The Boomerang Loss Cycle

Rediscovering the influence of value in a service economy

As a family owned company concentrated on the services end of the building industry, we’re always keen on the numbers that make new business happen. Whether you run a roofing company, sell office furniture, or a landscape

contractor, the numbers driving your businesses directly correlates with the volume of bids your team delivers each month.

The reason these numbers drive successful proposals is because you’ve done your homework, run through the figures several times, and you’ve delivered a bid that provides honest value for the services requested. In a larger sense, you didn’t compromise the value of your services and your customers clearly understand the strength of getting the job done right the first time.

Lebo and Pablo working on a Carson project

But what about your competitor who isn’t cross-checking prices or the labor hours? This might be an outfit sans years of training, little or no association participation, perhaps even lacking an industry certification or two? How do you compete with these entities who bid only to win rather than becoming a long-term partner serving the needs of the customer?

Throughout the years serving the Northern Nevada we’ve been underbid countless times by the competition. Some have successfully knocked it out of the park – it’s hard to watch, but it’s not inconceivable the other guys will hit a few
home-runs playing the low-price strategy. However, this is not the norm, and more times than not, you’ll soon find the competitor delivering on what they’re being paid rather than what they had promised.

So now what? Since the economic bottom dropped out in 2008, these price wars have only escalated, creating what seems like an entirely new B2B format where service is a commodity and freebies are the added value. The result… a skewed pricing model that has taken us just a few short years to get in to, yet will take at least a decade to dig ourselves out of.

The Sunny Side of the Price War

It seems that many of you who I’ve talked with over the past six months are seeing some clear benefits to these rock-bottom price providers. Look to your calendar for example. There’s a good chance these low bid customers are possibly in the market for a revised bid. While your organization might not be the first choice (for various reasons), there’s no reason you shouldn’t have your new proposal at the top of the pile.

Rather than calling them past customers, I like to refer to them as targeted leads. And the approach to these customers is that of any new lead, with a twist…deliver a dose of humble respect, clearly outline solutions to problems you know you can solve, and present a price that won’t necessarily match prior rates, but will offer margins reflecting the new economic model.

Bottom line, you know more about the client than anyone and you have historical knowledge base to provide a strong argument. There’s value to this. And if you took the initial hit with class and integrity, it sounds like a good chance you’ve developed a stronger relationship with the customer during your time apart. The old adage, “absence makes the heart grow fonder” can apply here.

During this absence, you’ll want to put on your marketing analysis cap and find the time to discuss your performance with the former customer. What were your strengths, and more importantly, where did you drop the ball? Tremendous value can be found interacting with former clientele. They’re typically more forthcoming in their scrutiny when the business relationship has turned from sales and service, to fact-finding and improvement.

A side note for those of you with solid clients, this conversation need not take place only after you’ve lost the business. Communication is key, start this conversation early and reap the rewards for years to come.

Service in Action

Over the past eight months, our own organization has had the opportunity to serve several past clients again; some we haven’t worked with upwards of three years. During the absences, our team maintained the relationship, offered support when asked, and worked hard to remain available as some of them struggled with the ‘low-bidder hangover’.

When talking with other company leaders in different trades, I’m hearing the same thing. Remain helpful and contemporary, support the industry and demonstrate growth from the experience. In concert, these action steps can do more to cement relationships with former clients than anything else.

Remember, we’re delivering value – that’s a recipe of excellent service coupled with communication served every minute of the day. Do your part of the bargain, and you can count on regaining some of the losses served our industry. It’s about time, and about value. Is that proposal ready?

by Steve Fine, Signature Landscapes