Breaking The Model: Commitment To Quality, Environmental Care Inc.

There seems to be two different schools of thought regarding sales and marketing when you’re a $100 million contractor such as Environmental Care.

The first view would be that marketing is simple because the company is so large, has tremendous exposure from its employees and has extensive financial resources. The second view would be that sales and marketing represent a formidable challenge because of the premium placed on customer retention in order to avoid having to replace $10 million of business a year even when the retention rate is 90 percent.

LOOKING TO THE OUTSIDE. For ECI, much of the sales and marketing challenge is the responsibility of Arnold Ng, vice president, sales and marketing, who’s assets when first hired by ECI included a lack of knowledge about the green industry.

“The one negative to having employees stay with a company for as long as some of our people have is that you can become pretty introverted without new blood,” observed Bruce Wilson, president. “So we’ve tried to add people from outside the industry to avoid getting stuck in mental models of always doing things the same way.”

Ng’s charge is to create an overall sales strategy for the company that can then be adapted for successful implementation in each of the company’s 20 service centers.

AIM BEFORE YOU FIRE. ECI has learned a great deal over the years about the value of targeting desired clients based on specific client characteristics. “We look for somebody that wants a long-term relationship with their contractors, values the landscape, and wants a high level of consistent service,” Wilson noted.

“We’re also looking for a profile of loyalty so we know we’ll have the opportunity to work with these clients over time to improve their landscape,” Ng added. “If they have a history of hiring a new contractor every year, then we’re not interested in them.

“In addition, we look for communication,” Ng continued. “We need to have a client who will meet with us, explain what they want from us, and give us regular feedback. We think the people who want to be very involved in their landscapes are actually the best clients to have.”

The commercial, non-single family residential market has emerged as the most attractive client for ECI to work with. “Single-family residential is not part of our business because you’re not getting very much dollar volume per customer from them, but that customer wants as much attention, if not more, than a customer generating $1,000 a month,” Wilson said.

Identifying potential clients who represent a possible long-term relationship for ECI is a skill that is emphasized to the sales personnel.

“The model we use internally goes against the idea of just getting more bids on the street to develop more opportunities and hope some of them stick,” Ng explained. “There can be some value to that, but we balance that approach with some qualitative questions about how much time the client will spend with us, whether or not they have a budget, and how much they value their landscape.

“That requires a better salesperson who is able to slow a client down and get them to identify what their needs are and how we can address them,” he continued.

Ng believes too many contractors ignore the downside associated with flooding a market with bids. “Too many contractors don’t consider all of the hidden costs behind bids that don’t stick and the aggravation that creates for the sales personnel,” he said. “Why not do a better job up front of pursuing the jobs you want and then getting them in a systematic manner so your close ratio goes much higher and you don’t incur as many hidden costs targeting people who will never do business with you anyway?”

Wilson looks for a close ratio of 25 per-cent from his sales force, but warned contractors not to get too attached to the ratio as a measure of success. “What a manager has to look at is if the sales person is hitting their target bottom line dollar number for the year,” he said.

RETAIN IS THE GAME. Much of the focus on targeting customers stems from a desire to maximize customer retention. “We’ve done a much better job targeting our customers as we’ve come to realize that the foundation of this business is customer retention,” Wilson commented. “If you can’t retain customers, then all of the new sales efforts go to replacing what went out the back door.”

Currently, ECI’s service center retention rates vary from 85 percent to 95 percent with Wilson saying he is “unsatisfied” with 85 percent, “satisfied” with 90 percent, and “ecstatic” with 95 percent. Again, however, the key is focusing on the right number. “The number of customers retained from year to year is important, but what really matters is the sales dollars which are retained,” he asserted.

“The key benefit of customer retention is that it allows a company to recapture the start up costs incurred at the start of the job. In order to do this, you need to be able to hold onto the work,” pointed out Wilson.

In addition, ECI’s goal of creating a “noticeable difference” when they take on a new job often cuts into the profitability of that job. “Very rarely can you start a new job on budget, because you have to invest in that job,” Wilson explained. “We want the client to see an immediate difference when we start.”

ECI also encourages service centers to increase ‘remedial sales,’ which is selling the customer minor landscape construction work or adding supplemental plant material to the site over the course of the maintenance contract. “We expect service centers to bring in 20 percent of their sales through remedial sales,” Wilson shared. “If a service center is below that number, they’re not staying close enough to the customers to pick up the work or they’re not adding new customers.”

Ng said ECI has found that remedial sales is often the best indicator of long-term customer relationships. “That means we’re proactive for the customer,” he said. “We’re being their eyes and ears on the property.”

SIZE MATTERS. One of the particular challenges Ng deals with is identifying which of ECI’s strengths should be emphasized for different clients.

“Most of our challenges are on the local level,” Ng recognized. “Each service center has to be able to identify its own challenges. If we’re new to an area, that means breaking in against strong incumbents and giving clients enough reasons why they should do business with a new company.”

One of the challenges a number of service centers have to address is the company’s size. “Some people have misconceptions that because we’re a big company we won’t give them the service they want,” Ng said. “The challenge is finding a way to communicate that they will get to know the personalities we have working for us and the money they spend with us won’t disappear off to corporate America.”

Despite the advantages offered by ECI’s size, there are too many downsides for some potential clients.

“Clients get into the mental model of, ‘We’re too small for you,’” admitted Martin Schaefer, vice president and Los Angeles service center manager. “To be honest, as a service center, we don’t use the size of the company as a selling point too often.”

“We didn’t get a job a few months ago because we were too large,” related Frank Annino, account manager. “The client contact wanted to know that the person on the job was personally accountable for putting food on the table at home so they wouldn’t do anything to compromise the quality of service.”

For other clients, ECI’s size is a positive differentiating factor between them and the competition. “There are clients who will seek us out because of the capabilities we have,” added Michael Schmitt, Water Wise service line manager. “If they need a contractor who can generate 40 guys at a moment’s notice, well, there’s not too many companies that can do that.”

“It’s up to the account manager to tell the client, ‘This is my book of business, so I have the commitment of the smaller company, but I have all of the advantages of the larger company,’” explained Annino.

“The client’s biggest concern about our size is usually that they want to know who can make a final decision,” noted Schaefer. “We have to convince them that the account manager or service line manager makes the final decision, and I will always stick by that.”

LINE THEM UP. ECI understands that just because they offer a particular service out of one service center, they don’t have to necessarily offer that service from every service center. In fact, only four of the 20 service centers offer all five of ECI’s service lines. However, the corporate office encourages service centers to explore as many areas as possible for potential growth.

“Exterior maintenance work is our base – it’s what everything stems from in terms of tree care and water management opportunities,” said Rob Johnson, vice president and service center manager, of the line representing approximately 60 percent of his center’s $8.2 million in sales. “And exterior is where our future is. We also try to maximize our client relationships by providing multiple services as much as possible.”

“There’s potential for one-stop shopping. That’s why we’ve developed all of the service lines,” remarked Wilson, who doesn’t expect each of the service lines to contribute equally to the company’s bottom line.

“We think there’s somewhat limited growth potential in the interior market, for example, but it’s important that we offer it to our clients,” Wilson said. “But we would definitely like to see water management become a bigger part of the picture for us.”

The company’s plans to target the irrigation business are so aggressive that it has invested heavily in developing an irrigation controller that it plans to lease to customers.

“Water management is an area that eventually is going to be a key factor in the whole outdoor maintenance realm because of the cost of water and its limited availability,” Wilson asserted. “Whichever company can figure out how to provide that service at a level where it’s economical for the customer is going to have a huge advantage over the competition. And I don’t think anyone is doing that well enough for it to be an advantage right now.”

The author is Editor of Lawn & Landscape magazine.