BEST OF THE WEB: Marketing - One Piece of the Business Puzzle

Seasoned landscape contractors know that promoting their services usually requires an investment in advertising. But how much should contractors spend on marketing? Lawn & Landscape Online Message Board users shared ideas about how contractors can determine their marketing budgets and how to maximize their advertising returns.

The decision often depends on a number of variables, including profit goals, market niche and company size, participants say. Jim Meloche kicked off the discussion by asking participants for input on his 2005 advertising budget. In 2004, his company, Novi, Mich.-based Treasured Earth Landscape Design & Construction, spent more on advertising than in previous years.

“We’re a $375,000 company, and we spent roughly 4 percent, $12,000, on advertising (Yellow Pages, direct mail, targeted print, etc.),” he says. “As I talk with other contractors, they are spending much less. What do you plan on spending in 2005?”
 
PICK YOUR PRICE. Successful contractors who are thinking about cutting their advertising budgets may want to consider where they might be without making the investment. Todd McCabe, president of the McCabe Landscape Group, Wrightsville Beach, N.C., says his company will spend 3.5 percent of its budget on advertising in 2005. That number may be higher than other companies, but McCabe says he wants potential clients to identify Landscapes Unlimited with anything landscape related.

“The question you should ask yourself is, ‘Would you have done $375,000 if you did not spend the $12,000 on advertising?’” says McCabe in response to Meloche’s comment.

Fairfax, Va.-based Patton Property Maintenance spends even more than Landscapes Unlimited on marketing, according to company President Todd Patton. His company spent 8 percent of its budget on advertising in 2004 and plans to spend an additional 1 to 2 percent in 2005, he says. These numbers often vary for landscape companies depending on what type of services they provide, and more established companies may be able to spend less on advertising because they’re already well known, Patton says.

Robert Shauger agrees with Patton that company size can determine advertising budgets. “Smaller companies may be spending a higher percentage to get growth,” says Shauger, owner of Advanced Applications, Deerfield, N.Y.

McCabe also says certain landscape services require more advertising than others. For instance, a company that does 100-percent commercial bid work will likely spend nothing on advertising while a company that is 100-percent residential lawn care could spend between 10 and 15 percent just on its spring marketing campaign, he says.

The size of contractors’ marketing budgets can also depend on the type of advertising and their sales goals, says Rich Walker, owner, Dreamscapes Unlimited, Cincinnati, Ohio. “I have seen some companies only budget 1 percent for advertising, but when they have annual sales more than $12 million that still is $120,000, which can generate a significant amount of new work,” he says. “Another one that does $6 million in annual sales is budgeting 8 percent. It depends on the individual owner and where they are taking their company. It also depends on the types of advertising you do. Where I am, you can take out a full Yellow Pages ad and spend more than $20,000 per year just on that.”

PROMOTIONAL PRACTICES. Contractors can optimize their advertising dollars by learning from past experiences and selecting methods that suit their services. Dreamscapes Unlimited spent approximately $5,000 on advertising, which included direct mail and flyers, in 2004 and will likely triple that number in 2005, Walker says. In the past, the company advertised in phone directories and magazines, which did not result in high returns.

Landscape design companies often sell their services with visually appealing marketing tools so potential clients can see the finished product. Long Island Dreamscapes, a Long Island, N.Y.-based landscape design and construction company, has realized high returns from its Web site, says company President David Huber. The company knows this because Huber says he tracks every service inquiry by entering each call into a client prospect sheet. The sheet includes a list of questions that Huber asks callers, the most important being, “How did you hear of us?” he says. The $600,000 company spends less than $1,000 a year on advertising.

“Direct marketing and cheap marketing are the keys,” Huber says. “Get a Web site. It brings me 80 percent of my work. Combine other forms of advertising with that, and you will do well. Do not think that you have to spend a large percentage of your earnings to get business. It’s just not true.”

CBH Landscape Contractors, Laconia, N.H., also monitors inquiries by potential clients to narrow its marketing focus, says company Owner Chris Haddock. “I think it’s better to track your incoming calls so you find what advertising is working for you,” he says.

Other companies, such as Clarkesville, Ga.-based B & B Landscaping & Irrigation, don’t find advertising necessary at all. Referrals comprise the bulk of B & B Landscaping’s jobs, according to company Owner Gary Batho.

DISCOUNT DAYS. Contractors who do advertise sometimes include coupons to increase sales and referrals. But some Message Board participants say coupons are counterproductive because they can appear unprofessional or because they can sometimes force contractors to underbid projects.

Instead, contractors should sell their work instead of their price, says Patrick Johnson, owner, Reflective Gardens, Knoxville, Tenn. For instance, coupons that offer free gifts might be more effective than discounts because they don’t devalue the work a contractor is providing, says Steve Cissel, founder and chief executive officer of the online green industry directory GIYP.com. “I don’t like the idea of eroding the value of products or services offered,” he says. “I would be more inclined to offer a bonus or a gift to a client that reaches a certain spend threshold. What we’re really trying to accomplish with the discount is to create a call to action, not necessarily give away part of the farm. Coupons are a call to action and they have been used in the Yellow Pages for more than 100 years. They work. Coupon idea: Sign a contract for X dollars by X date and receive two free first-class round-trip airline tickets anywhere in the continental U.S. or something like that.”

Discounts can be profitable if they lead to additional business, adds Frank Connerney, president, Castle Landcare, Tampa, Fla. Castle Landcare provides 3 percent discounts to each customer if the company picks up additional business on that street. “So far, so good,” he says. “We’ve filled two neighborhoods that we previously were only servicing two houses in. The discount is more than made up for by the lack of windshield time.”