“Measure the cost of customer acquisition and lifetime value. If you’re not measuring those, you don’t really have a marketing program.” – Peter Mollins

A basic concept that every business needs to understand is the Potential Lifetime Value of their Clients. Then they need to build systems to attain this potential value. This lifetime value is what you could possibly earn from your services to that client over the period that client is eligible for your services.

In determining the effort and expense you are prepared to put into getting new clients, as well as generating additional business with and from them, it is crucial to understand the true financial value of that client to your business — the ‘Lifetime Value of a Client’.

“The mistake everybody makes is they try and get their customers as cheaply as they possibly can.” – Dan Kennedy


The lifetime value of your clients is a direct reflection of the lifetime value of your service to them. To maximise this lifetime value of your clients, focus on maximising your ongoing value to your clients.

The most basic understanding of Lifetime Value is another reason that only the most short sighted Mortgage Broker would ever focus on commission over the best possible deal they can obtain for their client.

When you can reasonably quantify the full potential value of a new client, you will have a much clearer idea of the viability of your marketing expenses, and also of the effort and expense you should be putting into creating customer loyalty — building yourself to the status of ‘Trusted Advisor’ – and then realising this value through multiple transactions with the same client.

So understanding the Lifetime Value of a Mortgage Broking client tells you two critical things:

  1. How much expense you can go to in generating a new client.
  2. How much expense and effort you should accept to keep your existing clients,your

To be clear, I am focussing on the potential Lifetime Value of clients. Because the potential value will clarify for you what you should be doing to achieve that potential, in a way that is in the best interests of your clients and our role of their Trusted Advisor.

Some basic calculations

Let’s say, for example, a new client is worth $2,000 to your business and it takes eight working hours to go through the whole process of settling a loan with them, starting from the very first contact you have with them. If you are happy to earn $150 per hour, then you would be happy to spend $800 to generate a new client. That is, you spent $800 on marketing to get a new client and were paid $2,000 when their loan settled, leaving you with $1,200 for the 8 hours you spent, being $150 per hour.

If you do that every weekday for 48 weeks of the year, taking four weeks off for holidays, you are receiving $480,000 in commissions per year, spending $192,000 to generate clients, leaving you with $288,000. Obviously this is a simplification and you have other business expenses over and above marketing, but that is the general idea.

What if you also knew that the average client changes loans every 5 years, giving you the opportunity to help them with another loan? If your expected income is again $2,000 for this new loan that takes you 8 hours to do (hopefully less as you aren’t starting with a brand new client this time), and you are still happy to earn $150 per hour, then you should be happy to spend $160 per year on your clients ($800 over 5 years) to make sure they come back to you.

The above was just a general example of the concept of Lifetime Value and how you can tie it directly back to the financial costs you want to incur to, firstly, get new clients, and secondly, to get repeat business from them.