I'd recently attended a Caterpillar media event in the Raleigh, NC, area. Like most media events I've been to over the course of my 15-year career covering this industry, this one was complete with factory tours, product demos and a handful of bus rides. This Cat event in North Carolina, though, also featured something different—and very enlightening from a business standpoint.
We spent some time in the mock showroom, learning about why contractors choose to buy Caterpillar equipment. The company said its research points to five main factors, which when added together lead to the all-important No. 6: Salesman and relationship, Service and support (dealer network), Resale value, Performance and efficiency, Quality, and Value for the money.
Caterpillar also talked about how these factors are so important that a contractor is willing to put a price premium of 1-4% on each of them. Think about that for a moment, as you also reflect on how hard it has been to raise (if not just maintain) prices over the past few years.
What would your customers be willing to put a price premium on these days? Many of you will answer, "Not a stinkin' thing! The only thing consumers have really valued lately is my ability to lower my price." Fair enough; you're the ones fighting this battle, so you'd know best. But I wonder if that's the honest truth.
Caterpillar learned what its customers valued by doing something very simple: They asked them. Have you asked your customers?
Our featured contractor this issue has found that its customers place a high value on being unique. Thus, Julie Copps' expertise in horticulture and unique plant material, in addition to husband Ed's proficiency in hardscaping, allow this contractor to "charge what it charges."
Also in this issue, our Working Smarter contractor talks about how he has identified ways to reduce or eliminate things that are very costly, yet are of no value to the customer. The best example is carrying a huge materials inventory.
Finally, be sure to check out our Landscape Maintenance Industry Outlook feature. A variety of contractors both big and small talk about how they're handling things like price increases and fuel surcharges in order to remain competitive—yet profitable.
In closing, I'll leave you with this. Caterpillar said there is no such thing as the perfect piece of equipment, because the perfect piece of equipment would cost way too much money. So, the company that wins is the company that comes up with the best compromise. Do you think that philosophy can apply to your company? I'll bet you do. If you haven't begun already, start gaining a clearer picture of what that compromise might be. It'll come in handy for the next couple of years.
