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bob
01-01-2002, 07:31 PM
I have a list from Chemlawn of their customer retention percentages. The highest offce is 82.8% and the lowest is 30.4%. The average seems to be around 60%. I couldn't imagine keeping only 60% of my customers every year. I know thats how they do business, in quanity, not quality.

1MajorTom
01-01-2002, 09:06 PM
This is a great topic for a thread. I was thinking about the same thing.

I have never figured out exactly what our percentage is for customer retention, but I am going to figure it out over the course of this week. I do know that we have lost in the past a lot of customers. "Gasp!" "She said what?"

Yep, it's true. I guess I should elaborate a bit more. We are not losing customers due to the quality of our work, but for many other different reasons.
Some examples:
A good portion of lost accounts are due to the fact that the customer is placed in a retirement home, and the house is sold. Younger occupants move in, and our services are no longer needed.

Customer keeps us for a few years, then grandson/nephew/relative gets out of college and customer sees a golden opportunity to save money, and we aren't needed anymore.

Churches: We have had some good churches in the past. Then suddenly they realize how much they are paying for lawn care, and a parishioner steps up to the plate and donates his cutting services.

Commercial accounts have kept us until they find a lower price.

We also have intentionally dropped some customers at the end of a season for reasons such as bad terrain (we took these when we first started out; no more though), customers that would heckle us because they didn't want their grass cut weekly, and 2 if I remember correctly that were late payers with bounced checks.

We like to keep around 90 accounts, no less.
We already know of two that we lost for the upcoming season.
One was working for the State highway. It was a house renovated into an office, and after two years, the highway project is complete so we won't be needed anymore.
The second one hurts. A very good customer. A man and wife both in their nineties. The man died late last season. We assumed we would still be cutting, but the 70'ish year old son wrote us a note in the last payment saying that he would take care of his mom's lawn from then on in. It's not about just cutting that lawn. It was all the services they took from us. That 90 year old man was really on the ball. He wanted his yard to be in tip-top shape. He took spring clean-ups, aerations, mulching, hedge trimming, and fall clean-ups etc.

In our area, I see drawbacks with both residental and commercial accounts. With residental, in the area we are in, it is a lot of elderly which means more turnovers. Plus it can be hard to upsell to the elderly. With commercial in our area, we just can't seem to be competive with the pricing. We seem to always come in too high. So residental for us right now seems to be the ticket. We deal with some turnovers, but we can command the price that we want.

The more accounts you have, the more chance you have of losing them.

Wow, I was really long winded. ;)

gene gls
01-01-2002, 10:56 PM
1 Major Tom:

I'm in the same boat as you. I have also had several devorced ladies in the past that end up with live-in-boyfriends and I'm no longer needed.

My biggest problem is price increse. For some reason customers don't like the idea of paying for benifits for the lawn service. I have to educate them this year as to some of my cost of doing business. After talking with a few I have come to the concluesion most have no idea as the what it costs or have no idea of how much insurance I have to carry or how much taxes are.

The bigger the property, the more frugole the owner.

Gene

65hoss
01-01-2002, 11:48 PM
To top it off it will be a new season of newbies with there shiny new crapsmans that decide to cut a few yards. To make matters worse, the recent financial situation of many people may make even more decide to get into grass cuttin'.

Then again, let them take the cheapskates, slowpayers, rough terrain, and priceshoppers. There is always a fear factor this time of year. Looking into the unknown and knowing some customers will be going and wondering if new ones will be found. Managing that fear into a positive marketing energy is key. Knowledge and experience is power. Use it to your advantage.

OBRYANMAINT
01-02-2002, 06:25 AM
my retention is way up in the 90's....some people move and such, i never seem to lose more than a couple or so a year

i think the ratio is probably pretty high amoung lco's

i do agree the more accounts you have the more chance you will have to something happening beyond your control

GrassChopper
01-02-2002, 07:39 AM
I lost one account to kids ("MY kids have decided they want to make extra money"), one elderly couple who's house burnt down, one moved, and two because the Chemlawn guy told them the reason their grass wasn't responding properly to the chemicals was because I was cutting the grass too short. I cut at 3.75" and he measured the grass by seeing where it came to on his shoe. Oh well.

I dumped a couple accounts and am getting ready to dump two more. When an account gets three months behind, it's time for the dump.

David Haggerty
01-02-2002, 10:39 AM
Originally posted by GrassChopper
Chemlawn guy told them the reason their grass wasn't responding properly to the chemicals was because I was cutting the grass too short.
This kind of bad mouthing the lawn cutter most often comes from Chemlawn. I don't really think it's their company policy or anything, it must be the typical of person they hire. You know, someone who always blames someone else for their own shortcomings. It's really poor business practice, and reflects poorly on them.



Jodi;

I've been there too with the Churches. Only it isn't just limited to Churches. Anything that is governed by a board, committee etc. will give you the same "somebody had a better idea excuse"
I combat this with trying to get one single person to report to. I try to get far enough up the chain of command that the person actually has the power to authorize "extras" and to OK price increases.
I can satisfy one person, but no one can please a whole group.

Dave

Turfdude
01-02-2002, 05:40 PM
I'm W/ Major Tom!!

We retain mid 90% or so. Most we lose due to moving, passing away, and or financial reasons. Someone else mentioned $ increase drives some away. A lot of my better educated clients have begged me to downsize to 2 crews and just raise them up by $5-$10 per week (on small lawns $30-$40 currently). They know a lot about labor costs, equipment, and insurance, and feel that an excellent job is well worth paying for. I truly wish more of these high end residentials fall my way this year:D !

Also, with higher retention rates, upselling services seems to come pretty easily.:cool:

cantoo
01-02-2002, 09:01 PM
Some of this goes to show that we need to be full service companies to keep our customers. You might make special note of this Gene, a full service company would have kept those divorced women happy, do you not offer fertilizing and trimming services?

LAWNS AND MOWER
01-03-2002, 12:16 PM
I can relate to Major Tom about losing the 90 year old man's acct. I just lost my largest residential acct. A couple years ago, John Doe married. Mr Doe was one of the nicest guys you could know. He was excited to see me, would offer to prepay me in the winter, etc... 3 months after they married he died. So now Mrs. Doe is in charge. She assured me that things would remain the same, but gradually she would cut corners to save a buck. Finally she sold the house. I enjoyed working for Mr. Doe and felt attached to the yard but when Mrs. Doe took charge it was nothing but headaches. Another acct I lost this year was a client who bidded $200 on $500 worth of lawncare at a local silent auction. He won and called me in July to inform me that he would'nt need my services anymore this year but would like for me to start mowing again for him in the spring. Thank goodness his yard sucks and I was planning on dropping him in the spring anyway. He doesn't know this yet but I figured I would leave him hanging in the spring just like he did to me last season. Anyway, this is my sob story. 8 WEEKS TIL SPRING CLEANUPS

LAWNS AND MOWER

ohiolawnguy
01-03-2002, 01:00 PM
most times when we lose a customer, ts either a result of a neighborhood kid, or the death of the customer. if we lose an account for any reason other than that, i usually attempt to find out why.

as far as the chemlawn thing goes, dont get me started. lets just say that ive got their local office number on my speed dial, and leave it at that.

JimLewis
01-03-2002, 06:11 PM
I remember reading in one of the Lawn Care or Landscaping trade journals in the last year that the average LCO has a 100% turnaround in clients every 7 years. That is, the customers you have today will be all different ones 7years from now - On Average.

I have to say we've experienced almost that number. This is our 6th year and I only have 3 or 4 from that first year in business. And for good reason, too. I was way too cheap back then.

But regardless of price, there are other reasons we lose accounts. And the more you maintain, the more you'll lose each year. It's easier to keep 90% when you only maintain 30 or 40 properties than it is when you are maintaining 200 properties. It's just the nature of becoming a larger company. You can't be everywhere at once. But it's no excuse to go down to 30% retention levels either. You should still be able to keep most of your clients from year to year.

It's important to draw the distiction between retaining customers from winter to the next spring as opposed to retaining the same people from spring to spring. The latter is what we need to focus on.

I'd say throughout the course of the year we probably lose 20-30% of our clients. There are a billion normal reasons to lose clients. People die, lose their job, get divorced, have a baby, sell their home and move out of your area, etc.......

Then there are negative reasons we lose accounts too. None of us are perfect. And neither are our clients. Sometimes because of a fault of our own service or because the client is just a dork, we lose them as well.

So there are a number of reasons that all add up to turnover. We need to make sure that most of our losses result from the "normal" reasons though. I am always assessing why we lost a customer. If it's a normal reason, I don't worry. But if we have too many people cancel because of service related problems in a short period of time, that's a wake up call.

There are also many other factors to look at. In the city suburbs when your clients are Yuppies, you'll have higher turnover because this group of people moves more often, has babies more, and changes jobs more. If you're out in the country servicing mostly retired people in estates, you are more secure.

I wouldn't worry so much about comparing yourself to other LCO's percentages as much as I would just try to keep an eye on why you loose customers. If most of them leave for normal reasons, that's good. You're doing fine. Just keep growing at a pace faster than you are losing them.

JimLewis
01-03-2002, 06:17 PM
I should add that there are some very positive benefits to turnaround as well.

For instance, in the beginning most of our clients were just mow, blow and go customers. But now that I am better at marketing our full service, most clients choose our full service, gaining us about 30 - 40% more from each client per month. Our labor per house has only increases slightly but the profit per house has gone up significantly.

Secondly, all of our clients 3 years ago were invoiced and I had to wait for a check in the mail. Many were late-payers. But since we implimented AutoPay, now more than 50% of our customers are on our AutoPay program and we get regular, dependable payments each month. About 90% of new clients choose AutoPay so I can easily forcast that in another few years, because of turnaround. most all of our clients will be on AutoPay. Can you imagine how cool it is to know that every 5th you get $850 guaranteed, and on every 10th, you get $1200, and on every 15th you get $3450, etc.... each month.

The benefit to turnaround is that as you learn, you begin to be able to apply what you've learned and impliment it to the newcomers (whereas it's hard to change the plan on existing clients). And this often results in a lot higher profits.

Runner
01-06-2002, 04:15 PM
While a small percentage of losses is attributed to people moving, many times, for us, when they move, if it isn't far, they take us with them. That's always god when that happens. Sometimes, when the new people move into the original house, they continue with the service, but most of the times, I have found that with the purchase of a new house, especially one with a nice yard, for the average working class, this also brings a "fever" to do the yardwork, so often, it is ensued by the purchase of a new lawn tractor. There are the deaths, and other reasons for client turnover, but our main one is not actual "loss" of the clients, but just turnover - or "trade". What I mean by this, is that what happens, is we "price" ourselves out of the job. While more new work comes in, we price ourselves higher in the estimates, (within reason of feasibility) and if and when we get that work, and it looks like something that could be long term, we are then faced with a choice - company expansion, or selected work using profit/cost formulation. Well, expansion in the mauntenance field is NOT what I want at this time, so, that leaves job selection and editing. Within the year, (Always at the beginning of the next season) certain select jobs recieve price increases, not only to keep up with inflation, but also to maintain this profit obtaining pattern. Many, (usually the least desirable jobs) recieve higher increases to influence them to pay more, or make a change. When they inform us that we are too high, (or they are unwilling or unable to budget that amount for maintenance, then we are able to even make a recommendation for someone else for them. This works well for friends in the business. It is with this process that we are able to continue to grow in profits, without having to go into all the overhead of a larger company (who probably can/would not even make the amount of profit to overhead for that particular application. Bottom line is, What is charged? Whatever the road will bare. :cool:

thelandscaper27
01-12-2002, 11:52 AM
An incident that happend last year. An elderly lady about 55 years old No contracts involved. Anyways, we had an agreement on mowing, mulching and pruning.

She asked me what I would charge for these services.
I said $ww.ww for the pruning, $aa.aa for the mulching per bed.
All she would do is yell at me for the costs. I ask myself why???

There are alot of kids in the area. Why didn't she get a local kid next door ??? Sometimes I regret taking that job. My overhead was low at the time and those prices were low and I mean low.
I cut this lady a break that no one else would give or take the job. Once she burned me by 10.00 burned 20.00 off of her back and she didn't realize it.

I called up other LCO's in my area to get opinions about people like her. Gave them the area and street name they knew exactly who I was talking about.

I have like a pesonal policy I tell some friends of mine. You burn me once, I burn you twice. You burn me 4 times, I burn you 8 times.

I would like some advice.

When I first started, I got this book from the library called"
Operating a home-based landscaping business"
Written by someone named Owen Dell or was it Dell Owen?

He mentioned not to take on clients with attitudes or complains about other contractors because they are nothing but trouble.

Integrity
01-12-2002, 12:08 PM
We have been in the biz for three, going on four years this spring, and have only lost one customer. The one that we lost was really not worth keeping, and complained about anything and everything, no matter what. Ever had one of those??

I want our biz to stay at a size where we can still have that "personal" relationship with customer. Most of my customers are more loyal than my dog. They are willing to pay more than some "lowballer" because they know the quality of service that we provide and we always take care of their needs without cutting corners. Want to keep customer retention up? Treat them like family and they will come back to you every time.

JimLewis
01-12-2002, 01:22 PM
Landscaper27,

You asked specifically for advice. So I hope you are willing to take it, even if it's not what you want to hear.

As for that book you read, I'd have to agree. If something seems a little "off" with a customer, it's almost always good to get out quick. Almost every time I've felt there was something wrong with a client and continued to work for them I regretted it. These days, if I feel there's something wrong, I get out quick. There's no reason to work for jerks or weirdos or people who are overly demanding. There are plenty of good clients out there to be had. And your time is better spent on finding them.

As for your personal revenge tactics, that doesn't sound like a very good policy to me. It would be better for you to just quit working for that person and go on with your life, and not worry about getting revenge. This is better for many reasons. And I don't have time to go into all of them. But you have to understand God's law of cause and effect. Every action is rewarded with it's own consequences. Some people call it Karma. Whatever. The point is, people reap what they sow. They will get their consequences without you doing anything about it.

Part of this lady's consequences is that she's alienating herself from all of the good contractors around. And part of your consequenses for not getting revenge will be peace of mind. Another reward is that you will be able to start focusing your mental energy on people and things that are working to help you, rather than waste that energy on actions that will not help you at all. Finally, if all actions have consequences, you will not have to worry about YOUR bad actions coming back on you.

Trust me, I feel ya. I know what it's like to want to burn them back. I've been there 10 times more than you have. I've thought of all of the bad things I could do to their landscapes, etc. And I've come very close to doing them. But I have never acted on them. And I am a better man for it. I choose to make my time and thoughts work for me, not waste it on things that weren't going to produce anything positive. I hope you'll make that choice when the next decision comes.

thelandscaper27
01-12-2002, 04:53 PM
It is very rare that I do that. I understand. She wanted things done for free and we all know that we can't do anything for free.
She's like i want service, service service. She expected me to drive her around town and finish her work. I was having strait prices on her work and I needed to charge more for gas and other overhead. You should have seen her face when I told her That I'll charge her 10.00 per hour when I'm not working on her property. Yes she bitched about it and I told her tough luck.

She was never kind to me or my workers. {dvice for this please)
So, why should I have to lower myself to her standards?
I think that I shouldn't have to.

thelandscaper27
01-12-2002, 04:56 PM
Jim Lewis,,,,

PS I want to thank you for the constructivge critisism and I will take it to heart and continue to think about it.
SIR, Tanks again and take care. You really got me thinking.:rolleyes: :rolleyes: :rolleyes: ;)

JimLewis
01-12-2002, 07:10 PM
Hey, I understand. My comments weren't as much about her as they were with the fact that you said you have a personal policy to burn people back twice whenever they burn you.

I totally understand though about this kind of customer. We all get them every once in a while.

All you can do is just walk away, not return their phone calls, or say you're too busy. It's really not worth your time dealing with people like that. Even if you had no other jobs on the line, you're better off laying flyers door to door, in hopes of finding more business, then you are working for someone who will never treat you or your workers fairly.

Az Gardener
06-17-2010, 10:22 PM
Old thread and Jim gave good advice even back then. I bring it back because I was thinking how to calculate a retention rate. I'm sure I can figure it out but my brain is tired from many other calculations I have been doing as I dig deep into the financials of my business. Also how far back do you go? 1 year? 3 years? 5 years? Life of the business? What is the industry standard? Little help here from the smart guys.