When Clients Leave On Price

Apr 12, 2017 | Growth Tips

Every spring a certain number of your (service) clients will leave you. There are good reasons and bad reasons for clients leaving.

Bad reasons

If good clients are leaving over quality, then you are doing a poor job at the basics. But if good clients are leaving over price, it is worth considering what is in your control and what is not. A contractor with an excellent track record and reputation emailed our Leader’s Edge peer group last week “What to do when the competition is quoting prices 50% lower than my price?”

Here are some responses he received:

“I’m seeing competitive quotes from start-up companies I have never heard of before. I investigated a few of them and found that the owners are guys who worked for someone else during the recession and have now gone out on their own because they see how much opportunity is out there. In other words…they do have experience and knowledge, but don’t know how to price things correctly. Play to your strengths and ask your clients to consider how long the competition has been in business….A lot of damage can occur to a property in just one year of poor landscape management. Ask them to consider deferring the decision to switch service providers for one year and use that time to see if the new start up competition is a flash in the pan.” JOHN PURYEAR, PURYEAR FARMS, TN.

“We have gone to multi year contracts, generally three years with an inflationary value built into the contract whenever we can. When a customer leaves on price but comes back to us for service and quality we have them sign up for a three year contract so they are committed and don’t see the need to price shop every year.”  GREG WILDEBOER, WHISPERING PINES LANDSCAPING, ONTARIO

“We have found that a lack of an account manager and not being in touch with people at the right time of the year really hurts the renewal rate.”  PAUL FRAYND, SUN VALLEY LANDSCAPING, NE

The best thing you can do, when a good client leaves you for bad reasons, is to leave the door open for them to return. Consider adding a seasonal marketing campaign to lost clients; this can include sending actual contracts to them in the mail. If you don’t have an active social media and email marketing campaign, now is the time to get that going. Stay in contact!

Good Reasons

When bad clients leave you over price, whether you have raised yours, or they are simply shopping around, these are good reasons. Replace these old clients with new clients willing to pay your amount, and wanting to upgrade their property.

I promote using a “Fix, Fire, Fill” strategy to upgrade your client base. Review your contracts and fix the contracts that you have underbid, whether due to estimating inaccuracy or clients and properties that simply need more services. If you have the data to show your clients, the reasonable ones will stay on board. Allow the clients who don’t want to step up to the proper estimate to fire you––or you may have to fire them.  Lastly, fill the open capacity with new clients willing and wanting to hire you at the right price. It’s like pruning a tree, you will grow back stronger than ever.

When cheap companies sell cheaply, their capacity fills up quickly. At that point you can be the solution for the more discerning clients.

Jeffrey’s Breakthrough Idea: If you want your clients to be loyal to you, you need to be loyal to them. How are you showing your loyalty throughout the year, and not just at renewal time?

Take Action: Consider a mystery shopper campaign, where you learn how your competition is contracting and selling, so that your salespeople are armed with facts when talking to new prospects.