In Cincinnati, OH, an anomaly exists in the form of Oasis Turf & Tree. After a relatively flat 2010, sales grew a whopping 45% last year—without the need to open an additional branch or acquire another company. Rob Reindl, founder and president, is predicting similar growth this year. (See "Managing Sales Effort Key to Growth in Lawn Care".)
Some contractors are growing as a result of customers resuming services that were previously cut, such as fall overseeding. "Customers had cut back on services over the past few years," Schlossberg relates. "We're still seeing some of that this year, but it has definitely slowed down. We also saw many customers add services last year—so we think the net change is going to remain positive."
Burklund is seeing a slightly more dramatic spike in aeration services. “People are starting to realize how valuable aerating is,” Burklund says. “Nebraska being Nebraska, it’s all clay out here.”
Collins says his market is showing more interest in organic-based lawn care. "It seems to mainly be younger people who are also more affluent," he explains. "But they also want immediate results, and the two don't always go hand-in-hand. That requires education on our part."
Pricing pressure letting up?
How contractors are growing varies as widely as the market conditions in which they operate. One thing everybody seems to agree on is that pricing pressure has been a problem. However, that too could be improving—at least in some markets.
"We've had success in renewing maintenance contracts early this year," says Chapel Valley's Reeve. "Some clients have even been willing to accept a slight price increase. That hasn't happened for four years. Particularly in 2008, we were told that if we raised our price, the customer was going to bid the job out. So you had to work with them."
ValleyCrest isn't seeing much change. Sources at the company say there has been no uptick in pricing this year, making it all the more important to continue producing high-quality work while focusing on efficiency.
Both Schlossberg and Reindl have also had a hard time raising prices—though they have also been able to resist lowering them. They've kept the increases minimal.
"We've raised our prices a few percent each year since 2007," Reindl says. "I think that's better than holding your prices in place until you simply can't sustain it any longer, and then you nail your customers with a big increase all at once."
"We are already at the high end of the price scale compared to our competitors," Schlossberg says. "So we've had very small price increases of 1% each of the past two years."
Schlossberg says consumers remain sensitive to price increases, so he typically tries to work around it. "We do not match competitors' pricing. We have generally tried to eliminate a service in order to keep a customer. We've been fairly successful with that."
Big challenges still lie ahead
This year might be a different story, though. "We are attempting to make our routes more efficient," Schlossberg tells. "We are asking customers to be a little more patient with follow-up services to help us achieve this goal. Unfortunately—with fuel, fertilizer, chemical, postage and health insurance costs all going up—it is going to be impossible to not increase prices."
The challenge of trying to raise employee pay has created additional business strain. "Our employees were very understanding through the worst of the recession when sales were down," Schlossberg relates. "But now that the economy is improving and our sales are above pre-recession levels, employees expect to see more money. We've attempted to do that by offering incentives and allowing overtime. But this year, other than the employees that are at the very top of the pay scale, we'll have to increase pay rates somewhat."
One more strain Schlossberg has been coping with is the effects of using DuPont's Imprelis herbicide last season. He has several dozen customers that are waiting for DuPont to make offers to prune or replace dying or dead plant material.
Also on the "product" front, Maryland has passed a new lawn care fertilizer law. It won't take effect until 2013, but Schlossberg says contractors will have to start readjusting programs and obtain state certification. "We'll have to start preparing this fall," Schlossberg says. (Maryland’s Lawn Fertilizer Use Act of 2011 bans the use of phosphorus except when establishing a new lawn or when a soil test indicates deficiencies. The act also restricts the amount of nitrogen that can be applied.)