Favorable Forecast for Those with a Plan

More than half of snow removal contractors enjoyed a sales increase last season, and nearly everyone expects to at least maintain their current sales volume for the next two years. It’s not going to be easy, though. Customers are expecting more for a lot less.

“The 2010-2011 season was another busy winter,” says Brian Akehurst of Akehurst Landscape Service in Joppa, MD. “We didn’t have the snowfall amounts we had the previous year during Snowmageddon, but we still had multiple events.” Akehurst services a variety of retail, office and industrial properties, in addition to a mix of homeowner associations, planned communities and private residences.

In the Chicago market, Grant & Power Landscaping says its sales were up slightly, although its number of contracts grew substantially. “Our biggest challenge is the economy—and what it’s doing to the commercial market,” says Scott Hutchings, partner and vice president of operations. “The market here has gotten smaller. There are a lot of new plowers getting into the business. Even though it’s not as bad as in landscape maintenance, there is pricing pressure.”

Challenging, but not insurmountable

“One of our biggest challenges has been maintaining our current account base while having a service platform that’s scalable and effective enough to acquire new accounts, regardless of their location or complexity,” says Laura McMurray, president and CEO of Wichita, KS-based Complete Landscaping Systems. This is not a new issue, McMurray adds, but current economic conditions have made it more daunting. “The focus on metrics such as cost savings, risk mitigation and quality has been driven to an all time high.”

Many commercial property managers are looking for better service at an even lower price. The challenge for contractors is finding ways to meet both of those demands while remaining profitable.

“We are all faced with a slow economy,” Akehurst reminds. “Many of our clients have vacant buildings or have had to renegotiate leases with their tenants. To create a balance, they are looking to cut cost wherever they can. It’s no secret that our costs have also increased, from fuel to insurance to equipment and materials. But our clients don’t want to pay more, period. If we don’t give them what they want, they will find someone else to do it—no matter how good your relationship is with them.”

Colorado contractor John Reffel was able to increase his snow portfolio by 40% last year. “Existing clients gave us additional properties,” he points out. “Some were accounts we were already doing snow removal for, others were customers we did landscape maintenance for. In one instance it was a matter of a property manager not being happy with the national firm he’d been using.” Reffel is the owner of JLS Landscape & Sprinkler in Sedalia.

How to adapt and overcome

Hutchings says Grant & Power has been able to maintain its better than 90% customer retention rate, but doing so has been a real challenge. “Some price concessions have definitely had to take place,” he relates.

Flexibility. Grant & Power has also taken measures to remain flexible with contract structuring. Hutchings estimates that 25% of their contracts are seasonally fixed while another 25% are fixed on a monthly basis. Quite a few are hybrids. “We like to customize services for our clients,” says Jan-Gerrit Bouwman, partner and sales manager.

Communication has been another focus. “The biggest thing we hear when we land a new account is that the previous contractor didn’t communicate well,” Hutchings points out. “We communicate with the customer before, during and after a snow event.” Clients like to use email, but Grant & Power account managers also phone customers directly with news and updates. “Then we email a summary of what we did after each snow event,” Hutchings adds.