This industry needs a "Rebirth of Ethics"

Discussion in 'Business Operations' started by LawnLad, Apr 19, 2002.

  1. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    This was printed in "Greenspeak", a publication by Outdoors, Inc. - or Larry's Garden Center in Cleveland. Mike Colnar gave permission for this article to be reprinted.

    READ THIS - it'll take a three minutes. Mike has clearly defined the profit problem in this industry and the consequences of the low price attitude for us as professionals, our vendors, employees, and customers.

    "We need a rebirth of ethics in our industry"

    Concerning profitability in the landscaping industry, an attitude has developed over the last decade that the lowest price is the best price, and, that a sale at any price is its own justification. For want of a better name, we shall call it the "no profit" attitude. The basis of this attitude is that only the lowest price is worthy of a buyer's consideration.

    This attitude implies that a landscaper offering his services for sale at any price higher than the lowest price a customer can wheedle out of any and all other competitors (or make up out of his own imagination), is somehow taking advantage of, defrauding, cheating or otherwise ethically abusing his customers.

    This "no profit" attitude is widespread, and appears to be shared by our customers, our suppliers, and sadly and inexcusably, by ourselves.

    It allows our customers to regard themselves and their quest for the lowest price as being morally and ethically superior, and, to regard any landscaper who has a price higher than the lowest price as being morally and ethically inferior. You can sense this in their attitude and hear it in their voice. How often have you heard, "I'm shopping for a price and I'll buy where I get the best price."

    Too many of us are taken in by this attitude. We are afraid to be regarded as "too high." Too many of us accept this erroneous implication.. We act as if we are guilty of some terrible crime.
    This is an illogical, unethical attitude. As I will demonstrate, it is detrimental to the long-term interest of our customers, suppliers, employees, communities and ourselves.

    This attitude was quickly seized upon and adopted by our customers, who developed and reinforced it , and, raised it to an art form in what they perceived as their own self interest. It was likewise reinforced and given credibility by truly desperate landscapers who shamelessly pandered their suppliers' wares like streetwalkers running an auction.

    We sold price instead of features: price instead of product knowledge; price instead of the right plant for the job. If the customer recognized some of these deficiencies and hesitated to buy, other landscapers only reduced the price further in an endless down ward spiral, completely destroying the credibility we had built together through a lifetime of honest, ethical dealing.
    Together we abandoned the ethical high ground of "value," and retreated into the ethical swamp of " a sale any price." It is there that we find ourselves today.

    It is perhaps not surprising that our customers have adopted this attitude. Many of them make purchases infrequently and lack the detailed knowledge of our business that we landscapers possess.

    Because of this, in many cases they also lack the experience and capability of making a valid comparison based on values other than price. They are not even aware, until too late, there are other values worth considering. No one takes the trouble to tell them.

    It is easier to cut the price - to meet or beat the price that they tell you your competition gave them on a job that they tell you is exactly the same as yours.

    This is our customer's perception. It is your job to show them the error of this perception - to re-establish your credibility and to make certain that we not only deal ethically with our customers, but to make certain they perceive the transaction as being ethical, and, in their own best interest.
    Our customers are all different. But, they have one common denominator that they understand and have experience with. Money! They have to work hard for it . They never have enough of it. Everything costs too much!

    Some are afraid of offending the customer or of being ridiculed for being "too high". They are afraid of being thought of as unethical or of being made to feel unethical.

    Some actually feel that if they ask for the necessary profit, they are somehow taking advantage of their customer. They actually feel unethical. The most common reasons; however, are moral cowardice and ethical laziness. Given the current mindset in our industry, it takes considerably less intestinal fortitude and mental effort to quote a cheaper price, than to properly establish and defend the values involved in a higher price.

    It is easier to go along with the customer in their blind quest for the lowest price, than it is to exercise the moral fibre and put forth the mental effort necessary to help them understand the greater value your job and facility represent to them.

    It is unethical to sell your goods and services for less than they cost you, including the full cost of your overhead plus a decent return on investment. This applies just as surely on sales to customers from outside your area, as it does to those who are rightful customers.

    Implicit in this attitude that price is the only value involved, is the thought that it is foolish to spend one penny more than you have to. Taken to its extreme, this attitude implies that the honest landscaper who is charging a little more money but giving a lot more value, is somehow cheating or exploiting his customers, when nothing could be further from the truth.

    It is your responsibility and duty to challenge and to change this attitude whenever and wherever you encounter it.

    This attitude tends to disregard or downplay differences in product, service, location, reputation, experience or any of numerous other items of real value to a customer. It disregards these differences and pretends to assume that all goods and services are created equal. It tries to ignore differences in specifications, quality, ease of use, convenience, dependability, availability, longevity, etc., all of which contribute to long-term satisfaction and value to the user.

    Customers are not stupid. But, neither are they schooled in the complexities of the industry's historic pricing and discount structure, or, the shambles that some landscapers have made of it in the last decade. Perhaps they can be forgiven for the conclusions they have drawn and the attitudes they have developed. Perhaps they are no more to blame than ourselves.
    Self-preservation is the first law of nature. No one will willingly act against his or her own perceived self-interest. Perception is the key. We need to challenge and change the erroneous perceptions that are damaging our industry. We need to change the way our customers, and possibly ourselves, perceive our role as a supplier of goods and services.





    There is usually a greater cost attached to quality goods and services and therefore also a greater value attached to their ownership or use. The sum of all these considerations should be greater than the difference in price.

    You do your customer a disservice when you idly let them buy the wrong goods from the wrond seller. You must strongly assert (sincerely, honestly, & convincingly) that your customer is probably depriving themselves of the real value purchase by blindly accepting the lowest bid. IT ACTUALLY IS UNETHICAL TO ENCOURAGE YOUR CUSTOMER TO SHOP PRICE ALONE AND DISREGARD ALL OTHER FORMS OF VALUE.

    Your customer came to see you, seeking your help and advice to make a purchase. You owe him your best effort and your best advice. To meet or beat a price, just to land the work; is unprofessional and not good business... so say nothing of the fact you are promoting the unethical tactics of selling on price alone instead of selling yourself and your company. WHENEVR YOU SELL BELOW YOUR ESTABLISHED PRICE, YOU STEAL FROM YOURSELF. NOT JUST THE LOWER PROFITS FROM THIS JOB BUT YOUR NAME, PRESTIGE, AND YOUR BUSINESS OUTLOOK.

    You then will enter the downward spiral which makes you buy on price alone: cheaper workers, cheaper materials, ... until you are the one forcing yourself out of business due to price. because there are only so many ways to cut your costs and profits before you end up cutting your business's throat.

    IT IS YOUR DUTY TO MAKE A PROFIT...not on this job or that job; but on your investment in time, equipment, training, money, etc. for now and your retirement. If all you wanted to do was maintain your present lifestyle, then all you want to do collect a wage..not run a business.

  2. dougaustreim

    dougaustreim LawnSite Senior Member
    Messages: 488

    Oh, How true. Just last night I met with a homeowner, who wanted me to lower my already very resonable price for an irrigation system, because he had a lower bid. I explained that ours was likely a higher quality system. His answer was that an irrigation system is an irrigation system. He told me that price was more important to him than quality.

    I explained that we were obviously not going to see eye to eye on things and that he best get someone else.

    Thirty + years ago when I started out, I made the mistake of believing I had to be cheaper and that I had to have every job that came our way. People came to expect that we would always be the cheapest. It took a long time to change that perception.

    Doug Austreim
    Austreim Landscaping Inc
  3. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    As an additional note to this - I got a disappointing call yesterday from a prospective customer - we didn't get the job.

    Nice Shaker Heights creeping bent lawn, full bed maintenance program from perennials to roses to annual plantings - the whole package. She had a "gardener" for 20 years plus who took care of everything for her, down to the details. She's had 3 landscapers the last 6 years because she couldnt' find the right relationship. A very nice lady - she travelled in the same circles with many of my customers and knew some of them, so we had a trust established early on. She came to me through a referral as well.

    After meeting with the customer for an hour plus, and great first impressions on both sides - she rejected us due to cost. A $10,000 plus maintenance bid - all because the other guy is charging $25 per man hour over our $30.00.

    She said she's been burned before, and doesn't know if she's going to get burned again. But she decided to go with price.

    How frustraing.... oh well, had to vent. Thanks.
  4. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Messages: 1,276

    Interesting article. There are certainly things that all can relate to if not learn from in the article, but I also think he's off the mark on several points.

    The customer's belief in that system of low price shopping has come from everywhere, with 155% price guarantees, 30 day price guarantees, etc, etc. People in our industry have certainly helped to propagate that belief system, and the author is correct; we only have ourselves to blame.

    Speaking for myself, I'm not sure it was a 'moral cowardice' that had me pricing lower than I should have when I started; I was afraid I couldn't earn the business at a higher price. I didn't have a problem with charging what the market will bear, I just didn't know what that point was. Further, at that stage in the game, I treated every lead as though it was the only one I'd ever get, because I didn't know that it wouldn't be. Everything was carried out in nip-and-tuck fashion.

    So was there lack of confidence? Sure. Was there a real fear of putting loads of effort into a proposal only to lose it to someone else (for whatever reason)? Absolutely. I did color renderings, clay models, the whole nine yards to impress customers. Coming into this market I had more knowledge than most, more secondary schooling than most everyone, yet I still was worried nad lacked confidence, about my ability to sell and to do. (But I worry by nature...just ask Paul.)

    And after the first year, when everything was said and done, I couldn't eat for two days. "Where was all the money I had worked so hard for?", I asked my wife. Very painful learning, but those painful lessons are really the best teachers.

    Time goes on, confidence grows, prices go up, to the point where you win bids despite being the highest price. That's where I am now. Not on every job, but every so often we learn of a project we won that we were the highest bidder, sometimes by $1500+ on $5K-$10K projects.

    I think people don't need to relearn ethics; I think they need to:

    Educate themselves in their field of choice so they become as knoweldgeable as they can be,

    Learn to have confidence in what they do and have confidence in the value of those services,

    Learn to put themselves in the their customer's shoes, to really endeavor to find out what a customer wants to hear...Needs to hear, in order to choose you. That may involve various aides to help you to remember to explain your knowledge in this, or your recent experimentation in that. You need to give them solid reasons to justify the higher price.

    But once you have justified that price, whether explicitly or implicitly, stick to it. I think everyone assumes that if a customer asks for a lower price, or to meet another bid price, that you won't get the work if you don't lower the price. The fact that they are even asking tells you that they like you. Otherwise, they wouldn't ask. Stick to your guns, explain you charge what you need to in order to earn your own living, whatever. Just don't lower the price.
  5. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    Lack of confidence comes from lack of knowledge about the business technically and financially. That lack of knowledge is crippling. It is also indemic in the industry. The posts here are indicative of the lack of personal and professional respect the business world requires. We've become a society of entreprenuers because we are too lazy to get education and too uncompromising and unable to work with others to gain experience.

    In todays go fast world, the consumer also gets the blame because of what they purchase and the way they purchase it. Everything is a commodity where price is king ala WalMart- lowest price everyday.

    Placing a value on goods or services takes time and and effort to educate yourself about what you want or need to purchase. Few people make that investment because it is easier to judge by price alone. People are too busy to be wise and too lazy to improve.

    We don't build many great public and commercial buildings anymore. You know, the ones made of brick, granite, marble and ornate framing. Today we build of large, smooth panels and fancy cinder block. I like sleek and modern but not at the expese of cheaping out. We don't landscape our commercial or school grounds in many cases. We' don't even maintain public property in many places with any degree of dignity, professionalism or competance. So what is in store for the industry as todays children mature in these surroundings?

    What will happen to all the entreprenuers 40 years from now after working a subsistance lifetime with no savings, retirement, healthcare etc., that larger companies and unions have provided for our parents. The standard of living will decline based on our price driven, entreprenuerial, service society. We will see a whole new class of elderly poor because we where always to busy and too lazy to learn.
  6. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    VERY interesting reading.
  7. kris

    kris LawnSite Bronze Member
    from nowhere
    Messages: 1,578

  8. dougaustreim

    dougaustreim LawnSite Senior Member
    Messages: 488

    Very good points in this thread. Probably the most difficult decisions for most people in the service and construction industries has been getting over the idea that they had to have every job that came along. Over the years I have come to observe that in any of the trades, the company that had the reputation for being the lowest cost rarely survived.

    We are usually one of if not the highest priced company in our community. Yet just this past week, we had several substantial landscape jobs come in for long time customers, who told us what they wanted, asked for a time frame and never mentioned cost at all.

    We have been around long enough now to have landscaped the second and sometimes third new home that clients have built. It is not uncommon on the second home to have them order a complete landscape, irrigation etc, and not even discuss price until after we have been hired, and they usually only in ball park numbers.

    To paraphrase an old saying, "If you live by price, you'll die by price"

    Doug Austreim
    Austreim Landscaping Inc
  9. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Messages: 1,276


    Thanks. I like your signature line.

    HB, you 've made a thoughtful point - what will these one man ops do when they are too old to push a mower, too old to plant a plant? When the sum of their knowledge won't allow them to do anything but those two things? Bleak picture.

    But speaking strictly for myself, lack of confidence can come from many things. And I've seen people with much more confidence than they ought to have. I wonder if the laziness and unwillingness to work with others comes from (in part) too much confidence, not too little.
  10. paul

    paul Lawnsite Addict
    Messages: 1,625

    As a commercial landscape installer, the spring is the wost time for us to get work. We see bids all over the range. I've seen landscapers bid and get work at 1/2 of what others are charging. I've also noticed a lot of "new" companys, they have changed their name two or three times in the last couple of years.

    Along the same lines I've had customers look at me funny because I drive expensive cars, they think I make too much money! I ask them would you rather I not make money and give them poor service or product? The answer is always no.

    Some of you from the older days of Lawnsite and before might remember I've said landscaping is still in the dark ages. As long as you have a pick-up truck, wheelbarrow, rake and shovel, you're a landscaper.

    It's up to us to present a profesional image, price our jobs right, TEACH others, and inform customers on the proper procedures for the work we do. We are the industry.

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