Austin Hall and Palmer Higgins Transcript

(Transcripts may contain a few typographical errors due to audio quality during the podcast recording.)

It’s good to see you both on the podcast. Thanks for participating in a variety of projects. Palmer, you’ve been on the podcast twice, and awesome. You’ve participated in a handbook article, so excited to have you both now together. I know you chat frequently, but I would be excited to just hear first a quick background from each of you. Palmer, I think more folks will be familiar with you than Austin, but we’ll have you do a quick 20 to 30-second pitch on who you are and what you’re working on. So Palmer, do you wanna start off?

Palmer Higgins: 

Sure. So Palmer Higgins, a partner of Chenmark, is a holding company focused on acquiring long tenure small businesses with the goal of owning and operating them indefinitely, and currently serving a little bit of double duty as the CEO of one of those companies, Mainely Grass, which is a residential-focused lawn care and tick and mosquito abatement company in Northern New England.

Austin Hall: 

Austin Hall purchased GreenWise in late 2018. So I’ve owned and operated the business for about three years now. We’re a Chicago-based company, just North of Chicago, similar to Palmer’s business. We offer lawn care services. We’re sort of full service in nature. So we offer landscape construction, landscape maintenance, snow removal, some insect and pest control services came from the financial services industry working in awesome banking and private equity. But before that, my family had owned and operated a small business for quite some time, 35, 40 years in Indianapolis, where I grew up, had a small business in my blood in a way. And for a long time, I had a desire to be an owner-operator of a small company. So, here I am.

And how’d you guys get to know each other?

Palmer Higgins: 

That’s a great question. How did we get to know each other? We’ve been talking every other week for a really long time.

Austin Hall: 

I think four or five years, yeah. And funny enough, we just met in person like three, four months ago, for the first time. I actually think I had followed Chenmark for a while. When I was in business school, they came on campus. Trish James and Palmer came on campus to give a presentation. We’re talking about Sea Breeze, their commercial landscape business. And I think I asked them some sort of really silly question, like how in the world can you compete against BrightView? And now, to me, the answer is totally obvious. I think since that time, I had just viewed them as people that knew the landscape space extraordinarily well. And during my search process started to narrow down one of the sectors was landscape services. So I reached out to Palmer’s resource, and in a way, Palmer and I are the same age, but he’s been a kind of a mentor of mine ever since that time, helping guide me through the acquisition of our company. So I owe him a lot.

So what’s the obvious answer for the BrightView question now?

Austin Hall: 

Palmer, you probably have a better answer than that. You probably talk to these clients all the time. I have my own version of it, but why don’t you start?

Palmer Higgins: 

I’m a lawn care guy. So I don’t compete with Bright View anymore. I’d say from our vantage point, and I think it’s a similar answer to the question that we get a lot is, ‘Hey, if you own multiple landscaping companies, why don’t you consolidate them and combine them into one brand?’ We believe and what we’ve seen is that many of these businesses operate in a regional manner, and being close to the action is quite important. You can establish better rapport, better relationships with your clients. You do give up some ground on what we call sort of the super-regional or national players who want to deal with one vendor across their entire footprint. The benefit with us basically covering most New England is that we can coordinate among ourselves and still provide those super regionals sort of a quasi single point of contact. Obviously, we’re not national, but we think it gives us just a better touch with the client, better service, and a better relationship.

Austin Hall: 

Yeah. I don’t think I could put it any better than that. I mean, candidly, we’re a residential business, so a different animal. You don’t see a lot of large residential landscape companies, especially on the maintenance side, competing even regionally because I think of the similar dynamics of what Palmer described. With residential, though, I think it’s even more pronounced where you have individual homeowners who want to deal with a local company they like dealing with somewhat boutique in a way we’re a medium-sized small business.

I think it’s good for our clients to know that it’s operated by somebody who’s local. They can just have some peace of mind that the right details are being focused on, that we’re gonna be responsive, and that we’re not too big and we’re not too over our skis in terms of managing a huge business. But I think Palmer put it better than I could for the commercial side.

So, Palmer, we talked about this a little bit beforehand, but I’d be curious, leading into our chat more deeply, what’s been top of mind for you the last three, six months, or so?

Palmer Higgins:

So I’ll put a quick pin in that, just to say Austin, very kind words, but the feeling’s mutual; it’s been awesome to be able to talk to Austin. Chenmark has a cool dynamic where I have other CEOs of other operating companies to talk to, but it’s actually great to have an outlet that’s outside of Chenmark.

And to have that cadence be able to talk to someone who just thought as Austin is awesome. So I wanted to make sure it wasn’t just one way, man. It’s definitely two ways. So three to six months, that’s an interesting timeline. I was actually just talking to someone about this yesterday that we’re a highly seasonal business. So six months basically encapsulates the majority of our season in 2021. And I would argue that 2021 is a more challenging COVID year to operate than 2020, at least for us. So, on the one hand, and I can dive into that if you want. But on the one hand, COVID was operating within this year with COVID in the background was interesting, to say the least. In the last three-ish months, two primary things that I have been focused on and my team has been focused on.

Number one is just the supply chain has hit the lawn care industry hard and gearing up for 2022. This is a time of year when early ordering is happening for next season, and trying to get price certainty, and supply certainty is incredibly difficult and incredibly challenging when customers are expecting us to give them pricing now for next year. And the other piece is a pretty huge push into training and development. We’ve sort of overhauled how we develop, especially our field technicians and how we train them, and the career path that we’re trying to put in front of them. So we can turn what has historically been thought of as a job and do more of a career. And that’s taken a considerable amount of work and probably a lot more work than I thought when I kicked off this project last winter.

We talked a lot about pricing for materials and for customers in general, but I think it’d be fun to kick things off with just a little bit of discussion around pricing. What are price increases that you’re trying to look at, or what are materials going to cost you? How are you kind of navigating through a bunch of different prices, both for your vendors but customers as well? I’d be curious to start there.

Palmer Higgins: 

Pricing is pretty all-encompassing, and I think it’s gonna hit every business, regardless of what types of inputs you have, whether they’re materials, whether it’s labor, whether it’s a mix of both or all of one or the other, the impact is gonna cascade down across industries. And it’s gonna impact a lot of things that are tangentially related to price. So in my world, in Mainely Grass right now, the big complication is we have one opportunity once a year to set pricing, and that’s right now, our renewal letters will go out next week, and we will be effectively giving guaranteeing pricing to our current customer base for the entirety of 2022 in mid-November.

And that has a ton of complications when the vendors are reluctant to give me pricing on some of those input costs as far out as March, let alone September, October of next year. We’re wrapping up conversations, wrapping up decisions that we’ve had to make in anticipation of renewals, going out in an environment where our inputs are variable on a longer-term than the output has to be to the customer. And we don’t make multi-year contracts. So everything gets renewed except for very rare cases; everything gets renewed on an annual basis. You often have to imagine that it can be even more complicated for your world. You’re signing up for a commercial account that’s multiple years, and you’re struggling, trying to figure out what’s happening next year, let alone in two or three years.

Austin Hall: 

Yeah, it’s interesting. We actually operate pretty similarly to you, and we only have annual agreements. We have very few multi-year contracts, and generally, those are for our store removal contracts, where we just have more visibility on labor and material pricing. For instance, ice melt is pretty stable for us, as has been snow removal, labor costs, but for our green season services, landscape maintenance, and turf care, we’re sending out renewal letters a little bit later than you do in our conversations in the past. I think you talked about November being the right time frame. We generally send them in January and February. So we’ve got a little bit more flexibility to get visibility on pricing for next year, but we’re struggling with the same thing. I mean, candidly, I’d like to push up our renewals to November and December. A big part of it is for cash flow reasons. You know, we have prepayment programs, which we can talk about here that are similar to yours, where customers will get discounts for prepaying in advance, but I’m just not comfortable sending out numbers until we can’t get material pricing from hardly any of our turf care vendors at this point in time. And they really won’t give us visibility yet on when they’re going to be able to provide it.

Palmer Higgins:

I don’t know if this is the right way to deal with it, but like how, the only way we’ve been able to get over that is we’ve essentially pre-ordered 90 plus 90, probably closer to 95% of our product needs. I just set the final order today. So was it November 9th? So essentially bought out until the only stuff I haven’t already pre-ordered is the fertilizer I plan on using in the back half of my last round. And that’s only because my distributor couldn’t actually fit the quantity of its material I needed. If he could’ve, I would’ve bought the entire thing. And that rolls into discounts because I love getting cash in the off-season two, but to keep the economics for us, we’re dropping our prepayment discounts pretty significantly. We used to be 7% for years. Last year, we opted to 10% this year, we’re dropping it down to five across the board. What are you guys doing?

Austin Hall: 

On prepayment discounts? Yeah, we’ve actually been more consistent on that. In the past, we had a 5% prepayment discount up until when the season began. So I think that was historically like March 31st or the end of February. And we bifurcated it a couple of years ago to distinguish between credit card payments or ACH and check payments, obviously credit card fees being in the range of two and a half to three and a half percent. We wanna account for that. So we’re now at 6% if prepayments are made with ACH or check and 3% with a credit card; honestly, I would say we didn’t really see a ton of change in behavior because of that. We probably have a pretty similar mix of ACH and check versus credit card payments. Even with those distinctions on prepayment discounts.

Palmer Higgins: 

Yeah. You tell me this, but before that, we drop our, we don’t make, we don’t distinguish between ACH and credit card, but we do distinguish between the time of year that they prepay. And so if they prepay early, they get a 5% discount. If they wait a little bit longer and they prepay just before the season starts, it’s a 3% discount. We’ve had a lot of discussions internally about whether or not that’s necessary. I know you say that it’s not that customers are going to prepay regardless of the discount; they just care about the timing.

Austin Hall: 

Yeah. Well, that’s been our experience in the snow season. We did a better job of getting our act together for snow and getting our contracts out earlier in the season. And what we found is that if we send them in late August, early September, the upcoming winter, those contracts begin on November 1st. People, especially in the residential context, wanna get that off their plate. So we’ll see people prepay. We have far more contracts on the landscape and lawn care side as soon as the contract comes over. So it just takes us longer to get everything out. And we really haven’t had to scale down those percentages because we generally will send the renewals in January and February, and the prepayments are due within six to eight weeks of the contract being delivered. But I think that when we are more organized this year, we’re going to get ’em out sooner in November and December. And I just see people prepay in the same kind of frequency that we’ve seen in the past. I don’t think it really matters when the renewal goes out, but we’ll have to see how it goes this year.

Palmer Higgins: 

Yeah. Do you do an installment?

Austin Hall: 

We do, actually. Yeah. We have three types of ways to pay. So one is a prepayment, another is per service, so after the service is performed. Then the other is an eight installment program over the course of the season from March until October, November, ideally, for us, people prepay at the start of the season, or they’re on installment programs with auto payments with a credit card. And we just find that we probably end up saving money. If you think about the credit card fees versus trying to chase people down and collecting, we probably save money even including the credit card fees on those installment plans.

Palmer Higgins: 

That’s probably the biggest move that we’re moving towards because it’s so seasonal we don’t do any snow. It’s historically been all about prepayments, and it’s nice. It feels great to have a boatload of cash when you have zero revenue coming in the door, but it is still a liability. And historically, we’ve given up a discount to do that. What we’re doing now is put the script and say we actually prefer installment plans. And for us, it’s a little bit different because installment plans are a quasi prepayment because they’re 12 months out of the year. It starts in January, goes to December. So for January, February, March, we’re getting 1/12th of the total bill every single month, despite the season not having started or maybe towards the back end of March, it might have. But the huge benefit to us is what I realized this year. I don’t really know why I didn’t put two and two together as a prepayment customer. They have to prepay every single year. 

So we spent all this whole time in the offseason trying to connect with over 10,000 customers, getting them to prepay or asking them if they want to if they don’t if they just want to enroll in autopay, whereas installment billing, it’s just auto news, which doesn’t mean that customers can’t cancel. Of course, they can. We just, and if they do, we just refund whatever has been charged in the card, but it creates a mechanism for them to touch base with us in the winter, without us going to chase them down and say, Hey, do you want to prepay or not? We’re in this limbo status. And if they don’t touch base with us in the off-season, despite all of our efforts, we’re stuck trying to connect with them when things are getting super busy in April. So we’re actually trying to deemphasize prepayments, but it sounds like you’re trying to emphasize them.

Austin Hall: 

I actually think maybe I misspoke there; we would prefer to have the installment plans with autopay on a credit card because you just think about the prepayment discount. It’s a 5 or 6% of a thousand dollars program. So it might be 50 or $60. And if you either have the cash to support it or have a line of credit and money are pretty cheap right now, we can really afford it. I think a big part of it for us has been being able to buy inventory at the start of the season. We stock a ton of fertilizer and seed, and we control products and all the stuff in bulk material for our landscape construction projects. A lot of the stuff that your landscape companies are buying two Palmer and the pre havens has enabled us to do that, but we would still be able to draw our line of credit and fund those purchases.

Palmer Higgins: 

If a hundred percent of our customers were on installments. And I think that the cost of capital is just cheaper with debt financing than it is a five or 6% predated discount. But we have a lot of people that are just that behavior ingrained. They’ve been with us for ten-plus years, and the prepayment discount is not the reason they work with us, but it’s pretty attractive to them. So I don’t think it’s something that we’ll move away from because I think it would feel as if we were taking something away from somebody if we were to eliminate it totally, it’s literally the exact conversation we had internally where like everyone on the team likes installments for a whole host of reasons, but no one wants to get away from them completely, nor do we want to the fact that we still have them, because there’s definitely some, some cohort of customers that really like it and want to do it. I’m happy to extend a discount for them if they want to shell out, you know, their entire year’s worth of services in December the year prior.

What I found it became so acute when we just moved our maximum prepaid discount from seven to 10% this year; it seems like such an inconsequential number. And you talk about, oh, thousand dollars. It’s a couple, you know, 50, 60 bucks, if it’s 5 or 6% when you’re multiplying that over 10,000 plus customers, we were just giving away so much gross profit and prepayment discounts that like it, it became very acutely aware that it, for us not necessary, as long as you think that you can still hold onto those customers. And my view is if the prepayment discount is the only thing, keeping our customers around that, we’re clearly not doing a good enough job.

So this year, particularly, I used lower discounts on the prepayment side to offset what would’ve had to have been higher price increases on services all around. But that obviously comes with the potential ramification of some customers, not being happy that the 10% discount that they liked so much last year is no longer there.

Austin Hall: 

For us, we’ve looked at that math with a prepayment discount, and we could probably add two points of margin to our net profit by eliminating it entirely. But for a residential client base, it’s just not practical. So I don’t think we’ll move in that direction. What I would like to move away from is per-service billing. And there’s a lot of people out there who say, especially newer customers, that they wanna see the invoice, they want to confirm the services that we provided, and an installment plan can be a little bit vague if you’re paying eight equal installments of a hundred dollars a month. Although we send email confirmations and email schedule updates and we actually leave physical leave behind, we perform our services. 

Clients just feel better knowing that they know some clients, they know the service was performed, and then they’re comfortable paying after that fact. But in a residential context, I’m sure you see this ten times the size of us that it’s just at least on the turf side. It’s just really hard to get people to focus on paying their landscaper or lawn care provider. When I hear about folks in the HVAC or plumbing industries when you’re doing in-home installations, and you’re using a platform like service Titan, and the customer is literally paying by credit card on site. I wish we could move towards that model, but I haven’t come across many landscape companies that operate in that fashion.

Palmer Higgins: 

You’re running on Aspire that doesn’t isn’t necessarily set up to be as smooth on autopay. We do auto pay, and I have no problems with it. We do the service, post it, mark it as complete on the tablet, and that evening their card gets charged. And it’s very smooth, but I don’t think Aspire has quite the same smoothness to it. I will say one of our landscape companies had a similar problem to you with installments. I think actually more pronounced is that they were on installment. So customers are trying to contract to say, yes, I agree to pay x dollars every single month for whatever seven or eight installments, but it had become a practice that they wanted to show the work that was done that month in a fairly itemized fashion. So those installment invoices were getting held up by work tickets being completed for the month before the installment invoice was going to go out. 

For a bunch of services in April, you need all those work tickets completed and verified, and closed out before you can generate the work ticket report, which then feeds into the activity report that goes into the installment invoice. So the bill for April wasn’t going out until mid-May just so it could have the services for April, which is a brutal drag on working capital, especially in a seasonal business. So what they ended up doing is they just bifurcated it. They didn’t want to get away from that email completely. And so they just flipped the script, and they sent out invoices on the first of the month. And at the end of the month, they sent a summary wrap-up of what was completed for that month. It sounds so simple and obvious, but there was so much hand ringing around that the change of that and how customers were gonna be asked to pay a bill that wasn’t necessarily directly tied to services.

Just trying to get over that and say, like, they’ve signed a contract, they know what services entail. Those services happen, seasonally, and you’re still gonna give them the report every single month of what was done at their property for that month as is the case for a lot of these things, like a lot of concern and nervousness and valid, to some extent because it’s changed, but has been adopted wholeheartedly without issue.

Austin Hall: 

That’s interesting. That’s something we may want to consider. We found a way in Aspire to link installment invoices to completed services, but we’re doing it similarly. We invoice once a month at the beginning of the month service that was performed on October 1st likely wouldn’t be billed until November 3rd. And then we used to have 30-day payment terms. We actually shortened that to 10 days, which we got some pushback on.

But the thinking was by the time that we’ve invoiced and collected, and it could be 60 days from when the services were performed. And like you described every week, pay weekly for hourly payroll. We moved from biweekly to weekly because just the nature of our workforce was important to them. And there was a financial cost associated with it, but we thought it was the right thing for the business, but we have to float wages for 45, 50 days between when the services are performed, the laborers are paid, and the client pays us. And it’s just, when that compounds on itself, as you grow and grow, it can be a real, not just a strain on work, a drag on working capital. It can be a real strain.

Palmer Higgins: 

Well, especially in a seasonal, if you just look at a landscape contract, even if you’re on equal installments or even if it’s just paid as you go, so much of that work is barbell between spring and fall. So like you ramp up, you do a bunch of spring cleanup work, you spread mulch very expensive, and you’re waiting. You have to float that for 50, 60 days across a customer base. That’s thousands of customers.

Austin Hall: 

Yeah. Seeing that happen. I think a lot of it is just about communicating to clients as best you can, why these types of changes make sense for the business, and how it can be a win-win. It’s hard to do that at scale with a thousand or 10,000 lawn care clients. I think it’s probably easier in a commercial context when you have hundreds of clients, and I’m not in the commercial business. So I don’t know for certain if that’s easier, but when it comes down to it, if people have an issue with payment terms or with installment billing or prepayment discounts, we all often find it. If we can get them on the phone and have a conversation about why for a local small business, we’re not a national company, it’s helpful for us. Usually, we can make that change pretty seamlessly, but you gotta have a lot of people in the office to have all this conversation. So in a residential context, it just requires a lot of resources, especially the renewal process.

Palmer Higgins: 

Yeah, but those installments aren’t fixed upfront when you’re doing installments. Aren’t installments based on monthly invoices based on work done that month?

Austin Hall: 

No, they are fixed upfront. An $800 program would be invoiced a hundred dollars a month.

Palmer Higgins: 

Got it. So why not some other companies have done this, like why not send out May’s invoice on April 15th with 15-day terms. So you’re getting it ideally on May 1st rather than having the 10-day terms discussion, or if you want to take them 30 days, then send it out April 1st with a 30-day term. So it’s due on May 1st, and it’s the May installment. I know that’s almost impossible in Aspire, by the way, but I know it can be done cause I know one of our companies does something similar.

Austin Hall: 

We haven’t thought about separating installment and voicing and per service and voicing and doing them at different times of the month. That would be interesting to think about it probably wouldn’t get a lot of blowback from that. We’ve just done it all at once in part because when we send out monthly invoices, generally that generates a lot of phone activity and email activity, and our administrative staff has to put on their armor and suit up to field all of that dialogue with clients. So we’ve just done it all at once, but that’s a good suggestion.

Palmer Higgins: 

Have you ever done an analysis of which customers contact you and how frequently? Cause I get this a lot. We have over 10,000 customers and have a whole team now of 12 people that answer emails, answer phones, live chat, that kind of thing with all of our customers, and we track activity. So I can see when spikes happen. I can see that everyone’s bogged down with phone calls or emails. But what I can’t tell is whether it is like 20% of our customer base that’s emailing and calling us all the time, or is it a hundred percent of our customer base that happens to touch base like every now and again? And that just leads to a certain amount of volume.

Austin Hall: 

We haven’t looked at that. I’m just trying to think about how I would. Aspire isn’t well suited to that kind of activity-based information in large part because the CRM, in my view, is not extraordinarily robust. The system is more meant for commercial landscapers who don’t have nearly as many clients as you do or we do. So we would have to figure out a way to pull tasks, and you report, and I’m not sure exactly how we would do it probably would have to be actually outside of the SP. I’d say we have a lot of conversations about that topic internally with our sales team, especially when it’s coming to renewal season and pricing adjustments; just what kind of resources are we investing in that client relationship, whether it’s admin time or sales time or operational time, but I don’t think we have a good way of pulling that information. Can you pull that in Real Green in some way?

Palmer Higgins: 

No way, it’s a pretty gnarly data set. Because you’d have an email that is just Gmail, I think we can get the backend data there. Who’s emailing in. And that does feed some of our data activity trackers. And we have a VoIP phone system, which has reports. We’d have to strip that out. And then we have a third service for live chat. We’d have to strip that out and, oh, sorry. We have another service for texting.

So I’d have to basically on four reports from four different platforms to get a sense of which email or phone number is calling in or emailing in the map that onto a customer list that I would get out of Real Green to figure out which email and phone number is associated with that account to tie everything to a customer number and then roll it up that way, which is precisely why I haven’t done it yet, but I just can’t every time I hear that the office is getting just told inundated, I also hear stories about a small handful of customers that call or email all the time because everyone knows them by name. And so I just, I can’t shake the thought that it’s the 80 20 rule or maybe it’s even more extreme. 5% of our customer base account for 80% of our office-like communication flow.

And if that’s the case, how are we missing the boat with them, and how can we educate them or educate ourselves to solve those problems and answer those questions without them having to call or email in 800 times? I don’t know. I have no problem with them calling in at a high level. If they’re calling in that much or emailing in that much, clearly we’re not doing a good enough job solving their questions or solving their issues up front.

Austin Hall: 

Or it could just be not the right fit.

Palmer Higgins: 

Yeah. That’s why, when you were talking, it jogged my memory. You were talking about certain customers and certain reactions like I had a conversation about a customer today where it’s a husband and wife. They’re in a lawn care program with us, but they don’t want us to use any weed control products. We have a program designed for that. It’s called our pesticide-free program. We’ll swap you out of our traditional lawn care program and swap you into a pesticide-free program. And they refuse to go into that program.

And I have no idea why the team has no idea why almost every one of the team talks to this customer, and I’m thinking like, it doesn’t make sense to me. And so we’re gonna have to call that customer and understand like you’re in the wrong program. We can’t tell you we’re doing one thing but then do a different thing. Plus, we have a program that’s dedicated to this exact issue. So let’s just put you in that program and get you in the right structure. But maybe it’s just not the right fit. And I don’t know why I just heard about it today. It’s just a unique case and got me thinking.

Austin Hall:

Yeah, we don’t have a way of tracking that information in Aspire. We have done an analysis around our VoIP usage so we can track the number of calls that are coming into the office. We’ve usually used that to just understand how busy our team is and when they need extra support if we need to hire additional people or bring on temporary folks, the mapping that you’re talking about, the exercise of trying to tie back phone numbers to the customer list, there’s only a handful of people in your company. Maybe it’s the number one Palmer that can do that and do it well and do it effectively. This is a different topic, but trying to do that with our paid ad campaigns, this is the first year that we’ve really invested heavily in paid search in large part because of how successful it’s been for you and talking with you about your history with it.

And we have great information in Google analytics around cost per lead and conversion rates. And we’re really happy with those figures, but what we can’t get visibility on without doing a lot of Excel analysis is are these clients are these leads that converted leads actually converting to customers. And when I’m trying to cross-reference phone numbers with information in our system, the home phone, and the office phone, I mean, there’s all kinds of Excel gymnastics, you have to jump around to try to get a directional answer. That’s something I’m really struggling with right now. So the idea of trying to do that for activity-based client communication is like, it’s gonna put me out of my misery.

Palmer Higgins: 

I know. Well, look, we don’t do snow. So that’s why it’s like one of those winter projects. Luckily, there is definitely one other person at Mainely Grass who can do it by CFO and a GVP of Chenmarks. So maybe I’ll just dump that on him. It’s a good test.

Yeah. The lead thing we’ve talked about this before, but like the lead thing is something that we struggle with too, where we have this unbelievable data and clarity around who’s clicking what and how many people “convert,” which is for us filling out a lead form on our website, but then there’s this like a huge, absolute wall that like information cannot pass.

Because then it passes basically over an email into an inbox that it gets input into Real Green, where we then actually present them with a quote and try to convert them from there. So I’ve struggled with that. And I basically just do everything in aggregate. So I’m looking at what the cost for conversion is on the Google side. And then what the closing rate is on our side with associated numbers and costs to create an amalgamated cost of customer acquisition, but would love to see exactly, oh, Hey, like people who click this ad with this wording or through this copy are converting at a much higher rate to actual customers.

So you can afford to pay a higher conversion cost through Google because they’re going to convert better. I’d love that, but that is not feasible. And I honestly like we’ve looked at the workaround. The workaround is to create a dedicated landing page for every ad you have in the Google universe, which has a unique source code, which you physically copy over into the lead in Real Green. And then you run a lead by source report, which is PDF, and try and do it that way. And that’s just been talked about as too cumbersome. Like every two weeks, when I talk to our marketing consultant, he brings up how it would be so great if we could connect like the full funnel. And I tell him, ‘Man, it’s not happening.’

Austin Hall: 

I know that would be a dream come true. We’ve talked to Aspire a lot about that. And you and I have talked about APIs and just trying to build some technology. And I know you have some expertise around building that technology. I just struggle with spending thousands of dollars on Google Ad campaigns without really understanding which of those leads to becoming a GreenWise customer and what size of a customer, and how long have they been with us? What you’re just suggesting you’re doing is a swag, and it’s directional, but for us, it’s a significant amount of investment. And it’s just hard for me to continue with that program without having the confidence that it’s working. 

Palmer Higgins: 

Yeah. It’s definitely easier for me because the breadth and variability of services in size is much smaller than for you, right? So you could have a lead come in and turn into a landscape construction job that’s tens, if not a hundred thousand plus dollars. I could have a customer come in, and they could be, they could be a $2,000 customer, and that’s two standard deviations above my norm. It’s like my median new customer is $800. My average new customer is $900. And if you were to plot that on the histogram, the bell curve’s pretty consistent. That’s what gives me the confidence to look at things and aggregate at a high level without knowing exactly how this ad performed this well precisely, but knowing on average, I pay 50 bucks for a customer to convert on a Google campaign and fill out a lead form. And on average, I’m converting one out of two customers into a closed lead. Okay. Like unburdened, my customer acquisition cost is about a hundred bucks. The median new customer is $800 gross profit. Here’s what my gross is if it is per customer; here’s what my payback period is.

I can get behind that. It would be great to know in more detail because then I could just be much more surgical in how I allocate funding to different campaigns. But I think that’s an easier hurdle for me to get over because the uniformity of my customers and the uniformity of our services is much higher than my impression.

Austin Hall:

Hey, search campaigns have targeted specifically organic lawn care and mosquito control. So those are the services where we’re really trying to accelerate growth and where we feel we’re most differentiated, at least today. So we’ve been focused on those. So I have the sense that most of the folks I’m looking at are our numbers now. One of our campaigns, which we spent $12,000 on this year, found a ton of money in your world, but we’ve got 415 conversions. So 26, 27 bucks per conversion sounds pretty darn good.

We’re converting like 40, 45% of our delivered proposals into contracts. So I mean that math shakes out, but you know, I couldn’t tell you that 415, if 40 of those people are clients or 400 of those people are clients. It’s probably somewhere in between. So if somebody is listening to this podcast and can sell me a solution to be able to have more precision around that data, something that we would find usually valuable and probably pay a lot of money for the thing that’s a little bit murky for us is we weren’t using paid search until two years ago, and we’re still dipping our toe in the water on it. 

And our leak traffic was still very strong without the marketing dollars there. So what I’d like to do is go through April of 2022 with paid search off and then go through April 2022 with paid search on and compare the differences. Obviously, we could do that year over year, but then you’re kind of running an experiment in the middle of your green season. And that’s a little bit of a risky strategy.

Palmer Higgins: 

I’d tell you just to go search for a man. It’s going to work like those numbers are working when someone fills out if you’re getting a lead of the 415 leads when those are coming over, are they just coming like the same thing with me, like a lead form that then hits us like a shared inbox has a lead that then people are creating quotes off.

Austin Hall:

We have a Call Only campaign that directly links to a phone number that they can dial directly from Google.

Palmer Higgins: 

So why can’t you just tag that? Aspire has tagged just that as a Google lead. And then you could figure out how many of those are closing. Because what you’re saying is you’re concerned that those like organic ticket mosquito customers, maybe when the lead is via a Google paid search campaign, the close rate isn’t 40 to 50%, that’s much lower that’s what you’re concerned about?

Austin Hall: 

It’s often the case that people, well, when you submit a form online through a landing page by design, it’s meant so that the client may, or hopefully doesn’t know that they actually clicked on an ad. So with those leads, we can tag them in our system, and it’s not hard to do because it comes in a form. The Call Only campaign it’s actually been pretty successful for us this year. But for some reason, we haven’t been able to figure it out. I don’t know if this is a Google thing or with our agency that the phone numbers aren’t coming through clearly.

So sometimes, the area code will come through, but not the full phone number. Sometimes the client gives us a different phone number that they’re calling from. So when we try to match up this data from Google or our agency and with the data in our system, we can’t properly tag or accurately tag the leads because the client doesn’t know that they called us from a Google lead, to begin with. See what I’m saying?

Palmer Higgins:

Yeah. It’s the same issue of you having a wall in the middle of the sales funnel. Yeah.

Austin Hall:

And I will tell you that the local service ad platform is a lot better for this. And just in terms of data integrity, I don’t know if folks know Alex much about that. If you’ve talked about it in your prior podcast, what did it used to be called, Palmer?

​​Palmer Higgins: 

Google Guaranteed is like an offshoot of it. It’s Local Service Ads; LSA is like the parent of it. Google Guaranteed is like a sub-component where it’s essentially, I’m not on Twitter, but it’s like the blue checkmark on Twitter that says you’re verified. If you are Google Guaranteed, you get a checkmark next to your name when you present in the LSA like the local pack.

Austin Hall: 

So I think you’ve been experimenting with that over the last couple of years and investing heavily. So this year more so than last year, although we can’t seem to get nearly as much lead traffic as we’d like to get through Google Guaranteed. But nevertheless, like all those conversations are stored in a single sort of repository, and you have the call recording and the phone number. And it’s just much easier to figure out who called us and when, and tag them appropriately versus these Call Only campaigns through Google Ads. It’s just that the data integrity is not there.

Palmer Higgins: 

No, I hear what you’re saying. I think LSA is good. We actually just turned it back on after having turned it off for a while because it got to the point where over 80% of leads that were coming through were for lawn mowing. And even though Google My Business can distinguish between lawn care and lawn mowing, for whatever reason, LSA hasn’t copied that mapping onto their system. So when you say lawn maintenance, it includes pest control, lawn care, aeration seating work, and also lawn mowing. And you cannot uncheck lawn mowing. And that wasn’t horrendous like the peak sales season or the off-season for us. But then, when it got to like May, June timeframe, we just got obliterated by false leads. I don’t know if you do this, but you should, Austin.

Austin Hall: 

We dispute, yeah, you can. I know where you’re going.

Palmer Higgins: 

We were disputing hundreds of leads, and it was taking them months to get through the backlog. And you’re totally at the mercy of Google saying yes or no. And what we found is they will not grant you the dispute if you say even anything remotely close to lawn care. So if they call in as an example, this was an example given to us. They call and say it should be lawn mowing. ‘Hey, you say, sorry, that’s not what we do. Like we’re lawn fertilization and take mosquito spraying and aeration seeding companies. And, oh, sorry. Thanks a lot. That’s not what I’m looking for. Bye.’ Google listens to that call, and they say, oh, you said lawn care. So no problem charged to lead, dispute lost, which is just brutal.

Austin Hall: 

Yeah. We found this system to be, and I think they’ve got some work to do on it. And I guess it’s somewhat new, but there are clearly some tweaks that need to be made. But I think the frustration for us has been like, we can increase the dollar spend per lead as high as we want, and we’re still not driving the traffic that we’d like to. So that’s the first thing which maybe somebody can share with me what I’m doing wrong there. The second thing is the dispute process. Once they render, it is denied or approved like there’s no recourse. You can’t go back to them. And then on your third point, our office team doesn’t know when somebody’s calling us via Google Guaranteed. So when somebody calls in and says lawn mowing and says, what’s your minimum for lawn mowing, we’re gonna tell them whoever the number is 55, $60.

And without knowing that, we shouldn’t have had that conversation if we’re following Google’s rules and we don’t wanna pay for that lead. So it’s just frustrating for us because we can’t train our administrative team to filter because the client that’s supposed to know, they called via that program. We had that conversation, and nevertheless, Google is still charging us the 18 or $14 for that lead. And it keeps on happening over and over. I will tell you that the reason we haven’t turned it off is it’s just been super sporadic. We’ll have a day where three or four leads come in, and then we’ll have a month where not a single lead comes in. So I haven’t really been able to pick up on any patterns there.

Palmer Higgins: 

But also, you do lawn mowing. So that’s not as hard of a cutoff for you. And frankly, so I’ve had that same frustration, man. If I knew this was a Google lead, I might be able to do it differently. But then I thought about that and talked about it with the account management team. That’s a customer experience like, Hey, you’re calling from Google. I’m going to treat you totally differently. Cause I don’t want to get charged by Google. And you never know, maybe they say, oh yeah, I was interested in lawn mowing. But actually, now that you mention it, it would be great. If I had to take mosquito services at my property, I’d get smoked by ticks. And I want to get some protection there. Great. I’d love to give you a quote. You still want to insert a level of just like normal human interaction into a digital campaign world. And even if we could distinguish being Google accounts, I honestly would probably tell my team to handle them like any other customer calling in and treat them like you would want to be treated.

And if that means I get charged, I get charged. That doesn’t mean that when I talk to our Google rep, I’m not telling her the architecture for how to distinguish what services as you do. I and Google My Business. I don’t care how big of a company you are. Like you got to be able to piggyback off of that architecture and just Del and duplicate it. Because it’s already there, the other frustration that our landscaping companies have is there’s no way to distinguish whether or not there’s no ability to market snow on that platform, which seems like a huge miss.

Austin Hall: 

At that point, we’ve tried to market snow with Google ad campaigns in the past with very limited success, and it could be a user error. For some reason, we put ads out there that we thought made a lot of sense. We talked about residential services; we’re really pushing zero tolerance for residential.

So it’s a smaller subset of the market, but we just had the very little lead volume on a two-month campaign we might have had, like we were spending maybe 50 bucks a day and had 10 or 20 clicks, like almost nothing. So I just really couldn’t make sense of that. If it was a service that people just aren’t going to Google to, you would imagine in today’s world; people are gonna Google for darn near everything.

Palmer Higgins: 

Especially on the snow side, like it’s so in demand the headlines up here, ridiculous; I was gonna loop back to it. But you said you weren’t seeing a lot of inflation on the snow cost side of things, whether it’s the icing or plowing on the ice melt.

Austin Hall: 

On the ice melt, no, actually, we haven’t. We just pre-purchase most of the ice melt we need for the full season, just in anticipation of having; I’m sure there’s gonna be supply chain shocks and shortages that we’re just not seeing right now, but we are able to prey most of our material.

And on the labor side, I say we, we’re seeing just a little bit more inflation than we’re seeing on the landscape side, but not a lot. Our labor rates have probably increased like eight or 9% this year, which sounds a lot, but in today’s world, it feels fairly normal to me. So no, we’re not experiencing that.

Palmer Higgins: 

You’re doing great. I don’t know. I don’t know where you’re getting your salt. I’m going to have to call you after to figure it out. Because I think across the board for Chenmark companies, it’s like 25 to 40% up. We spent some time actually figuring out if we could source salt from the mine. And so like where it is Egypt, Bolivia, like how do we charter a barge? How are we going to get it to where we need to go? Then it’s gotta go on rail cars to all of our different locations in a nightmare.

So like that’s not what we’re doing. That price has definitely felt a lot like what fertilizer pricing has felt to me—the labor side. I’d have to check in with them. I don’t know if it’s been crazy, but I have seen headlines the last couple of days where municipalities in the New England area are paying a ridiculous sum of money for especially CDL operators that drive those big D O T trucks to for roadways, I’m seeing 200, $300 an hour just for the person they’ll supply the truck. You just need to have the license to be able to do the work, which is, yeah, nuts, nuts.

Austin Hall: 

I would say it’s been a little bit of a breath of fresh air for us on the snow side because we haven’t talked about this, but in our landscape construction business, plant material pricing has just been insane this year. Every time we pull up our vendor price list, so has changed, and there was just no way to really keep track of it or throughout the season. It was just every day. Usually, we have price increases once a year, which was disconcerting. And on the labor side, on the construction side of things, similar story, like just a lot of wage inflation.

Obviously, we’ve gotta pass that through to our clients. We also want to try to do what to the best interest of our clients and to the extent we can keep our prices down or flat; we’d love to be able to do that. So in our snow business, like we just, we didn’t have to increase things quite as dramatically because of that stability, which is actually a little bit surprising to me because it’s, I mean, for those that don’t know the snow business, it’s just, it’s really hard work.

You know, you’ve got folks who are, who, the folks who are doing the work have to commit their whole winter to it. It’s incredibly unpredictable. It’s very disruptive to people’s lives. So, in general, it’s hard to find people for that service but knock on wood. Our snow season just started. We’ve been able to get pretty decent commitments from our staff.

Palmer Higgins: 

I have to imagine people are raising prices a lot more. I know our companies are raising prices more than it sounds like you guys are, but we’re also facing sounds like we’re also facing input costs going a lot higher. I think for snow, scarcity is going to be a big thing. Customers, whether it’s residential commercial, if you haven’t locked up a contractor by now, you’re probably going to be a price taker. And there’s just not a lot of supply out there. I’ve heard incredible stories of competitors of ours in our markets, canceling contracts, good contracts. Not because they want to, but because they know they can’t service them, and they have to make the toughest of all calls just cancel some of their largest accounts that require the most labor and materials, and equipment. They can’t staff it appropriately. So they have to shrink their book of business. And that’s not a sign at times. I don’t know. I don’t know what else is. My guess is you’re going to hear about that stuff. Like once those start flying, you’re going to hear about that kind of stuff.

Austin Hall:

Yeah. I’m, I’m probably viewing it with two rosy glasses, but I will say that for us, snow is an important part of our business for you. I know you keep a lot of your folks on year-round for us. Ideally, we’d move towards a model where we can keep our entire staff on for the full season. At least for the people that wanna be here in snow enables us to do that. And especially having a zero-tolerance program where you have more consistent work for folks and enables us to do it. We have a pretty significant prepayment at the start of the season that allows us to sort of lock in a lot of our revenue because, increasingly, our costs are predictable. We’re buying a hundred plus pallets of ice melt to start the season while keeping people on full time.

So I think it’s a model that hopefully will continue to work for us that will allow us to ha be able to retain and attract people who want year-round employment, which is an industry that tends to be pretty seasonal, at least in the upper Midwest.

Palmer Higgins: 

Yeah, big time. I gotta roll, but I will say one of our companies just announced a guaranteed 40 hours in the winter, and it’s a pretty big gamble because we’re basically smoothing out the sea, the unpredictability of, of snow with their balance sheet so far, it’s been well received. Not surprisingly, we’ll see how it actually executes, but we won’t know that until next spring. So I’ll let you know how it goes.

Austin Hall: 

Yeah. I look forward to that. All right. Thanks, guys.

Yeah. Thanks for trying the new format. This is great.

Thank you for listening. I hope you enjoy today’s episode. If you enjoyed the show, please consider leaving us a review and telling a friend to help more folks find Think Like An Owner. I also want to thank our show sponsors: Live Oak Bank, Hood & Strong, and Oberle, for their support for full episode transcripts and more information; please visit our website at alexbridgeman.com/podcast. And if you want to learn more about the operator’s handbook, please visit us at operatorshandbook.com and join your peers in the endless pursuit of better.

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