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Can you create a service?
Adding to your bottom line with something new
As a garden center owner, who has not thought in the past five years that they need more money for themselves? Looking at the economy for that same time frame, many have thought the additional money was not going to come because of the challenge of stagnant sales and increasing expenses.
For the garden center that focused on commercial sales and installation as well as the do-it-yourself customer, reading any newspaper gives you a variation every day on the story that says there are very few new homes being built and foreclosures are continuing. Even that unique group of customers called ‘flippers’; those individuals that would purchase a home, do some remodeling, sell the home and move onto another home have largely disappeared.
Doesn’t this scenario put the garden center owner in a bit of a predicament? Or at least causes a ‘lack of opportunity’? There is another area of independent retailing that has faced the same challenge.
For many years, the local pharmacist held the honorable position as being the most trusted individual. This was likely because a person went to the doctor’s office, sat for a while in the waiting room, was quickly looked at for a few minutes, and then given a written prescription which was then taken to the local pharmacy for fulfillment.
The ‘most trusted individual’ designation was earned as the pharmacist would take the time to visit with the patient to answer their questions. The pharmacist would ask questions about other medications the patient was taking so the answer given by the pharmacist would take into consideration the possible drug interactions.
The patient would receive their medications, take the pharmacist, and leave as the pharmacist would then return to the task of filling other prescriptions. Unfortunately for the pharmacist, they were not paid for taking the time to visit with the customer.
Similar to the situation faced by the independent garden center, the pharmacist could only make money by increasing the number of prescriptions he filled.
Then the pharmacy faced a new and unexpected change to their business model. In today’s retail market, the pharmacist is facing competition from mass merchants who are selling the most popular generic drugs as a loss leader, if not giving them away for free.
Enter the situation when pharmacists began charging for consultative services. You can visit the pharmacy and have someone check your heart rate, pulse, and blood pressure. Bring your medications and they will review what you are taking, the dosage and frequency, and answer your questions. Perhaps you want to ask about side effects. You may want to ask if the headaches you are having are a result of drug interaction or if you need to visit a doctor.
This service goes way beyond the five minute free question and answer period you were previously getting. What has occurred is that the pharmacist has found a way to package their knowledge, expertise and knowledge into a service that customers are willing to pay for.
Let’s take a look at it for the garden center business. For the mass merchant competition, what is their solution to problems that customers have?
For products it primarily lies with a customer hopefully finding an employee whose answer to a question is given as they read the label from a product. On infrequent occasions, you will find someone that has some experience with plant material, pesticides, herbicides, and fertilizers.
The answer to a problem with plant material is illustrated in the sign that says all plants have a one year guarantee. Of course, the customer does have to dig up the plant and retain the receipt to get a replacement plant. It does not mean that a solution is provided.
Similar situations can occur with customers having purchased power equipment, irrigation, exterior lighting or sound, outdoor furniture or any number of products where a mass merchant has products that can also be purchased at an independent garden center.
For this to work in the garden center, the information/service has to be ‘packaged’ in the same manner a pharmacist does. An information card that can be given to customers, as well as signage within the business explains all that is included as well as the fees the customer will pay. Creating a package, which includes your time in the store or at their residence, customized information sheets, and perhaps some products makes it an easier sell to the customer because it is more difficult for the customer to calculate they are buying a block of your time. To determine the value of your time, you could do a comparison of your overall payroll expense to the revenue of your garden center and the hours you are open. As an example, a garden center with $1 million in sales annually could be producing a net profit of approximately $85,000. If this were a seasonal garden center, being open some 2200 hours over the course of a year, the business produces a profit of $38.50 per hour. Determining a rate should be more than deciding you are paying an employee $12 per hour and telling the customer the consultation services are $20 per hour.
While a landscaper or irrigation specialist is likely going to bury the cost of design in the cost of the overall job, you can design the package so that you are profitable in this service even if the customer decides to purchase products from a mass merchant.
The challenge with charging a price and then telling the customer you will apply their investment toward the purchase of the overall job, is that you are telling the customer you are willing to give this service away for free. Likewise, the customer that makes a purchase of all the necessary plant material to landscape their yard could easily ask for a discount in the amount equal to the amount you charge for your consultative services.
Think about all the challenges a customer has with their yard as well as the plants they have inside their home.
You could help a homeowner, condo or apartment resident with selecting and maintaining container gardening plants and the drip irrigation system. An in-home visit could show the appropriate plant placement for best lighting as well as how to keep the orifices of the irrigation system clean.
If container plants are a part of your business, you could offer a service of providing design for custom baskets. Permaculture gardening and even raising chickens for egg production in an urban setting are growing aspects of the garden industry.
The customer that knows nothing of how to do these is likely going to visit a store or Amazon to make a purchase of a book to help them do this successfully. Your first hand knowledge and experience can get that customer going quicker than their reading a book. The book is not free; why should you be free? The customer cannot go to the mass merchant to get this information. You have no competition.
In this writer’s business, I remember the customer pulling up at the gate with 1000 feet of one inch diameter PVC piping to use for installing their home irrigation system. There were a few additional items the box store did not have that we did stock.
The comment, with a degree of sarcasm, to the customer was to ask how they were going to make the irrigation system they were about to install function properly in their yard. The customer then responded with another question and received an answer that explained the material they have purchased from the box store is not going to function properly in the ground at their home.
The result was our business getting a sizable part of the sale that initially we were not going to get any of. We explained that this customer’s experience was only an example of the difference in a business that understood what they sold and how to use it. We made a sale; in hindsight, there was an opportunity to sell a service because we knew how to design, install, and maintain that irrigation system.
There is value in the information and assistance you can provide to your customers. The key is that this information and assistance is a ‘product’ you can sell, and the competition does not have a ‘product’ like what you can offer.
Now let’s look ahead to the next survey of most trusted individual. I think we can take a shot at competing against that pharmacist.
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|This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.|
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