Brandon (left) and Adam Schall of Greenstripe Lawns & Landscapes in Windsor, WI
Chris Binkley: "The hardest thing we face as a company when offering these types of specials is keeping costs down so we turn a profit for all of the services offered together."
Consumers are making hard choices when it comes to what they’re spending money on these days. According to data from the National Retail Federation from earlier this year, things like discount apparel, hair cuts, and Internet, cable and cell phone service scored high on the “untouchables” list for consumers. Lawn care services, on the other hand, were ranked among the most expendable—right there with other “luxury” expenditures such as maid services, club memberships, high-end jewelry and facials.
Many landscape contractors say it all depends on who you target and how you market. Some have shifted their sales efforts toward higher-income households and higher-value homes. Some are customizing their service offerings, payment plans and/or incentives in order to generate new leads and maintain the flow of revenue. Whatever the case, there is one constant: The contractors have a plan.
Upselling additional services
Since the recession started in 2008, Robbins Landscaping in Richmond, VA, has seen a fairly dramatic shift of its revenue toward maintenance (from 30% to 45%). Roughly 80% of that maintenance business comes from the residential market.
“We’re getting new leads for residential maintenance, but it sure isn’t what it used to be,” Doug Robbins says. Robbins Landscaping’s maintenance business is now growing in the 5-10% range, about half the pace of a few years ago. “We’re working pretty hard for it too,” Robbins adds.
Some of Robbins Landscaping’s growth has come from upgrading existing client contracts. For instance, the company has recently begun offering in-house irrigation services via a full-time technician who’s now on the staff. “This hasn’t proved to be a ton of revenue yet, but it does add another $25 or $30 to an account each month,” Robbins says.
The point is that you have to be willing to take on new projects and services as they present themselves. “Keeping in touch with the property owner is huge,” Robbins says. “It’s not like it was four or five years ago, but many are still open to certain upgrades. Roughly 85% of our design/build work this year is from existing clients, many of whom are maintenance clients. We’re getting jobs like small patios and areas of the property that were never cleaned up and planted properly.”
Simeon Meyer of Prairie Hill Horticultural Services in Lake Villa, IL, has had some success with invoice stuffers. “We’re including letters to let people know what else we have going on at that given time,” he explains.
It’s beneficial that Prairie Hill is able to offer a full range of mowing, detailing, lawn care and property cleanup services. It helps separate them from the many mow-and-blow operators in the area. One problem Meyer identifies is when the homeowner uses TruGreen for their fertilizer applications.
“Our company uses an organic-based fertilizer which is a little more expensive,” Meyer says. “Some people shy away from our proposals because we are a couple dollars more than TruGreen. There’s a huge difference in the quality, though. We constantly have people coming up to our crews who want an estimate, but many don’t go with us because of the price. I guess they need to see it as worth it in order to have a better-looking lawn than their neighbor. In this economy, unfortunately, that’s not happening as much as in the past.”
On a more positive note, referrals seem to be holding their own for Prairie Hill Horticultural Services. Meyer says being a member of the Better Business Bureau and having an A+ rating helps a lot. Prairie Hill has also worked to improve its website, www.phhort.com, along with its social media presence on Facebook and Twitter.
Invoice stuffers have come into play here as well. “Sometimes I insert flyers that our customers can pass out to other homeowners,” Meyer says. “Another thing that’s working well is referral cards they can fill out for a friend so we can provide them with a free estimate.”
Robbins has also continued to generate new residential leads by focusing on referrals from his existing customer base. He says 15-20% of maintenance revenue is coming from new accounts. Robbins Landscaping is hitting existing neighborhoods with direct mail. Job signs (18 x 24) are now posted on all design/build projects; the signs promote the company’s maintenance services with the slogan, “Another happy client relaxes here.”
Prairie Hill’s referral incentive showed some success earlier this year. For each friend or neighbor that ultimately signed a 2011 landscape maintenance agreement, the customer received one free mowing valued at $50.
Out in Colorado, Chris Binkley of Silver Peak Services has really ramped up the incentives in order to generate new leads this year. This Colorado Springs-based company initiated a coupon magazine campaign in April. The mailer goes out quarterly. “The response was unbelievable in both April and June—almost too much to handle,” Binkley says.
The coupons in April and June offered 10% off sprinkler repair. A second, more successful promotion offered four weeks of mowing for $99 with a fifth week free. “We set a maximum of 5,000 square feet,” Binkley points out. “Most of the yards here are 2,000 to 3,000 square feet, so I was comfortable with the price. Many of the residential lots we have are upper middle class. A few are military families where the husband is deployed and the wife doesn’t want to mess with the yard.”
A third successful promotion was a lawn mowing package for $115/month. It included mowing, trimming, blowing, three fertilizer applications, bi-monthly weed control and monthly edging. “This really had a good response and helped us double our accounts from the previous year,” Binkley says.
Customers have been responding well to this type of service bundling in order to get the value they want. As another example, Binkley says there are numerous contractors in his market who perform spring aeration services, but he takes it a couple steps further. “I do aeration, but also offer power raking and spring fertilization.”
Be careful not to “give it away” though
Binkley offers one important note: “The hardest thing we face as a company when offering these types of specials is keeping costs down so we turn a profit for all of the services offered together.”
Robbins issues a more stern warning. “The most dangerous thing we can do is give our services away. When I talk to a client, I explain that we value their business and are confident they’ll be happy with our work—but we just can’t afford to lower our prices, even by 10%. I show them that we must work off of a 10% profit margin in order to sustain our business. If we lower our prices by 10%, we are working for free, and that doesn’t make any sense. We push that ‘one-stop shop’ concept as the added value a client gets from hiring us. Then it’s my responsibility as the owner to make sure the client understands that value.”
In today’s changing market, Robbins says everything has to be about the customer. “Years ago it was all about the work you’d done in the past,” he explains. “That’s great, but now it has to be more about how you are going to solve this customer’s problem.”
In residential maintenance and even small commercial, Meyer thinks clients are looking for someone trustworthy who knows what they are doing and can answer a question when needed. “We make sure our employees are knowledgeable with horticulture, not just how to mow a lawn,” Meyer says.”
In Windsor, WI, the Schall brothers of Greenstripe Lawns & Landscapes say that visibility with clients has been an important part of their early success. “It helps that Adam and I are on properties maintaining quality,” Brandon says. “This makes a big difference in high-end residential. The wife and kids can trust the landscaper. Even the dog can.”
The Schalls started their business a few years ago while still in college. They’ve grown every year, even though things have tightened up a bit over the past year. “Our residential clients are sticking with us, though,” Adam says. “We focus on subdivisions with $400,000 homes and up. When you have families and careers like these people do, you need to hire someone to take care of your lawn.”
Greenstripe recently switched to Ferris mowers. Brandon says the independent suspension on the riders has had a positive effect on not only productivity, but also customer satisfaction. “Our employees don’t get beat up so much when mowing all day,” Brandon explains. “So they’re happier when working on properties, and customers notice that.”
Residential maintenance contractors who are dominating today are taking every little edge they can get.