Strategies for Reducing Fuel Costs
Strategies for reducing fuel costs and preserving profitability.
When you’re an established business with a substantial repeat customer base, tactics like this are a legitimate option. A second Indiana contractor has refined his coverage area to one county. He’s also begun adding a fuel surcharge per mow. “Next year I’m going to have to raise my prices across the board,” he added.
That first Indiana contractor has also refined his market. “I’m heavily marketing to the neighbors of current customers,” he said. “I have also traded customers (who were a long drive away) with other LCOs who have accounts in my area. We’re all looking to hold the line on sales but reduce windshield time.”
BUY SMART
A lot of contractors are also looking to greatly improve their ability to pre-qualify potential customers over the phone before investing the money and time in driving out to make an estimate.
Many are also putting a lot more thought into how they’re buying gas:
• Use a credit card that provides a discount when purchasing fuel; one contractor said a Chase BP card gives him a 5% discount
• Ask station owners if you can get a cash discount
• Avoid filling up in the heat of the day, as gasoline expands in the heat
As you can see, there are a lot of things you can do to at least soften the blow fuel costs are having on your business. One thing you can’t do is carry on with business as usual. Perhaps this is an opportunity for the most savvy of operators.
As one Midwestern contractor so aptly stated, “The economy is slowing and the fuel prices stink. But times like this help weed out all the fly-by-night landscape companies that have cut their prices over the years. And it teaches those of us who have been in the business for a long time to keep a very close eye on the bottom line.
“It’s been said that the one thing in business we have the most control over is our overhead. Over the past 12 years in the Midwest, the economy was booming, so you tend not to watch the bottom line as much. The current economy, although slowing down and not welcomed, also has a benefit to it: It teaches us to get back to the basics of running a very efficient company.”
Ask a PRO: “Invite donations!”
“My company specializes in the fertilization and weed control treatments of residential and commercial properties. In 2007 I added a fuel surcharge to my invoices to help offset the rising fuel cost. I felt like the extra $1.75 per customer was not asking much. To my surprise, though, many customers complained about the increase in price without prior notice, and about a third of them actually refused to pay it.
“This year I decided to go a different route. I knew I had to raise prices, but I wanted to make sure that my customers were not upset again. With this in mind I decided to offer an optional fuel surcharge. I simply stapled a leaflet to my invoices reminding customers that most service companies add fuel surcharges without their customers’ prior knowledge—and that I felt like that was a poor way of doing business. I made it clear that I understood that they are also experiencing higher fuel costs and have a tighter budget.
“I finished by asking if they could add a few dollars to their next payment to help offset my higher fuel expense—if their personal budget allowed. A couple weeks after I implemented this idea, I started seeing one customer after another sending $2 here and $3 there with their payments. I even had a few customers send $50 and more because they were so pleased and impressed with how my company handled the rise in cost.
“On top of this optional fuel surcharge, I also implemented a policy stating that every customer who sent extra money would receive a thank you call from my staff. Trust me when I say that not only are my customers more loyal to GrassRoots, but they are also spreading the word to friends and family members about what GrassRoots did—and are telling them to use our service.
Josh Wise
GrassRoots Tree & Turf Care
Acworth, GA
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