Contract Renewals and Client Retention
Maintenance contract renewals along with client retention rates are typically a tough subject around most landscape company's offices, especially with the mayhem that has already been the year 2020. Goals were most likely set when the budget was built out and although many of those goals may have been met depending on your client portfolio others were missed. The questions remain, can I still achieve the 3 percent increase we had targeted, will we make the 85 percent retention rate we aimed for? Are your competitors keeping their price flat just to try to ride out the storm, thinking low margin work will get them through? One deceptive factor in 2020 is the low fuel price, it may have helped you reach your margins this year but can you really expect your fuel cost to remain that low into the next year?
If you don’t know which clients are profitable let alone most profitable how do you know which one to price aggressively? There are always clients that are better to drop or lose than to keep the current price and your business management software should help you identify those, that the emotion out of it and just look at the numbers. That’s easier said than done with long term clients you may have a personal connection to. How are you tracking renewal dates, many of us have contracts that renew throughout the year so is your business management software alerting you to the renewal deadline?
So far I have asked more questions than provided answers however strong business management software should allow you to start with some assumptions and run several scenarios to provide you with options as to pricing your renewals and give you the option to provide a fuel surcharge to help you if your assumptions are wrong. This may keep your prices competitive so that you retain your clients and provide you with the downside protection you need.