Business consultant and Green Industry veteran Judy Guido has been doing a lot of research on the market for “green” landscaping services. She has studied successful landscape companies to identify benchmarks and best practices. She has also examined different types of consumers—identifying needs, wants, buying power, and attitudes toward “sustainability.”
Guido’s findings were presented at PLANET’s 2013 Green Industry Conference (GIC) on October 23 in Louisville, KY. Her session, “How to build a profitable green company,” drew a packed house of curious landscape contractors who wanted to learn more about how to make the concept of “sustainable landscaping” work from a sales, market share and profitability standpoint.
6 big drivers of green growth
Guido said there are six major drivers of “green” purchasing by consumers: declining natural resources (i.e. water) and subsequent regulations, access to information (people today want to see inside a company), increased customer expectation, demographic shifts (i.e. baby boomers retiring, wealthier women), population shifts (i.e. urbanization), and climate change. These changes are real, creating an ever growing market now in the $320 billion to $420 billion/year range. The specific market for green landscaping services is harder to put a number on, but is also growing, according to Guido.
Dispelling myths about green
Why is the market growing? Guido said that almost all (98-99%) of consumers want “greener” products and services—if those products or services work well and are comparably priced with more traditional ones. The good news for landscapers is that, contrary to popular belief, green services can be on par price-wise. In fact, they can be 6-8% less expensive, according to Guido.
Other “green landscaping” myths include:
- There’s no profit potential
- There’s no differentiation advantage because so many are promoting “greener” offerings
- Quality is sacrificed
- Hard to execute
- Lose focus on your core business
- Market is too small
- Will dilute our overall brand equity
How you can actually make more money
Guido’s research shows that roughly 60% of companies reported more profit with green products and services. The key for these companies, Guido points out, is that they had a real strategy with a concerted effort.
“Don’t wait to be asked if you offer greener solutions,” Guido warned the GIC crowd. “Leaders introduce opportunities to their customers. If your model is to wait to be asked, just watch where your market share and reputation goes.”
Guido says she has seen landscape companies that have actually lost out on large jobs because they did not have a green solution when queried by a prospective client. Being unprepared is the best way to fail as the market for green products continues to grow. On the other hand, the best way to succeed is to understand that the pathway to profits starts with having a clear business case for going green.
Consider these six elements in your pathway to profits:
- Use a green offering to break into a new market
- Be prepared to change elements of your existing business model
- Top management must be behind it and involved
- Measure and track performance and results
- Ask customers what they think of the greener alternatives, along with what they might be willing to pay for them
- Collaborate with people outside of your company such as vendors
Make no mistake, there is good money to be made by becoming a green company. Where does the profit come from?
- Create innovations, better solutions for clients
- Intangible benefits
- Cost advantages
- Charging a price premium if your market will tolerate it and you’ve done your research to feel confident in this
- Outsized market share