High maintenance

Eddie Martindale compares landscape maintenance to a trip to the local Wal-Mart — in a good way. “They have the 24-pack of pop shelved in the back of the store,” says the president of D&E Landscaping & Grading in Richmond, Mich. “You walk through the store and grab extras on your way out.”

Martindale says, “That is how we see maintenance: You have the fishline and hook to bring in the upsells or to make up the difference in lower prices and margins with more enhancement work.”

Lately, he noticed the maintenance half of his business, which is largely commercial, is luring in installation leads. The design-build sector has long been known for seeding maintenance contracts after projects are completed.

“People are spending more money on light landscape upgrades rather than having us just mow the lawn, so we’re generating more work that way,” Martindale relates.

Meanwhile, Grand Entrance Group in Willow Springs, N.C., is proving that the tried-and-true cross-selling tactic of converting design-build projects into long-term maintenance contracts is still a recipe for growth. Grand Entrance started as a commercial sign company working for national builders. “They kept asking for maintenance,” says Mike Bird, COO, relating that the business acquired Raleigh-based Commercial Landscape Management.

The regrouped business was a $1-million company with 18 employees in 2019. “Now, we are at over 70 people and about $10 million in revenue,” says Bird, noting the company was named to the Inc. 5000 list of fastest growing companies.

Currently, maintenance is 40% of revenues and Bird’s aim is to scale up to 80% through organic growth and acquisitions. There’s also a great opportunity to do more for existing property managers that are overseeing more sites given some shrinkage of this role after the pandemic.

“The average property manager in our area had nine properties and now it’s closer to 18 to 20,” Bird relates of the resulting maintenance opportunities.

Is the market high maintenance or low maintenance? Lawn & Landscape caught up with landscape maintenance companies across the country to find out how.

Opportunity cost

So much demand, so little labor. The pandemic surge of work has subsided, and most companies we spoke to indicate that increases were largely on the design-build side, with maintenance waning a bit as people who stayed home decided to DIY. On the commercial side, retail and restaurant shut-downs — even for a few weeks — resulted in maintenance service slowdowns.

Jeff Allison reflects on the wave of project requests during 2020, in particular.

“It was insane, and the biggest issue we had was finding people,” says Allison, the owner of Allison Outdoor in Eastpointe, Mich. “We had the perfect storm in the worst way possible of demand for work and not enough labor.”

Allison estimates his mostly residential business could have increased 10-fold.

Though he kept people on board he might have laid off, and those who exited were nearly impossible to replace. “We struggled for about two years when many other companies with a sustainable workforce were able to thrive,” Allison says. “But we made it through.”

The good news: Clients were much less price sensitive during the pandemic. However, they’re far more concerned about costs today.

“Our costs were up for materials and labor, but because we were in demand, when customers called and were ready to have a landscape project done, they were talking price. It was, ‘How soon can you start?’” Allison says.

Maintenance was steady but with simple properties, there was a bit of a slump during COVID. “People were home and able to do some work themselves,” Allison says, pointing specifically to mowing but not lawn care or enhancement jobs.

“People are back to not having time to take care of their own yards again,” he adds, though he feels “a lot of tire kicking.” Allison attributes price sensitivity to inflation and an election year followed by new administration. “It always seems that people hold on to their money tighter during election years,” he says.

He’ll receive email inquiries about maintenance services, reply to prospects and not hear a thing back.

Martindale echoes the pandemic surge of work. “We were barely holding on, we had so much work,” he says of design/build. The demand for maintenance services existed, but there was no labor to do the work, he says. “To grow maintenance was there but the labor was not.”

“Since then, we’ve seen a downturn on leads and requests for work,” Martindale says of installation, noting that maintenance is generating cash flow, yet competition narrows profit margins.

Back to labor, a perennial issue, Martindale’s company participates in H-2B. “We got a bad pick last year, and it’s not looking good for us. That’s another hurdle to get over.”

Costs, gone hiking

While prices for gas, labor and materials climbed during and after the pandemic, multi-year commercial maintenance contracts prevented SchoggenScapes from passing along some of the cost to clients.

Phil Schoggen, vice president of the company, says costs have leveled off for his business, with the exception of insurance, which is “very volatile.”

Despite the pain of some long-term contracts during the pandemic, SchoggenScapes has maintained and promoted its three-year service agreements, which appeal to industrial and school accounts with budgeting demands. But this time, the company built in a limited price increase clause based on the consumer price index. “This allows clients to project the worst-case scenario over the next three years.”

Sudden pricing jolts don’t go over well.

“If the price increase is small like less than 5%, you usually don’t see people balking at it if you can explain,” Allison says.

He had some explaining to do after holding prices for years. In 2022, maintenance contracts increased by 10% for his mostly residential operation. The following year, another 5% hike was required. Allison attributes it to lower pricing for this service than other offerings, with design/build more easily absorbing cost increases since estimates are line-item based and account for the latest going rates.

Then there’s this question: How can lawn maintenance contractors prevent clients from categorizing them as a commodity? In a word, companies say, “service.”

“Chick-fil-A and McDonald’s are both in the fast-food business but there’s a difference in the service you might receive at one vs. the other,” Schoggen says.

There’s a cost difference, too.

Martindale emphasizes this to account managers and technicians, who relay a value message to customers who push back on price increases. “We are selling a customer experience, from our staff to equipment to the end result of the service we provide,” he says. “And to many, it’s worth a higher price if we are always punctual.”

When commercial clients like HOAs balk at even slight increases, Martindale and his team get creative. Common areas might be cut biweekly during the slower-growing summer season. “You don’t want to lose an account, especially if you have a good relationship,” he says. “We try to make it work within their budget while making sure it’s still profitable for our business.”

That said, Martindale does caution customers who ask about reducing service frequency, such as dipping from three annual shrub prunings to one or dropping from six lawn care treatments to four. “We explain the repercussions of cutting services and discuss their expectations,” he says.

Experimenting with electric

Allison stood in a graveyard intently watching a self-driving robotic mower the caretakers had unleashed on the property.

“I was in awe,” he says, seeing a role for automated mowers as a labor support on large, open properties — but not a replacement for the human touch.

“I don’t think you’ll ever be able to go 100% autonomous with mowers,” he says, mainly citing tight spaces with a lot of pedestrian traffic like retail centers.

At SchoggenScapes, one crew tested hand-held electric equipment, especially focusing on servicing restaurants and fast-food accounts with drive-throughs where noise can be distracting for their customers. “The clients really seemed to like that the equipment wasn’t so loud,” Schoggen says.

The company is entering year two of the pilot program. “I’d like to see where we are after year three and how battery life holds up before we start diving into more electric hand-helds,” he says, relating his is the only company in central Mississippi trying electric.

Schoggen’s been keeping an eye on automated mowers, too, keeping this in mind down the road for industrial sites and wide-open spaces. The company will demo some self-driving mowers this spring. “I think we are years away from leaving one on a site and not having to worry about it,” Schoggen adds. “I can see rolling it off a trailer so it can start mowing while a crewmember jumps on details like trimming.”

For now, Bird isn’t seeing electric equipment or automated mower adoption in his Carolinas market.

“Someday it’s coming, to be fair,” he says. “But not yet.”

Setting goals

Martindale expects level growth in the maintenance sector, an intentional forecast based on the company’s desire to remain flat. “We’re looking to hold where we’re at,” he says of mowing accounts. However, he sees opportunity to increase the lawn care sector. “We have room to add work in that area,” he says.

Allison will shift operations even more toward maintenance, aiming for prospects with higher property values.

“What I love about maintenance is the recurring revenue and it’s forecastable, while with design/build, you’re at the mercy of the market and last year definitely showed this,” Allison says, relating it required twice as much work to sell the same amount of projects in 2024 and the average total cost per project was $15,000.

By reaching for clients in the $500,000 to $800,000 property value bracket, Allison expects they will focus more on quality vs. price. His business’s current sweet spot is homes in the $300,000 to $400,000 range.

Allison adds, “In my opinion, increasing maintenance will provide a more sustainable model.”

The author is a freelance writer based in Ohio.