When you reach the end of the season, it’s tempting to consider discounting your services to extend your season or to reach that end of year sales figure you created last January. You might be wondering why you can’t get more of your customers to purchase Fall cleanups, and debating whether it’s worth it to lower your price.
In reality, if you have been bidding your cleanups as high as they should be, you should only be getting about 20% approval. This means that you have 80% of your bids rejected. Theoretically, you could go back and re-negotiate a price that your customers are happier to pay. However, watch out for the consequence of discounting yourself. Discounting your price once is just asking for them to hold out until you lower your price next time. A hesitating customer that requires a discount isn’t the kind of person any lawn company prefers to work for.
Sending the right signal about your worth
Let me give you an example of how discounting works in my life recently. About a year ago, I purchased a new car for my wife. It came with one free year of Satellite Radio. At the time of purchase, the salesman told me, “When they call you to start paying, don’t accept the first or the second offer. By the third offer, it will be a lot cheaper, and then you can sign up for the next year.”
Well, his prediction was correct. They called me and offered me a year at $179, and I rejected it. A couple of days later, they called with an offer of $129. Again, I told them no. They called me for the third time, and I just told them to stop calling me. A few days later, they sent me a letter offering it at $99 for the year. I signed up and set a reminder for myself, a year from now, to cancel the Satellite radio. I will continue to play their game because they have trained their salesmen and their consumers that the value they place on their product, in reality, is $99.
Digger deeper for a solution
So, how does this enter into our discussion? Well, if we were to call the 80% that rejected our bid and discount our price to get the job, we would be training our customers to wait us out, that our product or service is not really worth what we bid it at.
What’s the alternative? Instead of calling them with a discount, call them and ask why they didn’t accept the bid for the Fall cleanup, and what they need the amount to be to fit their budget. Then you can negotiate with them which services you are eliminating from the proposal so that it’s worth it to your company to do it for that lower price. That way you get your end of year push, and they get their Fall cleanup at the cost they can afford.
Tips on the discussions around discounting
So next time you want to follow up a bid that was rejected, try what we do at our office:
CLIP Lawn Care Employee: We gave you a bid for a Fall cleanup, but you have not signed up for it. My notes here say that you thought it was too much to spend. Are you still interested in getting your yard cleaned up before the snow comes and in time for the Holidays?
Customer: Yes, but I just can’t spend the $600 that you quoted me. It would be nice to have my landscaping all cleaned up.
CLIP Lawn Care Employee: Well, in looking at the bid, and because we are coming to the end of our season, and we want to make sure that customers like yourself are taken care of, what do you think would be in your budget for a clean up?
Customer: I can only spend $500 on this clean up.
CLIP Lawn Care Employee: Ok, well, in looking at the bid, we could use natural mulch in back. We also might be able to not take the mulch quite as far back into the woods as we quoted you. I could have the guys do this for $500. Then your house will look stunning, just in time for Thanksgiving. Can we do that?
Customer: Yes, I think we could live with that, when do you think you could do it?
Learn to discount your Fall cleanups without discounting
See, what is important here is that you did NOT just come out and say, “Ok, we will lower the price.” In negotiating, you need to give and take on every round. If not, what you end up doing is training your customers to get you down in price continually. You have already calculated your man hour rating, and your service is worth what you are asking, don’t discount it!
Another way to discount without discounting the value is to explain that circumstances might be unique, i.e., “We have leftover mulch for the season.” “We can do it this week because the guys are going back to Mexico next week,” “We are doing another one in your neighborhood, and if we can do them on the same day it saves us travel time.”
What you do NOT want to do is to train your customers that they can get a better price from you next year by not signing up. Fall cleanups can be the most profitable service you offer. Remember, you plan to have these customers for many years, don’t train them to give you headaches!