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Selling To Commercial Customers
by Phil Nilsson, Green Industry Consultant
Selling to commercial customers offers contractors the opportunity to build substantial sales volumes over a short period of time. The business-to-business, market has the same need for services as does the residential client, maybe even more so. It is just on a larger scale - much larger.
Contracts can vary from a few thousand dollars upwards to hundreds of thousands of dollars, and unlike homeowners who can sometimes limit the services of a mowing contractor for example, the commercial customer often depends on their service provider to deliver a wide range of landscaping and grounds maintenance work on a year-round schedule. Additionally, with high levels of service comes responsibility for maintaining large acreages. Therefore, to satisfy the business markets contractors must have an ample supply of both labor and equipment, along with the expertise to fully understand the ramifications of complex specifications and, of course, successfully bid in a highly competitive pricing environment.
Compared to residential markets that consist mainly of homes, the commercial markets offer a broad range of customer types. And while heavily competed for, just about any contractor can participate in the bid process.
The list below is just the tip of the iceberg in identifying customers to call on. Sit down with your Yellow Pages, flip through them and find hundreds of commercial property categories to call on. And one of the best ways to do this is by telephone because businesses are called on regularly by landscape contractors, and many property managers are receptive to getting several bids for the same work.
Commercial Clients:
Factories
Resort Hotels
Elderly Housing
Ski Resorts
Day Care
Fast Food
Museums
Warehousing
Shopping Malls
Raceways
Parks
Municipalities
Truck Stops
Golf Courses
Airports
Gas Stations
Banks
Schools
Sports Fields
Auto Dealerships
Zoos
Funeral Homes
Night Clubs
Commercial Condos
Hotels
Motels
Restaurants
Theaters
Cemeteries
Office Parks
Water Companies
Electric Utilities
Theme Parks
Railroads
Boating Area
Reservoirs
Hospitals
Shipyards
Highway Departments
Real Estate Managers
Apartments
Strip Malls
Historic Sites
Religious Retreats
Colleges
Churches
Roadside Rests
Military Installations
KNOW YOUR NUMBERS.
Because of the size of commercial properties, the scope of the work, availability of labor, and often the need for an extensive inventory of equipment capable of handling the larger jobs, the need to fully
understand job costs is crucial to covering costs and making profits. Generally, commercial customers look for the lowest priced job bid, along with the contractor’s ability to perform the work. Profits can be quite thin, so knowing where to draw the line with price is paramount. In other words, the commercial market is no place for anyone who doesn't have expertise is accessing the work bid on.
Labor hours, equipment, production, work scheduling and satisfying customer needs on a large scale can easily overwhelm a contractor who is unclear on the requirements needed to handle commercial work or does not have the ability to perform to contract specifications. Remember that the "price advantage" rests in the hands of the commercial customer because the work has probably been tested for price repeatedly in the market. Before receiving a price, the customer already knows what to expect - he's "been there" many times with many contractors.
The greatest advantage that commercial work has over residential is that a commercial property offers larger properties to work on. Therefore, crews often spend the entire day at one location, which reduces travel time, makes work scheduling much easier and takes some confusion out of the billing process. However, unlike residential customers, commercial accounts will "test" contract prices quite often, to make sure they are getting the lowest possible price.
The final consideration - or call it "caution" - in entering and promoting commercial work is limiting customer dominance. By that I mean that a contractor is wise to spread around his work among many different commercial accounts such that he is at less risk for losing a substantial amount of sales volume should a contract not be renewed. A good rule of thumb is not to allow any commercial account more than 10 percent of one’s total sales volume.
Other than what has been mentioned above, commercial markets offer many advantages to capturing a rather large amount of business all within a very limited market area and timeframe. And if you're lucky enough to be located in an industrialized area, it's just a matter of knowing your numbers and going out to get your share of the available business. Again, know your numbers. Count and carefully measure each facet of the work, know the hours to complete a job and fully understand all costs involved. Also know that, generally speaking, there is not much room for guesswork in commercial work since profit margins can be quite thin, competition for this type of work can be extreme and pricing the work is a real challenge.
