Making a deal
|By Lindsey Getz|
Build customer relationships by offering clients more while boosting profitability.
Packaging services together can be an effective way to drive more revenue while also building goodwill and strong relationships with clients. But it’s important to make smart choices when packaging services together in order to get the most out of the effort.
Jack Moore, owner of Grassperson Lawn and Landscape in Lewisville, Texas, says bundling services provides a lot of value in clients’ minds.
Most people would prefer not to have to find and hire a variety of different service providers to work on their property if they can hire one company that they trust to do it all. He says one of the challenges is determining which services to package together. The goal is always to find services that the same crew can complete in one visit to reduce trip costs.
“Obviously, that’s not always possible,” Moore says. “The irrigation crew is not going to be skilled at fertilization and weed control as each is its own specialty. However, our goal is always to package what we can for a singular crew to handle. If we can add a service to the visit that the customer sees a lot of value in — such as cleaning out gutters, something that people really don’t want to do themselves — then we can add profitability to that service visit while also making the client happy.”
Moore says that landscape business owners should consider which services might be considered “high value” to the client while serving as an easy add-on for the company.
“Fire ant control is a good example of this for us,” he says. “Almost anyone working in our company is trained to provide that service. It’s high value to the client and to us. Drainage and drainage repair, which are commonly needed in our area, are a low-hanging fruit and another one that we often go after. But the timing on selling that service is critical as clients don’t always see a need unless they have standing water immediately after a rainfall.”
In terms of different service bundles, Grassperson has found success with a “good, better and best” lineup. The majority of their prospective clients lean toward that middle category, which is a little better than the basic package. If clients choose the basic package, then it’s viewed as a sales opportunity.
“Our goal is to get out there and prove to them that they’ve made a good choice by hiring us,” says Moore. “Once we’ve done that, we can start talking to them about other services that we offer.”
Darrin French, owner of Greenridge Landscape Inc. in Lynnwood, Washington, agrees that clients see a lot of value in hiring one service provider who can “handle it all,” and he has no issues with bundling multiple services together.
“Clients appreciate that they don’t have to call around to different vendors and feel like they have all of these different relationships to maintain,” he says. “They appreciate that one company is handling a number of different services for them.”
Like Moore, French says that in order to maximize profitability, he’s looking to get as many services into one visit as possible. Routing also comes into play as the most profitability comes when multiservice clients are also in close proximity to one another.
Joseph Barnes, marketing director for Yellowstone Landscape, headquartered in Bunnell, Florida, with locations across the country, says that the company is intentionally seeking clients who want multiple services.
“Our preference is to work with clients who hire us for landscape maintenance, fertilization and irrigation. We want to handle all three because of the fact that they really do go hand in hand,” Barnes explains. “We don’t think of that as a bundle deal but instead that we can provide the most possible value by handling all of those services. Occasionally we run into a client who already has a good relationship with a sprinkler company and wants them to handle irrigation while we handle everything else. But typically, this is a red flag for us that it’s not going to be a good fit. You open the door to clients or other vendors playing the blame game when you aren’t handling everything for them from the start.”
Do discounts work?
While a lot of landscape business owners might assume that bundling services means they should weave a discount in to show “goodwill” to the client, our experienced sources don’t agree with that approach. In fact, they say that discounts can sometimes be a big mistake.
Barnes says that discounts can backfire by setting the client relationship off on the wrong foot. Whether services are bundled or not, the company does not do discounting.
Sometimes discounting can be tempting to land a job, but Barnes says this is a slippery slope.
“When a client comes back and says that the competition is 5% cheaper, it’s not in your best interest to give them 5% off,” Barnes warns. “All that does is imply you didn’t give them the best price the first time. We see a lot of contractors do this to get work, but we believe it’s not the best way to start a relationship.”
Instead, Barnes says that if clients come back saying they need 5% off, they’ll look at what they can do to reduce the scope.
“We make sure that clients know our first offer was exactly what we needed to get to the job done the way they expect it to be done,” he adds. “If they need us to shave some cost, then we don’t just discount our services, we talk about where we can cut back. For instance, maybe they don’t really need all of the visits they put in their scope. If we need to make cuts somewhere, we first have a realistic conversation about expectations. Transparency is the best way to start a client relationship.”
French and Moore also agree that discounts are not always wise. French says that on a case-by-case basis he might offer a military discount, but as a general rule of thumb, he thinks discounts are a bad idea for the same reasons that Barnes cites.
“We do everything that we can to avoid discounting services,” says Moore. “Sometimes, it can be a necessity due to a lack of work. For instance, historically in January and February, we’ve offered a 50% discount for us to perform a standard irrigation inspection. On face value, we don’t make money off of that, but the technicians almost always find something that needs repair. Then the repair work is at regular price. This generates some off-season irrigation work for our technicians while also providing value to clients because it’s discounted and gets them ready for spring early.”
Incentives versus discounts
While the contractors we spoke to were fairly against discounting in many cases, they did express that “incentives” are a bit different and can be seen as a valueadd if clients sign on for more services.
“Sometimes if a client has a large enhancement project that they want to do such as a flower rotation or palm pruning, we might leave that outside of the landscape maintenance contract,” Barnes explains. “Then, if they do start up a landscape maintenance agreement, we can give them an incentive to also use us for the enhancement work. For instance, if the cost of the enhancement is $10,000, we might give them $2,500 toward it if they sign the maintenance agreement. In our experience, it’s best to offer incentives outside of the maintenance contract. In terms of profit, they work best for one-time projects.”
Moore says that Grassperson has also employed strategies to secure work without necessarily discounting services. He says sometimes it must be analyzed on a case-by-case basis.
“For one large account we were looking to secure, we did their first maintenance job, which required two crews for a whole day, for free,” he recalls. “Our strategy was that we knew they were looking at us, and we wanted them to give us a chance to prove ourselves. We landed a 12-month commitment from that client.”
Of course, Moore says this is not a strategy he’d use often but says it’s a great example of thinking outside of the box. He says that every landscape business owner should know their customer acquisition cost as well as what they stand to make. It could easily make an initial incentive worthwhile.
Handling payment struggles
Ensuring that clients are paying regularly is important to the cashflow of any landscape business. But some landscape business owners have been concerned that the COVID-19 pandemic would create more problems with unpaying or late-paying clientele. For the contractors we spoke with, this hasn’t been a major concern, but they still offered some advice to ensure payments remain on time.
“One thing that we’ve done, not just because of the pandemic, is focused more on our accounts receivable,” says Barnes. “Rather than waiting for someone to get to that 90-day mark, we’re aiming to start that conversation at the 30-day mark. We don’t let unpaid accounts get to 90 days anymore.”
Barnes says that too often, landscape business owners want to write off those unpaid accounts and just send them to collections. They don’t want to hurt relationships or have tough conversations. But he says that sending clients to a collection agency is certainly not a relationship booster. It’s better to have those difficult conversations in-house.
“Focusing more closely on accounts receivable has been a gamechanger for us,” he says. “We have in-house collections people making those calls and that’s made a really big difference. They know exactly what to say and how to handle it. Honestly, sending a client to a collection agency can leave them with a bad experience. You have a better chance of preserving that relationship and collecting money by handling it yourself.”
Moore agrees that remaining on top of finances has been a key to their success.
“When we secure a new client, no matter what service we’re offering, we require a deposit,” he says. “Accounts receivable does not have to end up being a problem if you have good practices up front.
A service deposit, even for a recurring plan, coupled with the practice of keeping a credit card on file has helped prevent us from having any problems. We have the occasional slow-paying client, but we have never sent a single client out for collections, and that’s attributable to staying on top of the financials and adhering to those best practices. Ultimately, it helps our relationships with clients.”
Lindsey Getz is a contributing editor to Irrigation & Green Industry and can be reached at firstname.lastname@example.org.