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Most tree service owners have a vague sense of whether their leads are "good" or "bad." The phone rings, you send a crew to give an estimate, and you either win the job or you don't. Over time, you develop a feeling about which sources work and which ones waste your time.
But feelings aren't numbers. And when you're spending $1,000 to $5,000 per month on lead generation, the difference between a good source and a bad one can be tens of thousands of dollars per year.
This guide walks through the exact math you need to evaluate any lead source in under five minutes.
The value of a lead comes down to three numbers you already know:
Average job value. Add up your revenue from the last 90 days and divide by the number of jobs completed. If you did $180,000 in revenue across 75 jobs, your average job value is $2,400.
Close rate by source. For each lead source, divide the number of closed jobs by the total leads received. If you got 60 leads from Google Ads and closed 24 of them, your close rate for that source is 40%.
Cost per lead. What you paid per lead from that source. This is usually straightforward: total spend on that channel divided by total leads received.
With these three numbers, you can calculate two things that actually matter:
Lead value = average job value x close rate
Profit per lead = lead value - cost per lead
That's it. Everything else is noise.
Say you run a tree service company in a mid-sized metro. Your average job value is $2,400. You're currently buying leads from two sources.
Source A: Shared lead platform
You spent $750 last month and received 30 leads. Cost per lead: $25. You closed 4 of those 30 leads, a 13% close rate. Revenue from those 4 jobs: $9,600.
Lead value: $2,400 x 13% = $312
Profit per lead: $312 - $25 = $287
Cost per closed job: $25 / 13% = $192
Source B: Exclusive leads
You spent $2,100 last month and received 28 leads. Cost per lead: $75. You closed 15 of those 28 leads, a 54% close rate. Revenue from those 15 jobs: $36,000.
Lead value: $2,400 x 54% = $1,296
Profit per lead: $1,296 - $75 = $1,221
Cost per closed job: $75 / 54% = $139
Source A looks cheaper at $25 per lead. But Source B generated $1,221 in value per lead compared to $287. Your cost per closed job is lower with the "expensive" leads. And you closed nearly four times as many jobs.
If you had put the entire $2,850 budget into Source B, you'd have received 38 leads, closed roughly 21, and generated $50,400 in revenue instead of the $45,600 combined total.
The formula is simple, but close rate is the variable that most tree service owners underestimate. A small change in close rate has an outsized impact on lead value.
Using a $2,400 average job value:
At 10% close rate, each lead is worth $240.
At 20% close rate, each lead is worth $480.
At 30% close rate, each lead is worth $720.
At 50% close rate, each lead is worth $1,200.
The difference between a 10% close rate source and a 50% close rate source is not a 5x improvement in close rate. It's a 5x improvement in revenue per lead, which compounds across every lead you buy that month.
This is why cost per lead is a misleading metric. A $100 lead with a 50% close rate ($1,200 value) is dramatically more profitable than a $20 lead with a 10% close rate ($240 value). The $20 lead looks like a bargain. The $100 lead is actually five times more valuable.
The math only works if you're tracking leads by source. If you don't know which leads came from Google Ads versus Facebook versus a referral, you can't calculate source-specific close rates.
Call tracking. Use a service like CallRail to assign unique phone numbers to each lead source. Google Ads calls go to one number, your website shows another, and your Google Business Profile uses a third. Every call is recorded and attributed to the right source.
Form tracking. If you use a form on your website, add UTM parameters to your ad URLs so you can see which campaign generated each submission. Most form tools capture this automatically.
CRM or spreadsheet. At minimum, keep a spreadsheet with every lead, its source, whether it converted to an estimate, and whether the estimate closed. Update it weekly. After 90 days, you'll have enough data to calculate accurate close rates by source.
The tree service companies that grow fastest are not the ones spending the most on leads. They're the ones who know exactly what each lead source is worth and allocate budget accordingly.
Once you've run the formula for each source, you'll land in one of three places:
Lead value is more than 5x cost per lead. This source is highly profitable. Increase your budget on it until you hit diminishing returns. If your leads are worth $1,200 and costing $75, buy as many as you can.
Lead value is 2x to 5x cost per lead. This source is profitable but has room for optimization. Look at your close rate: are you following up quickly enough? Is your estimator converting at a reasonable rate? Improving close rate by even 5 percentage points can move this source into the highly profitable category.
Lead value is less than 2x cost per lead. This source is marginally profitable or losing money. Either the leads are low quality (low close rate), your average job value on these leads is lower, or the cost per lead is too high. Reduce spend or eliminate this source and redirect the budget to what's working.
There's one more calculation worth doing: lifetime customer value. A tree service customer who has a $2,400 removal job today might call you back next year for trimming ($800), and again the following year for stump grinding ($600). If you do good work, they refer you to neighbors.
When you factor in repeat business and referrals, the value of a single acquired customer goes up significantly. A lead that generates a $2,400 first job might be worth $5,000 to $8,000 over three years. This changes the math on what you should be willing to pay for a lead.
Most tree service owners evaluate leads based on the immediate job. The ones who grow fastest evaluate leads based on the customer they're acquiring.
You don't need perfect data to start. Pull up your records from the last 90 days. Estimate your average job value. Look at how many leads you received from each source and how many turned into jobs. Run the formula.
The numbers will probably surprise you. The source you thought was your best might be your worst when you account for close rate. The "expensive" leads might be your most profitable channel by a wide margin.
Five minutes of math can redirect thousands of dollars in monthly spend toward what actually works.
