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TiedemanLLC
01-22-2012, 03:22 PM
So at the end of every season I always send out a survey to clients asking about our services and demographic. This year I did something a little bit different. I have one client, that is completely honest when it comes to things. She is also one of my best clients, and has a great attention for detail. I love that she is picky about things.

I sent her around seven questions that ask for more detail information about our services, the pros and cons. I basically asked her to spend a little extra time telling me what she thought. These weren't questions to answer yes or no. I wanted detailed, paragraph answers.

All of the answers were great information, and gave me a lot of insight into things. However one thing that really surprised me was why my referral discounts weren't working.

I basically asked her, "We offer referral credits to clients, however very few clients use these $30 credits, what is something that we can offer as an incentive that you feel will make our current clients refer their family, friends, and co-workers for our services?"

She said that the reason she doesn't refer us is because she doesn't feel comfortable because of how high our prices are.

The past few years we could not figure out why our referral discount program has not been working well. It has actually declined since we have raised prices. But this little insight gave us the information that we needed, but at the same time has left us scratching our heads of what to do next with the lack of referrals.

Steve
01-23-2012, 01:14 PM
So after thinking about this, what different paths do you feel you could take in dealing with this issue?

Also, how big of an issue do you feel it is?

TiedemanLLC
01-23-2012, 02:26 PM
So after thinking about this, what different paths do you feel you could take in dealing with this issue?

Also, how big of an issue do you feel it is?



Believe it or not we still haven't decided what to do. The first reaction is to lower prices across the board. We are probably the most expensive service provider in this area, and we did a major price increase last Spring. So our first thought is to lower prices.

It's funny, because when we did our survey to the rest of our clients we found out that their income levels were not as high as what we thought they were. So there is another red flag.

This is where I have an issue with though. I have always been a firm believer in providing a high quality service at a high price. Which we have always done. I am afraid that if we lower our price we may attract less than desirable work, and not be able to shift through all of the "less profitable clients"

I know we have to constantly adapt, but lower the prices is one area that I never thought we would ever do. We are at a crossroads with the business right now.

Chaz
01-23-2012, 02:38 PM
I think I would ask her for some more advice..

fullblast
01-24-2012, 06:41 AM
Wow, yea that would have me scratching my head too. But as chaz said, I beleive I would go see her and ask her what she thought about it and if she had any suggestions.

As far as your questionaire, did you get a good response in having them filled out and returned? If so how did you do that, and did you offer them any incentive to send it back?
Thanks.

TiedemanLLC
01-24-2012, 10:35 AM
Wow, yea that would have me scratching my head too. But as chaz said, I beleive I would go see her and ask her what she thought about it and if she had any suggestions.

As far as your questionaire, did you get a good response in having them filled out and returned? If so how did you do that, and did you offer them any incentive to send it back?
Thanks.

My first set of surveys I sent out to everything I basically just asked for some help with ways to improve our service. I more or less told them that by answering the survey this will improve their service.

With these questions (in which I received the referral credit insight) that I sent out I actually asked ahead of time if they would mind filling out a questionaire with more detailed answers.

bruces
01-24-2012, 11:27 AM
if I am reading this correctly ,you are seriously looking into lowering your prices because one lady told you thats why she doesnt recommend your services to others ? That may be the case with her ,but is it not possible that she is the only customer that feels this way ?

TiedemanLLC
01-24-2012, 11:40 AM
if I am reading this correctly ,you are seriously looking into lowering your prices because one lady told you thats why she doesnt recommend your services to others ? That may be the case with her ,but is it not possible that she is the only customer that feels this way ?


Let me give a little more detail with the situation to help you better understand things.

When I sent out my first set of surveys back towards the end of 2011 I found out that most of my clients income level was lower than expected. With the survey we also found out that more than half of our services they thought were high in price compared to other competitors. I figured out that this is why some of my marketing pieces, especially the ones with installation work, fell on deaf ears. It was because they couldn't afford the outdoor kitchens or the landscape lighting systems. So more or less I found out my current clients have a lower income than what I expected. All of this time I was marketing for the higher priced services.

Now when I sent out this survey and received the response from her, I started to put two and two together. Our referral system has not been working at all. We have tried all sorts of incentives and still it hasn't lived up to our expectations. So with her response we found out that she didn't feel comfortable passing our name on because she knew other people couldn't afford our services and she didn't want to be looked at badly for giving out our name to someone else that couldn't afford it. Perhaps she also felt how others would look at her for "being able to afford" a high price service.


We put the two surveys together and realize that

1) Our clients make less money than what we thought

2) They already feel our prices are high compared to others

3) We lost a lot of clients this past season because they couldn't afford us anymore. They were cutting back on expenses.

4) Clients are not referring us because they think their friends, and family can not afford us.


So it all goes back to price. Out of all our surveys it never came back to quality, every single time it was price.

Chaz
01-24-2012, 12:19 PM
well at least you know your quality is good!

CHEESE2009
01-24-2012, 12:41 PM
I have to lower my prices slightly this year, or have my clients pay more tax than last year for my services. It's a lose lose in my area.

From experience, keeping the customer top priority will kill you but sometimes we have no choice.

Lawn maintenance has become the next 'fast food' type of business. Get as much work as you can, and do it faster and faster to survive while maintaining a level of quality to keep you in the game.

There are two choices we can make;

a) let the ones who can't spare anymore money walk. Obtain clients who can afford your price.
Time consuming gamble for small business.

b) increase your productivity, work even harder, reach all audiences.
Friggen annoying, God is laughing at us.

Steve
01-24-2012, 04:45 PM
The thing I am thinking about with this is, if you are keeping your customers year after year, then I wouldn't think lowering the prices would be something that would be important.

When I reflect on any service I ever got, if I was pleased with the results, I would refer them to a friend. The cost wouldn't even factor into my thought on referral. The cost would be something the person I referred to would have to take into consideration.

The only exception I can think of that might apply to this case is if this woman and her close knit group of friends live on a fixed income and can not pay more than $x per month on such services. However, if that is the case, you then gotta ask yourself, is this the customer base I want to service?

I figured out that this is why some of my marketing pieces, especially the ones with installation work, fell on deaf ears. It was because they couldn't afford the outdoor kitchens or the landscape lighting systems.

This makes sense and is good to know. Are there other services you could offer that would be needed and could be priced within a range the customer base could afford?

TiedemanLLC
01-24-2012, 06:23 PM
The thing I am thinking about with this is, if you are keeping your customers year after year, then I wouldn't think lowering the prices would be something that would be important.

When I reflect on any service I ever got, if I was pleased with the results, I would refer them to a friend. The cost wouldn't even factor into my thought on referral. The cost would be something the person I referred to would have to take into consideration.

The only exception I can think of that might apply to this case is if this woman and her close knit group of friends live on a fixed income and can not pay more than $x per month on such services. However, if that is the case, you then gotta ask yourself, is this the customer base I want to service?



This makes sense and is good to know. Are there other services you could offer that would be needed and could be priced within a range the customer base could afford?


But what is happening is that I am losing clients during the season and when I ask why they inform me they can't afford it.

I have asked myself the same question about customer base, but when I pulled the information from my county, I find out that I am right. Income levels are low and unemployment levels are almost 19%. I have to accept that my potential clients are going to be at a lower income and I must adapt to them.

bruces
01-24-2012, 06:54 PM
how is your pricing compared to others in your area ? When the customers are quitting ,who ends up cutting their lawns ?

TiedemanLLC
01-24-2012, 08:01 PM
how is your pricing compared to others in your area ? When the customers are quitting ,who ends up cutting their lawns ?


My prices are actually high compared to others. Normally around 10 to 20% higher. And I don't cut lawns, almost all of my work is pesticide applications.

Steve
01-25-2012, 02:54 PM
But what is happening is that I am losing clients during the season and when I ask why they inform me they can't afford it.

Oh I got it now. Do you feel the economy also pushed more people in your area into lawn care which lowered the prices or do you feel it's more simply a matter of people not having the income they had in the past and they are looking to cut their expenses?

TiedemanLLC
01-25-2012, 03:39 PM
Oh I got it now. Do you feel the economy also pushed more people in your area into lawn care which lowered the prices or do you feel it's more simply a matter of people not having the income they had in the past and they are looking to cut their expenses?

Honestly I am not running into that many new lawn care companies at all. I experienced more lawn care companies back in the early 2000's, then I am now. I was lucky to see one new one this past year.

What I really think is happening is people just don't have the income like they did in the past and we are one of the first expenses to cut. For example for lawn spraying, my average lawn size is around 8,000 sq ft. With six applications at $40 each + one grub ($80), they are saving $320 per year just by cutting the lawn spraying guy.

The sad thing is I can't blame thing either. Since I have noticed the decline with us we started to go through everything and cut too. I sent out emails to suppliers, insurance agents, subs, etc asking them of ways to cut expenses.

Steve
01-26-2012, 04:02 PM
I sent out emails to suppliers, insurance agents, subs, etc asking them of ways to cut expenses.

What kinds of responses did you get back? Did you find anything worth implementing?

dpld
01-26-2012, 04:21 PM
My prices are actually high compared to others. Normally around 10 to 20% higher. And I don't cut lawns, almost all of my work is pesticide applications.

giving the current unemployment levels in your state which is i beleive is one of the highest in the nation if not the highest you are going to have to drop your prices to what everyone else charges or you will continue to lose customers until you have none.

the long term forecast shows no signs of things changeing in your state anytime soon and definitely not this year and if these people are having money troubles but still want to have the service you will find yourself on the chopping block.

right now you have to do what you got to in order to keep the ship afloat and preserve your customer base and if you don't mind being the highest priced guy in the area then i guess you won't mind losing customers.
when it comes to money no one has any loyalty and if times are tough and they got to cut back you, me and anyone else will be cut off if someone else comes along offering to do it cheaper.

based on you telling me that your prices are higher then most i highly doubt any marketing is gonna help you if your state is in that much trouble and the only thing that will help is lower your prices.
the products you use are the same as what anyone else will use and regardles of whether you do a better job the customer won't and usually never will understand that.
they are mostly driven by cost.

TiedemanLLC
01-26-2012, 05:38 PM
giving the current unemployment levels in your state which is i beleive is one of the highest in the nation if not the highest you are going to have to drop your prices to what everyone else charges or you will continue to lose customers until you have none.

the long term forecast shows no signs of things changeing in your state anytime soon and definitely not this year and if these people are having money troubles but still want to have the service you will find yourself on the chopping block.

right now you have to do what you got to in order to keep the ship afloat and preserve your customer base and if you don't mind being the highest priced guy in the area then i guess you won't mind losing customers.
when it comes to money no one has any loyalty and if times are tough and they got to cut back you, me and anyone else will be cut off if someone else comes along offering to do it cheaper.

based on you telling me that your prices are higher then most i highly doubt any marketing is gonna help you if your state is in that much trouble and the only thing that will help is lower your prices.
the products you use are the same as what anyone else will use and regardles of whether you do a better job the customer won't and usually never will understand that.
they are mostly driven by cost.


Well spoken

Steve
01-27-2012, 02:38 PM
This discussion really brings up a question on whether or not your location can effect the level of success your lawn care business can achieve.

Some business owners never seem to have a problem with their location while others do.

Do you find this to be an issue? Do certain locations really limit your ability to find success?

gardenbarber
02-05-2012, 03:52 AM
Cost is only an issue when budgets are tight - so location will affect some more than others. As general locations that house similar bands of the workforce experience similar financial circumstances so gardeners will come under pressure. But there will always be some who will pay for the service. The trick is to make sure you are that service. So you have to run tighter and cleaner and keep in business while the less productive gardeners give up. Make sure you get all the pie.....

willshome
02-06-2012, 10:52 AM
I think it is great you are thinking about what your customers think. what % of costomers have you lost and what does you bottom line look like over the last few years how much % has it dropped? Any time you rase prices you will lose customers but does the new price cover that. the higher your prices the more you will have to spend on advertising.

TiedemanLLC
02-06-2012, 09:48 PM
I think it is great you are thinking about what your customers think. what % of costomers have you lost and what does you bottom line look like over the last few years how much % has it dropped? Any time you rase prices you will lose customers but does the new price cover that. the higher your prices the more you will have to spend on advertising.


We have noticed a slow in revenue ever since around 2005 (that is the time that Michigan started our recession). We have had some good years here and there. In 2010 we actually had our best year ever. So we took that great year thinking that the economy was starting to come around and decided to finally raise our prices up, especially our fertilization prices. Right away we lost around a dozen of clients due to the price increase letter, and then throughout the season we were losing around 3-5 clients a month because of prices. Even though we raised the prices, we lost around 20+ client during the season and our revenue was down greatly.

I think another thing that happened to us is we got a big head about the 2010 season. We took a lot of things for granted, and concentrated on just the money, not the client.

Steve
02-07-2012, 02:58 PM
When that kind of situation happens, is there anything you can do to back pedal and save those clients? Even now or no?

If another lawn care business owner found that happening, would you suggest they do anything to counter it?

TiedemanLLC
02-07-2012, 04:08 PM
When that kind of situation happens, is there anything you can do to back pedal and save those clients? Even now or no?

If another lawn care business owner found that happening, would you suggest they do anything to counter it?

We tried a little bit of everything. Offering them reduce packages, payment options, and even going back and telling them "Ok, we will keep you price the same or perhaps even reduce it" but nothing worked. They pretty much had it made up in their mind that the lawn expenses was one luxury that they had to cut.

Steve
02-08-2012, 01:20 PM
This is a really interesting situation and it makes one pause to think about raising their prices. Maybe it would work better to slowly roll out a price increase after testing it with a few customers at a time?

Also I do wonder if there is a certain time that is better than others to raise prices.

TiedemanLLC
02-08-2012, 01:57 PM
This is a really interesting situation and it makes one pause to think about raising their prices. Maybe it would work better to slowly roll out a price increase after testing it with a few customers at a time?

Also I do wonder if there is a certain time that is better than others to raise prices.


What we did was reviewed everyones prices. We found that some were perfectly fine and we didn't raise them, while others we had to increase the price. We sent out the price increase notice in April of last year. So not all of the clients actually received a price increase. Probably around 80% of them did.

I think if we had to do it over again, we would have only raised the prices of those clients where the profit margin was extremely low, and left the other clients alone. Went through the year, and evaluated it again during the off season. Then perhaps did a price increase with the other clients the following year. So almost like a stepped effect.

gardenbarber
02-12-2012, 12:57 AM
How come I get a great big ad block in some of my posts - is this a forum setup - if so don't mind. Have to pay the rent somehow. But if it's a setup thing from my side I'd like to know how to control it.