they leave again. It really depends on your business what you're actually providing.
Collin 8:41
And then there's the other part of that is just retention of you genuinely have clients who come in and they just churn out, and this could be for a number of reasons. But you have to look at it: were they a snowbird situation, or am I messing stuff up and clients are dissatisfied, so they're going to go find somebody else? And how would I know that? What would I do? What kind of surveys would I send out? How would I ensure a better quality of this? And then that's part. That's just part of what you're doing, right? Are they are they leaving after six months? Are they you know are they moving? Are you in a high pass through area? So yeah, run the survey. Do an offboarding call if you want to, if you feel comfortable that, and just start looking for patterns. Are people using some similar language of well, you know, something was missed, or we did they didn't remember, or they didn't, you know, they didn't do this. That those will tell you a lot of what you need to do, and then there's frequency of how often are my clients actually booking us, if they're only booking you occasionally, of okay, well they travel in the spring and in the winter for one week at a time, or maybe only a weekend trip. Well, that's a really low frequency for you, and if you have a lot of clients doing that, the lifetime value is just going to be lower than than you know than you. Probably want, so then all of a sudden, what we start doing is asking ourselves, okay, if they if they are using me infrequently for my existing services, a great question to ask is, do they even know what I offer, or maybe can I come up with some way to serve them more frequently? So if you're heavy into cat sitting, a great example of this is, okay, well they might not maybe taking trips every month, which would be a high frequency kind of client. But you know what cats do need that is very high frequency litter box cleaning, and even if they have an automatic litter, you know litter box or whatever, you can still do maintenance on that. You can still clean that. You can still review that. You know that that can be part of this. Now you're seeing them once every two weeks for a service that increases the frequency that you are seeing them and increases the touch points that you have with them and their cat, which betters that relationship too. To
Meghan 10:53
raise that value, think about doing add-ons. So what can you do while you're already over there? Nail trims, light grooming, watering things. You could also offer memberships or different packages. The regular schedule nudges really do move this number. So you've calculated your LTV, your lifetime value, but now you want to calculate your profit margin. What do we actually keep here? That's the number that, after all the expenses, what you actually keep. So you've calculated your LTV, but now what profit margin is the next thing. What do you actually keep at the end of the day after your expenses? What do you bring in? Because revenue is great. How much clients give you is great, but you have expenses. You have business things that you need to purchase.
Collin 11:38
So just going after the top line revenue number of oh I made $300,000 this year. No, your business brought in $300,000 this year, but what actually went into your pocket? That's where profit becomes sanity because it tells you where the delta is, but and tells you a lot about your business operations.
Meghan 11:57
So while LTV tells you what clients spend, the profit margin tells you what the business earns, and that's how you know how much marketing spend you have. In order to find this, you want to take your revenue minus your expenses. So that's your payroll, your software, your insurance, anything your anything that your business is spending money on. Then you want to once you have that number, divide by your revenue. Yes, again, your top line revenue divide by that times 100 and that is your profit margin percent.
Collin 12:29
Many people will have a confusion over well, what's the difference between profit and profit margin? Profit is the total dollar amount. Profit margin is just the percent of your revenue. So again, you bring in $10,000 a month after you take out payroll, software, insurance, gas, supplies, etc. etc. Maybe you spent $7,500 which means that your profit is $2,500 and your margin is 25% because we take 2500 divided by 10,000 multiplied by 100-that 20-5% So, is that good? Is 20-5% great?
Meghan 13:06
It really depends on your model, right? You, but you can't answer that without knowing what the number is first. So, you have to calculate it, and then think about what type of business you have. So, if you are a solo, your payroll is your own labor. Are you paying yourself, or is a profit just what you didn't spend? You really have to think about that.
Collin 13:27
Yep, a lot of us tend to get into the mindset of, well, profit is just whatever I can put in my pocket at the end of the month. But when you start to change it to, well, let me pay myself first a wage, a number that I need to pay my bills. Do I have any money left over in the business? That is true profit. Once you've paid yourself, is there anything left over? And so, as a solo, we it can be a bit toxic. Of wow, I've got all this money left over, or maybe I don't, but like, where did the money go? Did it actually go in my pocket beforehand? And that's where profit first. This way of accounting is very beneficial because it comes up and it says your business will have profit in it. Now let's make all the numbers, let's reduce expenses, let's look at all this stuff to find the way to do that, basically, and that does include your pay, your take-home pay, and then there is money left over. and And a lot of people, when they start profit first. They'll set okay. Well, I'll just have 1% always goes to profit. That way, I know without a shadow of a doubt I'm profitable because 1% of my revenue goes to profit, and then I can pay myself, and I can then pay my expenses and all that. It kind of flips the mindset of I'm going to cover expenses, and then whatever's left over, that's what I take home. Instead, it goes, I will make money, and then I will have to pay my expenses out of what's remaining, which will necessarily curtail our expenses.
Meghan 14:47
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Collin 16:15
And obviously, you'll be able to do this easily because you're using a separate business account where all of your business expenses go in, and you're not having to tease out Netflix, the grocery run, and late nights out with friends from all of these expenses that you're doing. Again, this is why it's so critical to have that separate business account.
Meghan 16:31
Don't ignore that your owner's pay, though. If you're working in the business, that is a cost. You pay yourself as well. It's important.
Collin 16:39
Yeah, and you might not be paying yourself as a w2 but you can still account for it because that's the number you need. Lock that in, account for it, and see what money is left over. So you asked, we asked that question of what's a good percentage. It does depend on your business operations, but there are some general guidelines if you look across various industries. Right, if you're under 10% this could mean that the business is is fragile. One bad month matters a lot, and so you have to look at okay, why is it under 10% What what is going on here? I may so operationally or admin or labor heavy that this is dragging this down, but if it's accounting for my pay and I have 10% left in the business, well, that might actually be okay. So again, that's why these numbers get so tricky to understand because it so heavily depends on you and what you're getting out of the business. Most people will shoot for like 15 to 20-5% profit margin, especially if you have employees, it'd be really good. If you're 30 plus, this is really strong. You actually have room to invest and grow your business instead of keeping that money back. Because this is what this is what companies do. They go, okay, well, I don't want to keep so much money in my business because then I'm not getting an ROI on it. It's just sitting there, and as a business owner, as a small business entrepreneur, the best thing you can do to get an ROI is to invest back in your business, invest back into marketing, invest back into people, invest back into whatever, whatever. That's what you can do with your money. Instead of going and putting in the stock market to get a return, you can put in your business and get a much better return usually.
Meghan 18:21
If you do have a business that's kind of under that 15% think about when the last time you raised your rates was. It probably needs to happen again. Raise them. If your price is keeping pace with the cost, okay. Well, what kind of add-ons and memberships and packages and and how do you get people to spend more money with you so that you can raise that profit margin, maybe offer a mix of services. Some services are higher margin than others. So, are you pushing the right one, or are you saying yes to the pet taxi that's an hour away and you shouldn't be?
Collin 18:51
Well, Megan, you said some services have a higher profit margin than others. What does that actually mean? That means that the cost to deliver the service is much lower than the cost that the person pays for the service. So an example for this is if you can get somebody on a weekly template for poop scooping. Well, if if they're doing it every week, every time you show up, there should be less poop, right? So you kind of get this point where that first poop scoop is really expensive because it takes you a long time because there's a lot of poop. Then they get on a weekly rhythm, and then that poop scoop may only take you five minutes, and they're paying you for the same amount for that weekly, and then you can move on to the next one, and the next one, and the next one, and the next one. Additionally, whenever you can look at your service mix, not just that, but the how tightly packed are your services? What's your drive time? Drive time destroys margins in this industry. If you have a 15 minute visit that someone's paid you for, and then you drive 25 minutes to your next visit, who paid for that 25 minute drive time? Who did? You did. It came out of your profit. And so, if I can go a 15 minute visit and then have a one minute. To the next visit, that's a lot more money back in your pocket, and this is especially critical if you have a team of employees. So you have to look at your your service mix and how it is structured and where it's offered and the density of your services.
Meghan 20:15
You talked a minute ago about subscriptions on personal expenses, but we also do subscriptions on business expenses. So your software is a big purchase every single month. You're obviously not subscribing to Netflix on your business account.
Collin 20:28
Well, hopefully, no.
Meghan 20:30
But there are supplies. There are reoccurring things that we need every month or on a reoccurring basis that do add up. Your phone line, your payroll. Where are these extra expenses coming in that maybe you can cut back on or go to a smaller tier. Then there's the payroll efficiency for employees. How can we get better routes for them?
Meghan 20:51
Where can we get the most bang for our buck with them?
Collin 20:55
You may find that some employees you have a lot of clients in one cluster of your service area, and then every now and then they're having to drive 2530 minutes over to this other cluster. Well, the question arises: Does the same employee have to make the drive from one cluster to the next? Can I have two separate employees running in each cluster, or maybe do I need to focus intensely on my marketing effort in between the two clusters of employees, so that I can have this little bridge of visits from one over to the next. And gosh, golly, how much would I know how much to spend
Meghan 21:30
on my advertising to gain those new clients in between those clusters? Hey, I just calculated my LTV, and I've got a semblance of an idea of 10% of whatever my LTV is. I can put that towards marketing and advertising to gain that new client. That's worth it to me. And now here's the wonderful thing: because I can compound that, I can gain efficiency now in the route with controlling my costs and ad spend. And now this all impacts my overall profit margin and the money that goes into my my pocket. Or I can increase pay for my employees across the board because I have more money in the business, or I can do nice things for my clients, give them gifts, throw a party, a client appreciation, or you know, help out rescue dogs. Whatever your mission is that it lines up with, we're not trying to be greedy business owners here that are trying to eke out every cent from our customers and trying to not pay our employees well. But it is being wise with our money. It is being smart and and making good choices so that we can be here for decades to come. Because we're setting ourselves up now with the ability and the margin to do that.
Collin 22:32
If you want to pay your employees well, you have to understand what money your business has to spend and pay them. If we don't know that, if we don't control the costs, if we don't have efficiencies in our business, we won't be able to do that. We won't be able to reward them and pay them what we really want to pay them, or offer benefits, or any of that. All that flows from the business.
Meghan 22:52
So we have to know what our cost per visit is. What does it actually cost us to show up? And not maybe not us personally. If we have a team, what does it cost my team to show up? Because a lot of times it's it's higher than what we think it is when we account for taxes and and their software and everything that goes into it. This number, the cost per visit, is really the engine that drives everything. Because the first two numbers are great and you should know them, but this one really tells you what brass tax, how you're doing the cost per visit, the CPV is what it costs the business to deliver one service visit. So to calculate this, you take your total monthly expenses divided by your total visits completed, and that's your cost per visit. It's a pretty simple number to calculate. So if you have $7,500 a month in expenses and you have 300 visits completed. You would take $7,500 divided by 300 and you'd get $25 Is your CPV your cost per visit?
Collin 23:50
So the big question here is, how much are you charging per visit?
Meghan 23:53
Because if it's $25 you're breaking even before you even pay yourself. So that's not going to work.
Collin 24:00
Yeah, and so there are different ways to calculate this. You can cost, you can calculate your CPV with your pay included versus with your pay not included. So if you're $7,500 per month, if that does include the pay that you took that month, go ahead and leave that in there. And this tells, especially if you are heavily in the field, because this tells you a lot of what your labor is generating for the services, and so this is really eye-opening because a lot of us have a hard time going. Well, I don't even know how to calculate how much it costs to deliver a dog walk, and so this CPV calculation allows you to spread out across all of your monthly expenses and boil it down to the visit, and this is important because you don't make money unless you do visits. So all of the costs have to be tied to the visit, and when we lose sight of this, all of a sudden we have no money left in our business. And now a word from. Angela Reinbacher with Pet Care Growth.
Meghan 25:02
Hi, I'm Angela Reinbacher. In 2025, I spoke at the Dog Coast Summit about Facebook ads for pet care businesses. After speaking, the number one question I heard was, "Do you have a course? Well, I just created one. I recorded a step-by-step Meta Ads course designed specifically for pet care businesses, so you can confidently build Facebook and Instagram ads that attract more clients. And don't worry, you can start advertising with as little as 30-$5 a week. If interested, visit PetCareGrowth.com and use code PSC one five to save 15% So for solo sitters, we need to think about gas and mileage, your time at a fair hourly rate. We don't want to be working for $5 an hour here. You think about your software, your insurance, any supplies prorated per visit. So, do you have a specific leash for a dog that you walk, or if you are a poop scooper, you have to have those supplies to sanitize in between visits, or if you provide extra enrichment, those Kongs and the puzzles and the toys and all of that that you provide, how much does that factor into this?
Collin 26:07
Yep, or just how much did you spend in marketing? Are you part of a Facebook group? Are you buying ads each month? This just your monthly expenses to operate your business divided by the number of visits you did. This is how if we quickly discover that we're only earning like $8 an hour when we do the math, and this all the math changes a little bit when we have employees because CPV has to include the wages. Then it's not just the wages; it's the taxes, which is 10 to 15% on top of that, or and the workers' comp that I have to pay for on top of that, it's the total drive time. It's the benefits, the bonuses, the equipment. It's all the per seat softwares that we buy. Whether that is your your software for the pet sitting, or if you have others, or if you pay for Slack, or whatever that is, this is just your total overhead per visit.
Meghan 26:59
And this is compounded even more when you have admins who aren't actually generating any revenue at all, so they're just expending the revenue. So if you have several layers built in and several managers, your cost per visit is going to go up inherently because they're not the ones out there doing visits. You can find your total monthly expenses on your profit and loss sheet. You can pull your total visits completed directly from your software, if you use something like Time to Pet, then you divide and you compare to your average charge per visit,
Collin 27:26
because that's another question. A lot of us have various charges and very various time lengths of visits. Oh, I offer a 15 minute visit. I offer an hour and a half long visit. But here's the thing: we're we're just boiling this down to, and this is what will change a lot about how you think about the visits and the services that you offer. When you come down and you say my average cost per visit is $25 and when I look at my service mix, and here's how you find that you just look at the total number of services that you offer, add up the price for each one of them, and then divide by the total number of services. That's the average price per service that your employee that your clients pay. And so let's say you charge $32 on average across services, and your costs are $25 Well, that tells you you've got some margin in there. If you look across your service mix and you find that the average price that clients pay is $25 and it costs you $25 on average to deliver a service. Where's the extra money coming from? How are you going to grow that?
Meghan 28:29
If your cost per visit is higher than your rate, you're losing money on every visit. This is really common if we are underpriced. If your cost per visit is close to your rate, there's no room for growth, and then if you are well below your rate, you have the margin to work with. You can make real decisions that are going to affect your growth. If you have a high cost per visit, there are several things that you can do, such as route density, making them more efficient. The more visits you have in a geographic area, the lower your drive time is, and then lower your gas cost is. If you need to increase density in a route, you can do marketing in a specific neighborhood, yard signs, going door to door if they're not no solicits. Talk to your clients in the neighborhood, see if they're willing to talk to their neighbors. For having a high cost per visit, you also want to think about your visit length versus your rate. So, are you offering a 30-minute visit at 20-minute prices? Again, try to increase those prices or make it more valuable because that time really matters when you are calculating this.
Collin 29:26
Well, and a tie into that is: Are you sending a lot of your employees out to do 15-minute visits, 20-minute visits, 30-minute visits, and they're charging you or costing you an hours of labor? I know something that we have of if we need to send out an employee to do a visit, and there's nothing around it. We call it a standalone visit. We will pay them for a full hour of their time to make sure that is worth it. This eats into that profit margin. This increases the cost per visit. So, how are we utilizing our staff? Are our employees running 567, Visits, or maybe only two to three, and they've got massive drive times. Scheduling efficiency is margin in our business, and when we lose that, we lose that we lose everything.
Meghan 30:12
As we talked about earlier, the the fastest way to lower your CPV is to raise your rates. So a $2 $3 rate increase across 300 visits a month is 800 to $900 a month, almost always more than any cost-cutting measure. There are only so many efficiencies we can have in our business, but at the end of the day, if we're as efficient as possible, we we need to then raise our rates. So we've talked about three super important numbers to know. We've talked about your lifetime value of a client. If your average client is worth $3,000 over the length of the time that they're with you, acquiring them for $300 or $200 is a 10 to one return, and that that's worth it. For that, we do have to kind of get out of our heads for a little bit, going this is going to pay off. You obviously have to be smart with the marketing initiatives that you do, but it is okay to spend money to get clients.
Collin 31:04
But if I'm going to get that $3,000 from that client, how much do I actually put in my pocket? That's why I have to know the margin on them. And if I've got 10, 20% margin on that, well, okay, that's that's another $600 that's been put in my pocket. Still worth it, right? But now I know exactly what I'm buying. I'm buying. It's not just the revenue that that client generates. It's money that I can spend on things. I can either increase my my my pay for my employees. I can give gifts to clients, or yes, I can pay myself more. But that really starts to change how I know what I'm spending versus what I get.
Meghan 31:40
But the only way we get money is to do visits, and so we have to know that cost per visit. If it's high, getting more clients without fixing your operations, your internal structure just scales the problem. It doesn't actually fix it. You have to fix the engine before you step on the gas.
Collin 31:56
That is such a big one. I see a lot of people talking about how they want to make more profit in their business, and all they really are talking about is wanting to get more revenue in their business. Because if you, we've said this, if you are not profitable at one visit, you will not be profitable at 1000 visits. And so, structurally, we have to look at how am I set up, and maybe I do get some benefit of scale. You will get some benefit of scale. Benefits of scale include if I have one employee doing one visit a day, my cost per visit is astronomical. But if that one employee can start doing 10 visits a day, it goes down. Additionally, if those 10 visits happen to be very close together because I've done some great marketing in a particular neighborhood, now my CPV is even better, and I'm way more efficient in that. Which means that I've got better margins. Which means I actually have money that I can spend. And how do I know what to spend? Well, I can look at the lifetime value of my client, so I know what kind of return I'm going to get. But if you don't know how much it costs you to deliver a single service, do not try and scale and grow your business because that will actually hurt you more. And you'll look up and you'll go, "I'm doing twice as many visits as I used to do, but I don't feel like I'm making any more money. Well, most likely you're making less money because you were inefficient in your business operations, and now we have to figure out ways to correct that and actually make it profitable.
Meghan 33:22
If you are staring at a marketing initiative, or staring at some sort of advertising, or somebody is knocking on your door saying, "Purchase this; it's really good deal, and you're trying to decide if it's worth it, then you need to know your lifetime value of a client to say yes or no. This is a good deal. If you want to know if you have enough money to purchase T-shirts for your employees, or to buy tennis balls for the event that you're doing, or to hold a company appreciation event, then you need to know your profit margin. And if you want to know if you can bring on an employee, or even better, a manager or a team lead, if you want to know if you can pay somebody more, you need to know your cost per visit to know if you can bring them on and do that. A lot of times, we make marketing and operational decisions based on the gut that we have. I like this person, so I'm going to invest or do this thing that they want me to do. Or I don't, I don't know. It kind of feels a little icky. I don't want to do that. Or maybe you're looking at whether you should do an event or not, or bring on a hire. A lot of these times, we we go with our gut, and that is important. But it also needs to be backed up with numbers, and that's what these three numbers are. They are super important to know. They're going to inform a lot of decisions, and you can go with your gut, and you can you can trust your gut. These numbers are probably going to validate how you're feeling and and make your feeling even stronger.
Collin 34:39
Yeah, you may make the same decision that you would have, but now you'll know why, and you'll be able to track how it's working out and whether you'd make the same decision again. So this week we gave you three numbers. We would just want you to pick one, whether that's lifetime value, whether it's profit margin for last month, or your cost per visit. Just look at one month, okay? If you're doing the the profit margin or the cost per. Just look at last month. If you're doing your client lifetime value, pick your top 20 clients, 20 clients that have spent the most with you. See how, or maybe the ones that you like the most. I don't know. Pick your top 20, whatever that means to you, and calculate how much money, how long they've been with you, and how much money they've spent, and find the average there. That will give you a lot for how much you know you need to spend on marketing, but just pick one of these numbers. Wherever you feel like you're struggling, wherever you feel like it's been hard, maybe you have tried to grow and scale up a lot, and you don't feel like you're making any more money. Calculate that cost per visit and compare that to your average cost of services that people are paying you for. If maybe you have, if maybe nothing is tight, and you're just wondering how much can I pay myself, or can I pay myself more, or can I do take on these extra expenses? Look at your profit margin to see if it's healthy, and if you are looking at more marketing, more advertising, and trying to understand the value of each individual client in your business, look at that lifetime value calculation.
Meghan 35:58
Thank you for listening to this. We hope it's been valuable to you and your business. If it has, feel free to share it with a dog walker or pet sitter friend. We'd like to thank our sponsors, Pet Sitters Associates and Pet Care Growth. We will talk with you next time.
Collin 36:10
Bye.
