Loss leaders/buying contracts

Raven Lawncare

LawnSite Member
A few questions: I am taking any customers within a 40 mile radius of my base. With that said I will begin to focus on exceptional service and profitability from the start. However due to travel time there is not much profit left if any due to lack of density. I am taking these customers as loss leaders with hopes of density saturation in the future. Any luck with this tactic? Next thing is buying out commercial contracts. I approach cust a to propose service and submit bid. Cust a state’s he’s in a service contract w 3 months left. My approach would be to buy out the remaining competitior contract and re sign customer w a longer contract to cover cost of buying out contract. This in my line of thought creates more and more density. Which is a key component to any service industry. Any advice on both or either?
 

dieselss

LawnSite Silver Member
Location
NWI....
Cust A states he's not leaving his current lco....now what?

I am taking these customers as loss leaders with hopes of density saturation in the future.
So taking customers at a loss in hopes of gaining more in that area? What happens when that doesn't happen? Or when cust a talks to cust b and discuss that there prices are totally different??

How much are you willing to spend to get all these new customers?
 

Matthews Lawn Care

LawnSite Gold Member
Location
Neosho, MO
A few questions: I am taking any customers within a 40 mile radius of my base. With that said I will begin to focus on exceptional service and profitability from the start. However due to travel time there is not much profit left if any due to lack of density. I am taking these customers as loss leaders with hopes of density saturation in the future. Any luck with this tactic? Next thing is buying out commercial contracts. I approach cust a to propose service and submit bid. Cust a state’s he’s in a service contract w 3 months left. My approach would be to buy out the remaining competitior contract and re sign customer w a longer contract to cover cost of buying out contract. This in my line of thought creates more and more density. Which is a key component to any service industry. Any advice on both or either?
You’d be better off buying residential accts from another lco. Commercial contracts aren’t designed to favor the contractor and rarely will a commercial acct sign your contract, generally you sign their service agreement, if/when they accept your bid. If you have any leverage(great reputation, niche service, etc.) you can “amend” their agreement.
 
OP
R

Raven Lawncare

LawnSite Member
Cust A states he's not leaving his current lco....now what?


So taking customers at a loss in hopes of gaining more in that area? What happens when that doesn't happen? Or when cust a talks to cust b and discuss that there prices are totally different??

How much are you willing to spend to get all these new customers?
Valid points. But I am selling all my accounts to be profitable at my required hourly rate. The reason for the “loss” if you will is lack of current density. So as word of mouth, great service, fair pricing, advertising gain traction it will pay dividends. As for cust a if he’s happy then I move on. Everyone is not happy with service, pricing or both. There are a couple legacy providers in my area. The pricing is very high to support their massive overhead and inefficient operational activities. I’m already poking holes into their base and will continue to do so. Density, proper pricing, service, efficiency are my foundations.
 
OP
R

Raven Lawncare

LawnSite Member
You’d be better off buying residential accts from another lco. Commercial contracts aren’t designed to favor the contractor and rarely will a commercial acct sign your contract, generally you sign their service agreement, if/when they accept your bid. If you have any leverage(great reputation, niche service, etc.) you can “amend” their agreement.
Duly noted. Thank you
 

zlandman

LawnSite Bronze Member
Location
Ohio
So, that's a service area of 5000 sq miles, right? Going to be able to staff up to cover all those areas.
Think I'd pick one quadrant of the circle to focus on at a time.
 

andersman02

LawnSite Senior Member
Location
Snowy MN
There are a couple legacy providers in my area. The pricing is very high to support their massive overhead and inefficient operational activities.
This is exactly what is wrong with this industry... Your not the first to think this way and won't be the last..... Their pricing is that way because they are a "legacy" company who knows what it takes to survive and grow. Good luck
 
Top