June 15, 2014
Race to the bottom vs. selling value and benefit
LO executive director
During the economic crisis in 2007 and 2008, sales of smart phones and tablets skyrocketed. It is not unusual for families of modest means to have three or four televisions and a tablet, computer and phone for each child. Why are some people willing to spend $100,000 plus for a car when $10,000 will purchase a vehicle that will get them to the same place in the same amount of time? Why will people spend hundreds of dollars on a restaurant meal or thousands of dollars on a vacation? Why do so many people find ways to afford what they want even in times of scarcity? Why does a tree or shrub cost so little when it takes years to grow and provides a lifetime of pleasure and benefit? The same can be said for landscaping in general.
In the May issue of Landscape Ontario magazine, Ted Sikkema wrote an excellent letter to the editor about the race to the bottom. He makes the case that increased input costs and increased competition necessitates the raising of prices in order to remain sustainable.
Whether in the company of growers, landscape professionals, irrigation companies, lawn care firms, interiorscapers or retailers, I hear the same argument: Pricing pressure is real. Too many members are working too hard for too little even as they provide products and services that enhance the lives of their customers in so many wonderful ways. Pricing pressure is the reason employers find it difficult to pay their employees more. It is the reason that sometimes corners are cut and quality is sacrificed.
The issue of pricing is very complex. At the core, pricing must be based on input costs plus a sustainable margin. Every company has a slightly different input cost based on efficiency, experience, volume, equipment, management, profit expectation and overheads. Therefore, the best that a company can do to deal with pricing pressure is to know its own costs in detail before pricing products or services. This simple idea to ‘know your costs’ is necessary, but it is just the beginning. A better way to deal with the pricing issue is to sell value.
Just about every other industry is better at selling value than we are. I can’t think of many industries that provide a lifetime of pleasure, benefit and value. Our industry does. Some might say we are a luxury item and that plants and landscapes are not necessary. We know better. Our products and services make people happy, while providing economic, environmental, recreational, aesthetic, health and spiritual benefits, as well as community pride.
Owning many tablets and televisions is not a necessity, yet many families do. Going on expensive vacations is not a necessity, yet many people do. Eating at expensive restaurants is not a necessity, yet many people do. The necessity argument is fairly easy to refute.
Although pricing pressure is real, I believe our focus (the association and everyone in the industry) should be on learning to sell value. We need to be clear on why the public should utilize our products and services and communicate the ‘why’ in every action, activity and message. Focusing on pricing is too limiting. Focusing on value is limitless. If we look at every transaction from the perspective of providing true value and benefit, pricing becomes less relevant.
From an association perspective, our public focus has been on raising awareness for the benefits of plants, gardens, landscapes and green infrastructure, as well as the professionalism, creativity, expertise and character of our membership.
Our resident public relations expert Denis Flanagan is a tireless promoter of our industry and membership. So are many of our garden media friends such as Mark Cullen, Frank Ferragine, Ed Lawrence and Lorraine Flanigan. We try to support events, activities and institutions that educate the public about the value of plants, landscapes and green infrastructure. We participate in Canada Blooms, distribute how-to sheets, maintain an excellent public education resource at Landscapeontario.com, publish Garden Inspiration magazine and provide content for members to use in their own messaging through our information packet service.
Our Green for Life branding is meant to be used by members as a co-brand to let the public know that our members are a green force for beauty ready to green their lives. Our public relations company is constantly sending out information. We regularly communicate with property managers, building owners and other procurement professionals about the benefits of maintaining their properties and the value of using professionals to perform the work. We support the Green Infrastructure Coalition and Trees for Life alliance. Our chapters are involved in community projects that demonstrate the value of our products and services and the contribution ethic of our membership. We do a lot. But we need to be doing a lot more. You do, too. The more we learn to communicate value and benefit, the less pricing matters.
Tony DiGiovanni may be contacted at email@example.com, or at 1-800-265-5656, ext. 304.