Growing to $250,000 in Revenues
My first year installing Christmas lights was a success, but it didn’t provide me with a comfortable income yet. I spent the next three years growing Atlanta Loves Christmas Lights to generate over $250,000 in revenues during an eight week installation season. In 2014, we installed Christmas lights for 286 homeowners and businesses in Atlanta, Georgia.
There are three important aspects in growing a Christmas lighting business. They are as follows: 1) A high customer retention ratio; 2) Increasing stream of new leads; 3) Crews to perform the additional installations.
Customer Retention Ratio
Only 89 out of 109 customers served in 2012 used the Christmas lighting services in 2013 yielding an average customer retention ratio of 78% over the lifetime of this business. Customers have a variety of reasons for not returning each year which will always keep the retention ratio below 100%. These reasons vary from customers moving away, leaving home for the holidays, unhappy with the price/service, the inability to contact and schedule customers, switching companies, and even death. Increasing this ratio has a direct increase on total number of customers served and revenues.
As the retention ratio is very unlikely to reach 100%, the company must replace lost customers with new customers just to maintain zero-growth. To grow, the company needs to acquire even more new customers than in the prior year.
I’m blessed to have an abundance of new leads in the Atlanta metropolitan area. In 2014, the company received over 800 phone calls and emails from potential customers. Selling Christmas lights and scheduling new installs is easy with an over-abundance of leads.
Additional installation crews must be brought online every year to grow the business and acquire more first-time customers each year. This company started with one installation crew in the first year and added an additional crew each year until reaching four crews.
In 2014, each installation crew was led by a crew-leader who had worked for me during at least one season. Retaining employees is just as important as maintaining existing customers. Christmas lights will not be hung without installation crews.
The increase in revenue is directly attributed to the increasing number of customers served, an increase in prices, and more high-dollar installations. In 2011, the average installation contributed $780 to revenues. By 2014, the average revenue per new install increased to $1160.
The abundance of leads, a returning customer base, increasing prices, and more installation crews led to higher revenues. The opportunity for growth in the Christmas lighting market is unlimited, but to realize those opportunities, the company must identify bottlenecks and continually improve.