When you started your lawn care or landscape maintenance business, chances are the last thing on your mind was how you’d handle customers who pay late, or worse, not at all.
With cash flow always being a major concern, delinquent payments are an additional stressor you don’t want to deal with. One of the ways to mitigate this issue is to encourage customer prepay.
Customer prepay is beneficial for several reasons. The most obvious is that it provides your business with cash during slower times. This can aid in not having to lay off staff members and stocking up on necessary materials at a discount.
It can also cut down on administrative expenses like tracking and receiving billing calls and questions.
Also if you have a client pay for their services in advance for the full year, chances are you are less likely to lose them to competitors as they’ve already financially committed to you. This doesn’t mean you can do no wrong in their eyes, but you will have a stronger tie with them, so make sure you don’t give them a reason to look elsewhere at the end of the year.
Prepay can also give you a good sense of your customer retention rate, as well as which clients are serious about their property looking the best.
To see if moving more customers to a prepaid model would be a good call for your business, review the average days to pay in your accounting software. You can identify who is fast to pay and who is slow. You can also review who is overdue and by how many days to see which customers you need to target, or consider dropping altogether.
For a prepay model to work, you have to solve a customer’s compelling problem, build trust with them, and offer something different from what’s in the market, making clients prefer you over others.
Offer Savings
A common incentive for customers to choose to pay in full upfront is if they are reaping some savings in the long term.
Depending on your business cycle, you can offer discounts well before your season starts and gradually decrease the savings offer as the season approaches. This encourages clients to prepay as early as possible.
While some clients will take any degree of a discount, others will expect a significant offer in order to be enticed to prepay. This could be an additional service at no charge or some sort of gift card.
Another way to offer savings is to offer an exemption from your annual price increase.
Contact Early
If you’re looking to lock in loyalty – start contacting your clients early on about your prepay option because you don’t know when your competitors will start reaching out to them.
You can reach out via email, direct mail or phone calls. When contacting your clients, wording is everything. Make sure you cover a description of the services, the frequency they’ll occur and supplemental services you offer.
Brad Leahy, vice president of Blades of Green, based in Edgewater, Maryland, switched to a subscription model because he wanted to move away from sending out prepay letters in January and February.
“We sent out these prepay letters and I call them cancel letters,” Leahy says. “It’s just a reason for customers to say, ‘Oh wow, I’m spending this much money,’ they can see it all in one bill, and go ‘I don’t want this anymore.’”
If you choose to send out these types of letters, thank your customers for their business and let them know how important they are to your company. Highlight how much a customer can save by paying in advance and incentivize them to lock in their pricing now.
Emphasize Convenience
Most customers who are late paying you probably aren’t doing it deliberately. Rather, there are so many other tasks on their plate that your bill has slipped through the cracks.
Emphasizing the convenience factor of prepaying once at the beginning of the year and not having to worry about it anymore can be very appealing to your clients who are incredibly busy. Give them the peace of mind that their property will be well cared for and they don’t have to spend time scheduling multiple credit card payments.
Another element of convenience you can offer clients is letting them set up a payment plan that works best for their budget and schedule. Explain how paying in advance can allow them to plan and budget for their lawn care and landscape maintenance needs.
