The Right Approach: Making The Bid

Last year, Vande Hey, vice president, Vande Hey’s Landscaping, Appleton, Wis., pulled out of the bidding game and started focusing his company’s efforts on non-bid design/build projects with high-end residential customers.

“In bid work, we realized that a landscape contractor cannot possibly expect to be the low bidder, have the project make money for the company and be of good quality at the same time,” said Vande Hey, explaining his company’s change of focus. “Some corners have to be cut when a contractor is putting in a low bid to get the project and, unfortunately, it starts with cutting down the quality of the work.”

Vande Hey isn’t the only landscape contractor to refocus his business away from bid work. According to Jud Griggs, vice president of landscape operations, Lied’s Landscape Design & Development, Sussex, Wis., not only are landscape contractors getting fed up with the bidding process, but so are general contractors, building owners and architects.

“Now, general contractors are favoring certain subcontractors they know they can count on to guarantee the work and get it done right the first time instead of bidding the project out,” Griggs said. “In bid work, it has been proven that if the result is a visually nice end product, the process in getting there was horrible for everyone involved. And, more likely than not, two years down the road when plants start dying because of lousy construction or installation work that was done to cut corners, that customer is spending even more money to fix the mistakes made during the initial project.”

As the structure of bid work changes, landscape contractors are learning that by doing more negotiated bid work and sticking to a client profile and sales process while doing non-bid work, closing the deal on any project becomes naturally uncomplicated.

BID WORK. Vande Hey said that 30 percent of the work his company does involves renovating the work that was done incorrectly on past commercial bid projects.

“This is our first year not doing bid work and sales are up 27 percent,” Vande Hey enthused.

Bid projects are generally installation jobs for landscape contractors, Vande Hey explained. Very little design is done by the landscape contracting company. Each part of the project is managed by a different individual.

“Someone produces the design, and then a series of contractors bid on the project,” Griggs pointed out. “These companies assume that if they have three bids they can get the best products for the best price, but the low bid is now synonymous with low quality. Companies are realizing that they are at a better advantage by focusing more attention on their landscaping and paying a little bit more instead of taking the lowest bid.”

So, as the trend away from bid-work continues, how can contractors keep their name out there, make a profit and still install quality projects while doing bid work?

Griggs said the answer to that is a process known as the negotiated bid.

“Three bidders may still be involved in this process,” Griggs explained. “Except this time the customer will negotiate more with one or two of the bidders that are the most qualified for the job.”

Eighty-five percent of the work Lied’s does is now non-bid design/build projects after scaling back its bid work.

“We still do some bid work when we are trying to develop a relationship with a particular client,” Griggs said. “But now we go into a project with an architect and a general contractor as a design team working together. That way we’re all involved and accountable and the customer isn’t being told by three different people that someone else is responsible for a mistake.”

Although customers are realizing they have to focus more on landscaping, they are still taking the lowest bid 90 to 95 percent of the time, according to Vande Hey.

Once a contractor is bonded to their bid and then chosen by the company to complete the project, there’s no backing out, Vande Hey said. One way a landscape contractor can avoid this mess is by making sure they are bidding correctly and not eliminating any details, such as the cost for bed preparation for plantings, base preparations for retaining walls, etc.

“Unfortunately, however, contractors don’t realize right away that they could be losing money doing bid work,” Griggs added. “Some of the companies that focus heavily on bid work in Wisconsin are consistently getting all this work and their bid prices are lower than our costs are, and I’m wondering how they are doing it.”

NON-BID WORK. As landscape contractors become more recognized for their professionalism, customers become more educated about what a landscape contractor’s role is in the design process, Griggs noted.

“We are at the low end of the construction totem pole,” remarked Bruce Zaretsky, president, Bruce Zaretsky Landscaping, Penfield, N.Y. “Architects have earned the right to be compensated for what they do, and we should also get paid for our designs and experience.”

In most non-bid work today, landscape contractors are charging a design fee for their designs. When the initial design is complete, the cost of the design can be separate or can go toward the project installation cost depending on the way the contractor has set up costs at his or her business.

Zaretsky charges a small fee – never more than $300 – for a design and, if Zaretsky gets the installation contract, then the design fee can be incorporated into the overall cost. For a design at Vande Hey, customers purchase a gift certificate that can be used toward the installation costs or, if the customer chooses not to install the project, then the customer can use the gift certificate toward products in the company’s garden center. Craig Klingensmith, vice president, Smallwood Design Group/Smallwood Landscaping, Naples, Fla., on the other hand, charges average design costs in the area of $3,000 to $7,000 because of the high-end residential clients the company keeps.

But contractors agree that the key to getting a hold of good design/build projects is establishing a customer profile and sticking to it.

A customer service coordinator at Vande Hey’s Landscaping takes care of all of the calls coming in from customers requesting design/build work. This employee asks the customer questions and finds out what they are looking for, what their time frame is and what kind of budget they have to spend on a landscaping project. If the customer fits the right profile, which in Vande Hey’s case means they want some curb appeal, high quality, low maintenance, long lasting landscape work done, then the coordinator will have a sales representative knowledgeable about the landscape design process visit with the customer.

“If customers come across as people who are looking for low dollar, I have no desire to deal with them,” Zaretsky said.

SELLING TIPS. Each landscape contractor has a different way of selling his or her services unique to the way they do business.

The first mistake landscape contractors make is not listening to their customers, Klingensmith stressed.

“We’re too quick to talk about us,” he said. “Listening to your customers is all about being curious and inquisitive. Customers want landscaping, but they don’t want to be sold landscaping. What your company is all about doesn’t matter unless you’ve figured out what your client wants first.”

Vande Hey said his sales representatives don’t come back from a first visit with a client without pages full of notes. On a typical visit, Vande Hey takes a list of 45 to 50 questions that he can ask his customers to help them come up with a plan that incorporates what the client is looking for, how the architecture of their home relates, the layout of the site and Vande Hey’s expertise as to what would look best on that client’s property. A landscape contractor should be cautious, however, Vande Hey warned, when suggesting what he or she thinks will work best on a landscape.

“That’s where listening comes into play again,” he said. “For example, if a customer wants one thing, but you think another thing would work better, you still have to give that customer the one thing they asked for and wanted.”

During this education process, the customer should be able to learn something from you without feeling like they are in a classroom, Zaretsky added.

“Don’t come across as smarter than they are,” he said. “Try to educate them without belittling them or coming across as overly arrogant. You have to make them feel that it’s important and exciting.”

A good sale also involves preparing a good sales packet to give customers when discussing services with them. Klingensmith gives his customers a packet that includes photos of projects, the company’s approach and philosophy, project references, design awards, the organizational structure of the company, each designer’s resume and an equipment list. Zaretsky’s packet is very similar, but he also includes an insurance statement, professional affiliations that the company is involved with and an installation sheet. This sheet details what the design fee pays for and the proper way the client’s landscaping work should be installed. Zaretsky said he suggests customers take that sheet to other contractors and do a cost comparison of how much others could do the work for the same quality.

“This helps the customers trust my work,” Zaretsky said.

Although photos are good at showing customers what kind of plants will be installed into their landscapes, so is the real thing. Many contractors on the second or third client visit invite the client into their nurseries or offices and let them see firsthand what plants look and feel like.

“From a blueprint, most people can’t envision what their landscape is going to look like,” Vande Hey said. “So, we invite them to our facility where we have live demonstrations of waterfalls and ponds and take them through our garden center and showroom to see plant materials.”

After building a new facility last year, Klingensmith said at Smallwood they take full advantage of inviting customers in to discuss landscape plans and see materials.

“Instead of just talking about our image, we bring our customers here and let them see, feel, touch and meet our company firsthand,” he pointed out.

What you need to show the client depends on what kind of visual aids they need, stressed Scott Milovich, landscape architect, Moore Landscapes, Glenview, Ill.

“With some clients, simple sketches will work,” he said. “With other clients, they want specific plans and plant photos and so on. You have to treat customers like they are your only ones and learn to understand how they are going to interpret the information you’re giving them. The breakdown in a sale comes with misunderstanding.”

NEGOTIATING PRICE & PROJECT. Negotiation is a natural part of closing any deal, but it should be done without dropping price for a reason and without giving up one thing for something else, Klingensmith said.

“If you drop your price, the customer – who trusted you up until that point – starts thinking, ‘He just took this much off of my project with no validation – I wonder how much he’s overcharging me?’” he warned.

Most landscape contractors deal with this situation by substituting less expensive products for more expensive products, trying not to affect the look of the overall landscape too drastically.

“We’ll suggest that instead of planting 20-foot trees, we’ll put 15-foot trees, or instead of planting trees every 2 feet on center, we’ll plant them every 3 feet on center resulting in less trees planted,” Klingensmith explained.

When customers are shocked by price and don’t want to give up anything in the initial landscape design, then landscape contractors can negotiate the down payment and if that doesn’t work, they can phase in the project over time.

“We require 50 percent down,” Klingensmith said. “That’s a big chunk of change, especially for someone who has just spent so much money building a new house. So, we’ll negotiate 10 percent down at signing, 30 percent down upon the start of the project and then another 10 percent down at 50 percent completion of the project. Our customers are usually very appreciative after negotiating down payment and their cost worries are over.”

Also, when a customer is concerned about price, Vande Hey said he will suggest doing the project all at once, which is cheaper than doing it in stages.

“As long as you educate your customers on the process, they usually understand the cost,” Klingensmith stated. “For example, if your company doesn’t require a down payment and the customer complains about the cost of the project, why not suggest taking 5 percent off the top of the project and requesting that they give a 25 percent deposit. You can tell them that by doing this you can walk into the nursery and with the cash up front get a slightly better deal for the 400 oaks that you need for their project, which will compensate for that 5 percent. You may not get the full 5 percent back, but you haven’t cut too much off of the overall profit, you’ve received a down payment and have made the customer feel more comfortable with the cost of the project.”

In the end, service is more important than dollars and cents, Zaretsky said.

“Negotiation is just a natural step toward closing the sale,” he stated. “Once I meet with my customers and give them the whole package, I say, ‘Here, I’m going to leave you alone with all this information. You look at it and when you’re ready to get started or if you have any questions or concerns, you give me a call.’ Seventy percent of the projects I present, I get. The quality of the work you do and how you go about doing it will be remembered long after the price is forgotten.”

The author is Assistant Editor of Lawn & Landscape magazine.

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