Your Customer’s Impact On Your Company’s Value
In an ideal world, a new business would start up with a profile of an “ideal customer” who has a compelling need for our offerings of goods and services. From that customer’s perspective, we would provide exactly what the customer wants in the way that they want to receive it. Our prices for those “best fit” customers would be attractive for customers while achieving our financial goals. Win-Win, right? Oh, if only it were so easy.
In our real, less than ideal world things might be quite a bit different. We may have a started our business with a strategy to be the “Go To” landscaper in a particular market. I’ve seen that description for quite a few companies, including landscapers. I think it is more helpful to describe what that “go to” means. How does that vision translate to your strategy, for example.
Are you focused on being the “value” provider who can provide a solid set of services at a lower price point than others offer? You will be focused on lower costs and may be concentrating on finding ways to be the most efficient provider of a select group of services. Your pricing won’t support customized responses tailored for each customer.
Are you focused on being the high quality, customized provider to high-end residential clients? Your clients will expect and be willing to pay for the highest level of responsiveness and quality consistently.
The difficulty arises when we find ourselves in a “mismatch.” For some reason you may be working in areas and/or with customers that don’t fit your vision. Customers in some areas don’t want to spend money for high-touch service or luxury materials or, alternatively, we may be working with customers that want a higher level of service and as the value-priced provider we don’t have the additional bells and services for high touch customers. Here are a few real examples I’ve seen in the past few years:
- Customers you’ve had for years. This was an ideal customer a decade ago but with all the rapid changes in the past few years, these customers are no longer the best fit for us. They may have no desire or interest in anything other than their standard package for little to no price increase. No new sales or services possible.
- Customers from the time when sales were based on revenue goals with little focus on margins. Back then, there was no screening for size/level of services purchased or gross margin. In one example, the production team was constantly trying to deliver a badly estimated job at margin.
- Customers who experienced a management team change. In this example, a property manager wanted to switch to another company they had prior experience with. The existing production teams were criticized for months before management acknowledged the customer was trying to break the contract.
With the scarcity of labor in the past few years, smart landscaping companies reviewed and eliminated customers who were at the bottom of their rankings due to lowest margin, highest numbers of callbacks and complaints and other “poor fit” criteria. Those smart landscapers were able to redeploy their workforce to better fit customers. In doing so, they achieved higher margins, happier employees, and more opportunities to “add on” to ideal customers’ properties. The increased sales, customer satisfaction and profitable growth increased the company’s value for his ownership team and ultimately, for a potential buyer in future.
If you’d like to discuss how your customers contribute to your company’s worth, or other ways your company can maximize its value, we’d be happy to have a confidential complimentary conversation with you about these or any other exit/sales/buying issues.
You can reach me via email: [email protected] or on my cell phone a: 224-688-8838.
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