How low can you go? That’s what prospective clients want to know today – and they’re inviting multiple companies to the bidding table to collect proposals for landscape services, and any service for that matter.
“Owners and property managers are much more active in shopping all of their facility services,” says George Gaumer, vice president and general manager of the commercial grounds management division of The Davey Tree Expert Co., Kent, Ohio.
Existing clients want to know how you can nip-tuck that contract so the price looks svelter. Residential customers call for your services, but let you know they’re collecting offers to work on their property. (As if you needed the reminder that you’re not the only game in town.) Property managers have orders from the “big man” to “cut costs across the board.” And that means deflating the size of the check that goes to you, too.
So how do you compete and win in this stifling bidding environment? Lawn & Landscape spoke with three firms that shared their approach to creating proposals that please prospects without sacrificing profit.
Prequalify before proposing
Not every customer is “the one.” That’s why prequalification is such an integral part of the sales process at Davey Commercial Grounds Management. Managers make sure a job fits the company profile before bidding on it.
“It’s best to understand and learn which customers are the ones that will fit your company’s capabilities best, because they are going to be the ones you will have the highest batting average on in terms of closing ratio,” says George Gaumer, vice president and general manager for the commercial grounds division at The Davey Tree Expert Co. in Kent, Ohio.
Special attention is paid to these job characteristics before any bid goes out: location, property size and how the property is used (retail, HOA, etc.).
If a job is a match for Davey, then it’s on to the bidding process, which Gaumer says has become more competitive over the last few years. “More owners and property managers are shopping all of their facility services, not just landscaping,” he says.
For Davey, this means more opportunities to bring on new business, Gaumer says. And it also means sticking to that prequalification process.
About 40 percent of the commercial grounds division’s business today comes from bid invitations from qualified companies. The remainder stems from negotiated sales: a customer calls Davey, but is also comparing its proposal to other service providers’ offers.
Gaumer says another change is the scope of work requested from clients. Davey has to be creative because “the customer doesn’t want a lot of extra frills,” he says. In years past, if Davey estimated a job and recommended five lawn care applications rather than the client’s requested four, this suggestion would be presented and generally accepted by the client. Same goes for landscape enhancements and maintenance. “We can’t do that anymore,” Gaumer says. “There is no room in the price for that.”
Instead, Gaumer finds that winning a bid is dependent on providing the most service for the best value. That’s just the way it goes these days.
Price is not something Davey will negotiate down just to win a job. And it’s lost work because of it. Sometimes Davey has won work it previously bidded on because the client originally went with the low bid and wasn’t happy with the end result.
Gaumer stands by these key steps to winning a bid that the company can service up to standard: First, prequalify the prospect, then perform a thorough quantification of all assets to be maintained and tasks to be performed. Figure in labor hours and equipment required to do the job. Manage the performance of the job and ensure the results live up to the bid promise. Finally, continue to focus on running a lean operation.
Show the specifics
When Bertog Landscape can show prospective clients what a professional can do for a property, winning the bid is that much easier. Sure, a photograph portfolio of completed “wow” projects always helps. But whenever possible, Tracy Bertog likes to give potential clients a tour of the company’s blue chip accounts.
“We have some prestigious properties across the north shore (of Chicago), and we point those out,” says Bertog, CEO of the Wheeling, Ill.-based firm, which he started back in high school and has steadily grown during the last four decades. “We offer to meet clients at a property so they can see the type of work we accomplish.”
Quality costs more. That’s why it’s important to show, not just tell, prospects the kind of value they can expect.
Also, Bertog aims to make all bid presentations in person at the client’s home or office. “If we can get in front of them, walk them through the whole proposal and share how we do it at Bertog, they get a better feel and see the value in what we are doing,” Bertog says.
Spelling out this quality is more important now than ever before. Because clients and prospects are asking for more – “Will you throw in this service ... add this shrub?” – and expecting that the company pick up the tab as a favor, an extra. “It’s becoming difficult to say no, and hold your ground and let them know what’s not in the contract,” Bertog says.
And it’s even harder to walk away from a job or opportunity to bid. But Bertog does if he recognizes that price is the only factor a prospect cares about. “I don’t know how some companies can afford to do the work as cheap as its being bidded out,” he says. “And unfortunately, some clients are willing to accept lower quality to save money. Standards have dropped. And a lot of companies aren’t following specifications.”
Bertog points out, companies like his can win back those clients. “We had a blizzard here last winter and a lot of companies didn’t perform well, so we picked up new business that way,” Bertog says.
In the end, he finds that sticking to his high-value prop wins the best clients.
And being flexible also helps. For existing clients that threaten to bid out the work to get a lower price, Bertog does work to tailor the proposal to meet a new, lower budget. One of Bertog’s “Big 19” clients needed to shave 5 percent off its costs. “I said, ‘When we get to the late summer months, we can skip two (mowing) visits,’ and that got us down the 5 percent.”
Bertog is glad when existing clients ask how they can lower the bill. “We can help them work through it,” he says.
What he isn’t pleased about and is seeing much more is that 30-day notice from clients with multi-year contracts. “A competitor comes in and says they’ll do the job for half of what you were getting paid and the client sends you a 30-day notice and cancels the contract you priced based on being there three years,” Bertog says.
There’s really no way to plan for this.
“If out of the blue, a clients says, ‘We are sending this job out to bid,’ then you drop your bid,” he says, “ ... and the others come in under you, and you still don’t get the work back.”
Bertog says the company can’t ride on getting work like this because these types of clients aren’t sustainable.
So instead, his crews work hard to exceed expectations. “If a customer only cares about money and doesn’t care what the property looks like, that’s not a good mix for us,” he says.
Education by explanation
It’s not unusual in this environment to compete with a dozen companies for an attractive account. But if you’re the company that wins the job, the success could stoke a feeling of insecurity.
Did you make a mistake in your pricing? Did you forget to specify a service, include certain materials costs, figure in subcontractor labor? Uh, oh.
“After the excitement of getting the big project comes fear and questioning whether you made a mistake somewhere because there were so many people bidding on the project,” says Lee Keenan, director of construction project management at Mariani Landscape in Lake Bluff, Ill.
Mariani Landscape is generally not in this position because the high-end design/build firm usually doesn’t produce the lowest bid. And, importantly, the company takes care to compete at its level. “We know we can’t always be competitive in every arena, so we focus on (jobs) that are in our scope and fit our company,” Keenan says.
The sweet spot for Mariani is high-end residential design/build projects that may eventually turn into long-term maintenance/enhancement accounts. Even so, the firm feels pricing pressure like any landscape company these days. “In the world we live in, people are being more conscientious than ever to make sure they get value for their dollars,” Keenan says.
That’s why explaining proposals in detail is a big part of winning the bid. Mariani Landscape’s proposals are extremely thorough, listing out services and descriptions of exactly what each line item entails. For example, bringing on a masonry contractor for an outdoor living space, or identifying each step in amending soil to improve drainage.
Ultimately, the proposal doubles as an estimate and an educational tool.
“When there are multiple bids, it’s important for clients to understand that we are their advocate,” Keenan says.
And its equally important for clients and prospects to understand fully what a proposal includes so they can make a smart decision among service providers. That means including every dirty detail.
“We cover every specification of a project and explain our process – we explain that we are not going to take steps one or two, but our processes might involve four or five steps that, in the long-term, ensure the best finished product,” Keenan says.
Clients are only expecting the best, he says. “We have to explain why our number might be higher than someone else’s and how we bring value to the project.”
The more information a proposal includes, the better, Keenan says. Clients do not want to see added costs mid-project because a proposal didn’t cover every material, labor hour, you name it. “We don’t want to go back to the client for extras,” Keenan says, adding that project prices are well thought out to avoid this.
Mariani Landscape also reviews the maintenance investment design/build projects will require before any contract is signed. “We don’t want clients to be surprised at how much it will cost to maintain the landscape and keep it moving forward,” Keenan says.
The author is a frequent contributor to Lawn & Landscape.