BUSINESS OPPORTUNITIES: Lighting Up Profits

While “decking the halls” is a time-honored tradition at many households, it doesn’t usually top the list of homeowners’ favorite outdoor chores. Rigging up outdoor lighting exposes people to inclement weather plus various safety hazards, including getting on the roof, working with electricity and climbing trees.
 
A number of green industry service providers have discovered the profit potential in installing, taking down and storing holiday lighting – a service consumers value, but don’t want to do themselves.
 
Over the last 50-plus years, Robertson’s Landscaping in Colorado Springs, Colo., has positioned itself as a full-service landscape company – one that takes care of customers who don’t want to do any work in their yards at all, says General Manager Steve Samuels.
 
Borne of this philosophy about 17 years ago was Robertson’s holiday lighting division, which kept one crew busy hanging consumer-grade lights purchased from local retailers for 30 or so customers. “Most people love holiday lights, but they don’t want to put them up themselves,” Samuels says. “It started as a service that people asked us to provide, and we did it as necessary. We didn’t do any marketing.”
 
Two years ago, Samuels recognized the greater potential of the holiday lighting division. Not only were there profits to be made, but boosting this side of the business would allow Robertson’s to address a major labor concern – providing year-round employment for as many workers as possible.
 
To boost its holiday division, Robertson’s become a distributor of commercial-grade holiday lighting. By ditching lights from Wal-Mart for their commercial-grade counterparts and instituting a sales and marketing plan, the company added two additional lighting crews and generated more than $200,000 in revenue last season. With 100-plus holiday accounts slated for this season, Samuels hopes to devote 14 employees to the service.

GETTING STARTED. When taking its holiday lighting division to the next level, Robertson’s Landscaping partnered with a manufacturer’s representative to become a distributor. For less than a $10,000 initial investment, Robertson’s gained access to the commercial-grade products for installation or retail sale, plus training, support and a la carte marketing materials.
 
Access to commercial-grade LED lighting (light emitting diodes) is one of the first things that piqued Samuel’s interest in a holiday lighting distributorship. “LEDs use one-tenth of the electricity and they last longer so there are fewer call-backs because strands aren’t burning out,” he says. “They’re four times more expensive initially, but most LEDs have a 10-year lifespan.” (For more information on LED lights, see page 124.)
 
Last year, three-quarters of Robertson’s holiday lighting sales were LED lights vs. traditional incandescent lights. “We really market the energy savings,” Samuels says. “Everyone’s looking for green buildings, green cars – these are green lights.” An added benefit is the savings customers see on their electricity bills. “A lot of people had them up for three months last season vs. four weeks previously,” Samuels adds.
 
Lengthening the time clients can enjoy this service adds to its value, as holiday lighting can be a relatively pricey proposition for customers. Price points average around 1 percent of a home’s value for a year-one installation, he says.The net profit margin on first-year installation – which is different from subsequent years in that it includes the initial product purchase as well as setup, takedown and storage – is about 30 percent, Samuels says. Roberston’s prices the lights by the strand or piece; setup and takedown services are assigned hourly rates; and annual storage fees depend on the number of pieces being stored – it’s typically about 10 percent of the cost of lights.
 
OPERATIONAL STRATEGY. The company’s sales organization is made up of four project managers plus the owner and general manager who all sell the entire menu of services to their own accounts. Lighting is no different; it’s just one more service they sell their clients. “We feel it’s better to create a relationship with one person vs. being bounced around to different departments,” Samuels says.
 
Generally, the salesmen meets with clients and develops an estimate based on the products to be used and how long installation will take. When the job is sold, it’s entered into the firm’s scheduling software program, which is helpful, as there are some timing concerns with holiday lighting. Many clients want their lights to be installed the day after Thanksgiving and Robertson’s needs to begin installations in early October to fit them all in. While some companies offer discounts to encourage customers to sign up early, the market hasn’t forced Robertson’s into discounting yet.
 
Robertson’s Landscaping has focused on advertising holiday lighting to its existing client base by including fliers about the service in literature the company sends regarding irrigation system shut-offs during the month of October. The cost per piece for the simple information sheets is just “the cost of a sheet of paper,” Samuels says.
 
But word-of-mouth marketing has taken off, especially since Robertson’s started installing LED lights, Samuels says. Neighbors of lighting customers frequently become new clients, even though the company does not offer incentives. Newly acquired holiday clients have boosted sales in other areas of the business, too, Samuels says. “We’ve picked up 10 to 12 jobs based on clients we hadn’t known before.”
 
The design software program that Robertson’s has access to through its distributorship will add to its marketing efforts this season. The program allows project managers to input images of prospective clients’ homes and then digitally augment them with holiday lighting designs. Samuels hopes it will allow Robertson’s salesmen to “do estimates on the fly.” For example, they could take digital images of the homes of clients’ neighbors and show them the potential of professionally designed and installed holiday lighting displays. If, as the saying goes, seeing is believing, Roberston’s should have no trouble racking up another record season of holiday lighting sales.