Scott Olden, left, discusses a new commercial account with a client.
Scott Olden has a knack for exploding those common sense notions that people believe for no other reason than everyone else seems to believe in them.
Shirking widely held notions about what kinds of accounts make the most money, he sometimes asks other contractors to guess what his most profitable account is. Many are surprised to learn it’s a flower shop with a patch of grass for which he charges $20 a visit. “We’re in and out of there in under two minutes,” he says.
By keeping his eye on the numbers he’s disabused himself of many myths, including the one that says there’s no money to be made in “lower-end” residential maintenance.
Although most companies trend away from the segment as they grow, most of his 800-plus accounts fall into that category. He isn’t much concerned about being undercut by low-ballers, and he also competes successfully against the nationals for commercial accounts.
Olden isn’t a maverick—if one can define maverick as staying the course while most everyone else doesn’t—because he enjoys bucking the system. It’s because he has a solid grasp of his company’s capabilities and performance.
His company services a wide mix of properties, from ranch homes to corporate headquarters. But he says he draws the line at straying into some market segments or adding more services.
“We’re set up for high-production maintenance. We don’t do a lot of high-end residential because that requires a different focus. I’ve been tempted to chase installation, application or irrigation because at first glance they look like easy money.
“But I have to take into account the enormous capital and training costs. Even if we could take that on, it would create ripples throughout the company and everything suffers because management is stretched so thin. Things could change, of course, but right now I see a lot on the table yet.”
Olden designed his operation for high performance, and over the years he’s tuned it for maximum rpm.
He switched to two-man crews several years ago. “I used to run larger crews of three, four or more, in part because that’s what some homeowners and property managers expected. They became accustomed to seeing a big group, regardless of whether they’re really accomplishing anything. But I noticed I wasn’t losing any production when people didn’t show up. So I broke them into teams of two. The driver is in charge, and takes responsibility for training.”
He says each of his trucks is a “Swiss Army knife,” equipped to handle any type of work the company performs. Each also carries a backup walk-behind, trim mower, blower and trimmer to eliminate trips back to the shop for repairs.
He’s also designed systems to simplify communication with crew members, over half of whom are employed through the H-2B visa program and have limited English skills. To speed morning preparation, for example, he color-codes instructions on route sheets: blue means grab materials or tools from the shop, green means perform all services at a given property and yellow means “new customer, watch for special instructions and pay special attention.”
Occasionally, Olden will slip a mischievous message into the route sheet instructions such as, “Call me for 10 bucks.” If the employee’s paying attention and calls in, he’s rewarded with a $10 bill back at the office.
A large whiteboard in the break room is divided into sections for each crew. On it are posted notes, changes and any customer complaints on 3x5 index cards. “It’s a convenient place to collect all communication,” says Olden. “And it introduces a bit of friendly competition, because the crews can see each other’s mistakes. It’s become a point of pride to keep complaints off the board.”
Olden also supplies each crew with a point-and-shoot digital camera, which they use to photograph trouble spots and areas that need special attention on each property. The photos are downloaded onto a PC in the breakroom each afternoon.
“It’s really been an elegant solution to a number of issues,” says Olden. “The photos are time-stamped, providing proof that the crews were on site; it gives us a measure of quality control without having to visit every site every day; and it gives up a heads-up on problems without the crew member having to stop and write up a report.”
The biggest change Olden has made by far, though, was putting crews on “commission” a few seasons back. Each crew member earns credits for the work they perform against the time budgeted for each property, with a guaranteed minimum wage. In other words, employees can earn a bonus for beating the budget.
“When I introduced the system I simply said, ‘This is an opportunity for those who want to go after it to make more money. If you’re happy where you’re at, nothing’s going to change; you’ll make the same wage.’ The slackers quit in a couple of weeks, the guys in the middle were happy and the high performers were ecstatic.”
In addition to improving performance in the field, Olden says the system has a number of benefits:
- It locks in the company’s No. 1 expense, labor, as a ratio of sales and adjusts costs accordingly if sales slow down
- It allows employees to set the standard for above-average performance, rather than an arbitrary measure imposed by management
- It gives employees incentive to learn how efficiency relates to profitability, to innovate and to avoid costly mistakes
- It provides automatic raises to new hires as they learn
- It’s introduced an element of competition as well as competition; crews often negotiate with each other to adjust workloads
Olden says the system has also increased employee morale, performance and retention dramatically. “Every crew member on board right now is well above the minimum, and some are literally off the chart. I had to make a new scale.”
Making the most of marketing
The systems he’s put in place for crews have greatly reduced Olden’s management burdens and allowed him to focus his efforts on growing and tracking business.
He’s paid particular attention to generating leads, and has hired two estimators to keep up with the volume. “We get on average 100 calls a day,” he says, “and we probably follow up on 25 and give out eight to 12 estimates.”
He keeps close tabs on the numbers, including a monthly summary of where leads came from, how many are closed and how much each costs. He spends up to 5% of his budget on advertising. “I’ve experimented with pretty much everything through the years.
“Referrals are of course the best, but we’ve had good luck with door hangers for residential. They’re both the most expensive and most effective, with a closing ratio of around 50%. Our truck signage has also been successful.” He says he’s largely given up on garden shows, broadcast ads, and all but the most basic Yellow Page listing.
“We also track by job type. If we see something’s popular, we may go out and look for a deal on nursery stock, for example and run a promo.”
He also keeps tabs on customer complaints and cancellations by crew, and awards bonuses if problems trend downward. “We’ve managed to increase sales and decrease complaints, which tells me we’re far from exceeding our capacity,” he says.
At least once a year, Olden produces a complete summary that breaks down dollars per hour and ranks all customers. “I compare it with PLANET’s (the Professional Landcare Network)benchmark numbers to see how were doing on costs. And the customer breakdown lets me get and handle on what people’s tolerance levels are for spending and where we’re making money. I don’t do across-the-board price increases; it’s really a judgement call on a case-by-case basis.”
In addition to the numbers, Olden likes to keep close tabs on his customers’ attitudes, conducting regular surveys through his newsletter, with invoices and on seasonal color forms.
Several years ago he decided to conduct an experiment to see how his marketing efforts compared with others. He and his office staff called every maintenance company in the Dallas phone directory to get an estimate for a fictional property.
“It was very interesting to see it from the customer’s perspective. We tracked everything, including who answered the phone and how long it took to get a follow-up from those who didn’t answer. It took 10 calls to get a response from some companies.
“Prices were all over the board, from $1,500 to $10,000. Some were given in a nice binder, and some were scribbled on the back of a business card. It made us realize how confusing finding a contractor can be, and just how important that first impression is.”
Olden says his company responds with a folder containing a brochure, a general idea of pricing and terms, special offers and “The Lawn Mogul’s Powerful Guarantee,” a commitment to timely and quality service.
Armed with insight into his customers and his company’s capabilities, Olden says his company is prepared for growth. Where others dismiss much of the maintenance side of the market as marginal, he sees opportunity.
“We’ll take on pretty much anything as long as we can make it profitable,” he says. “It’s just a matter of knowing our strengths and weaknesses.”