Power Players Part III

Last October, Lawn & Landscape Associate Publisher and Editor Chuck Bowen sat down with owners and executives from top companies across the country to better understand the issues the industry faced in 2011 and what’s to come this year in 2012. The panel talked sales, pricing, labor, regulations and employees. All year Lawn & Landscape will be running excerpts of that conversation. Here, we pick up where the conversation left off in our March issue – bidding work and explaining to employees how to meet customers’ needs and their price sensitivity.

Chuck Bowen: How do you handle telling your managers to be more flexible with specs?

George Gaumer: Well, I think you have to wake up and realize and say, “Look, quit complaining about what other guys are doing, and understand the needs of your customers.” Consult with the customers and ask them what’s important to them. And structure a program that gives them the most for their money. Ask them what their budget is. All they can say is “No, forget it.” Build a program for them.

I think that if you approach it from a consulting way it’s better. Take that bid mentality out of your brain.

Chris Kujawa: I think there’s one thing that we’ve done when you ask, “How do you get that across?” We certainly don’t do this all the time, but if an account is big enough and important enough that we want to put the effort in.

Once you’ve looked at a place and sized it up so that you can meet their expectations, it doesn’t take you a whole lot longer to give them three bids.

“Here’s what you asked for, here’s what you’re getting and here’s what we think you need.” They’re the same numbers, just lined up differently.

So the guy gets a bid, another bid, and another bid, and then three from you.

He’s going to be curious as to why he got three bids from you, and that’s going to start the conversation.

We’ve done that a couple times now, and that’s what takes it past somebody’s assistant taking the bids and putting them into a spread sheet, and getting your bids in front of the boss, the decision maker.

Give him three bids.

GG: And so many of those customers, the managers that Chris talked about that used to have a staff, now there’s a couple of people. When it’s time to rebid the landscape, they’re going to their spreadsheet, and they’re sending whatever they used three years ago, and they aren’t looking at it. At the same time, when we do our customer focus groups, they’ll admit that they really don’t manage to that scope of work.

If the place is all right and they’re not getting complaints, everything’s good. They’re relying on us to do what’s best for them.

Bob Grover: I just think that over the scope of my career, and maybe other markets are different, but I have never been called out on missing a frequency of anything in the scope of work that I presented and what they got.

GG: They’ll only resort to that if the place doesn’t look good.

Scott Jamieson: I have a question. We don’t apply in the bid market really. So when that occurs and you start cheating and don’t follow up, does that naturally start to force pricing down and how aggressive your bids are, knowing that we don’t really have to follow this scope?

Is that what is really driving a lot of this from the good companies down when you go, “Well, they’re not going to hold us to it.”

Dale Elkins: It used to be a rule of thumb that you always bid the scope. We’ve had to alternate price more than we ever had in our lives.

So it’s just common practice now that you say, “Here’s the specs, and now here’s an alternate price that will get you closer to what you want, with a much different price.”

Presentations are going down, and you can’t get in front of people because, like you said, they don’t have the time. Now it’s just “Give me the price and let’s move on.”

GG: The first thought is, “If we don’t give them everything on that list, we’re cheating,” which isn’t necessarily the case. It isn’t really what they want, that’s what is in their computer. Their budget is dramatically different than when they created that scope.

So what you’re doing is you have to step past that and understand that they want you to provide them the best value for the budget that they have.

Frank Mariani: I think what Chris said is that if you can educate a client – we’re even doing it on the high-end market. We’re seeing insane pricing for design build – $250,000 job and somebody is charging $140,000. I said to my team, “Here’s what I want you to do: I want you to call that client and just open up the books for them and show them what we paid for the plant material and the labor force, and everything.

Just say, “Mrs. Jones, I know you have a company offering you $140,000. That’s great, they’re a great company. I just wanted to show you what we paid for everything.

“We’re making 10 percent, which we believe is reasonable profit. However they’re doing it for $140,000, we don’t know, we’re not that smart. What we want you to know is that we’re not cheating you.” That’s the biggest threat to us: people out there giving insane pricing, and I don’t want the client thinking that Mariani ripped me off.

I care about losing the contract, but I care more about losing integrity. I just tell them I don’t know how they’re doing it, but we have integrity and this is how it should be priced. And what happens is that people start to question the price. And we usually get a call later.

The author is editor and associate publisher of Lawn & Landscape. He can be reached at cbowen@gie.net.