Ready to play the waiting game on proposals again this year?
Most lawn and landscape companies send out proposals early in the Spring. Then they get hit by late-season snow once the bids are in the mail and no one calls them back. They sit and wait in the office for the customers to respond, but customers aren’t even thinking about mowing lawns when there is snow on the ground! Your well-thought-out proposal letter will just end up in a pile of junk mail on someone’s desk waiting for sunshine; if they remember it then.
Sure, once the sun comes out and everything is green most of your customers will call you back. However, by that time the lawn companies are going full tilt and are busy answering phones, talking with customers, making estimates, and starting the Spring mowing season. Every phone call is just another intrusion on the crazy season. Like Spring isn’t busy enough!
Why not just avoid all this? But how?
Understanding Your Business
Before you send out proposals, you should start with a review of last year’s business. Having a good understanding of how your business ran can set you up to gain profits next year. CLIPitc gives you several in-depth reporting tools that can help you through his process.
You, as the owner, need to know your man-hour rating from last year. If you don’t know this number, go back to our article on Man Hour Rating (or use this spreadsheet to calculate your man-hour rating if you don’t have CLIPitc). Combining these results with the efficiency report can help you understand if you’re charging enough to cover your overhead.
Raising prices across the board to cover your losses is poor management, and a good way to lose valuable customers. Our job costing report is a great way to understand which lawns are making you the most profit. If specific jobs aren’t reaching that threshold, then it’s time to reevaluate if you can raise the price to meet your needs or if you want to lose that customer. We’ll talk more about raising rates later.
The next step you have to go through is the hassle of creating new estimates/proposals. This process can be time-consuming, so don’t bog yourself down by doing more work than you have to.
Work Smarter, Not Harder
If you were doing commercial properties, you would have a multi-year contract that would roll over, from year to year. At CLIP Lawn Care, we do the same with our residential clients. Our agreement is “perpetual,” and we continue to keep mowing from year to year. The clause that makes this possible is that we can change the price with 30 days written notice. The customer can cancel at any time.
It is something called “the assumed close.” You assume that the sale will continue and you leave it up to the customer to change that. By sending out proposals that need to be signed and renewed, you are assuming that the customer will not want your services and you are placing the burden on them to sign and return the proposal. Why make it hard for them to do business with you? Do you assume that they won’t want to have you do business? Are you that unsure of yourself and your service?
No! What you need is to know that your prices are right, that your service is good, and that your relationship is strong. Now, assume that you will continue to do business with your customers and that they want to do business with you. Stop the insanity of Spring!
Well, you ask, “What if I show up and mow the lawn and the customer refuses to pay?” While that does happen, it’s rare. It’s a small price to pay for not having to worry, call, talk, and wonder about the future of your company every Winter and Spring.
Notices And Raising Prices
Let’s talk more about what to do if you do need to raise prices. We discussed earlier that you don’t need to increase the rates for everyone, just those clients who aren’t making you money. If you did your job costing correctly, you can now target the accounts you’d like to save versus the ones you might be willing to sacrifice. How do you know the difference?
Why would you ever want to fire a customer? It might boil down to one of several reasons. If the client lives too far outside of a profitable route, it might not be worth the time to get to them. You could raise their price, but you’d likely be charging more than fair value to adjust your route. Another reason could be that the services they request aren’t enough, and you could be investing your limited labor time into something that pays better. It’s never an easy decision, but sometimes cutting customers that aren’t profitable opens up more opportunities that are.
Our “perpetual” contracts require a 30 day written notice if we change the price. While that seems cut and dry, some best practices can help you. Staying in contact with your customers helps build a solid relationship that can lead to more business and ease the shock of price increases. At the end of the season, send each of your customers a thank you card. Taking the time to handwrite how much you appreciate their business can go a long way.
When the next season is approaching, send out notices to every customer to let them know you’re excited to see them soon. This is an excellent opportunity to talk about other services that you offer. Maybe your crew noted something in the account that needed to be done, or you did a one-off service before. Mention it to your customer again just as a reminder, but don’t ask for a reply. This letter should also be where you discuss any price increases that you’ve had to make. You want to explain a reason to them, but don’t go into too much detail or let them know that not everyone is receiving this increase.
Man Hour Ratings Ensure Profits
Always work towards making your company be the one with long-lasting relationships, good work, and man hour ratings that keep profits growing. Stop renewing your proposals, and give a 30-day notice when you need to raise your prices. Let the customer tell you if you aren’t good enough to stay with next season.
Act like the company you want to be seen as 5 years from now, today, and you will become it.