When you start offering services that can provide your company with recurring revenue, you can’t assume all your cash flow problems will go away instantly.
After securing clients in maintenance contracts, it’s important to make sure they continue to renew regularly. Otherwise, you’ll still be in the cycle of constantly replacing the revenue you lost.
Length of Contracts and Renewal Rates
Cole Weller, president and CEO of Weller Brothers Landscape Professionals, based in Sioux Falls, South Dakota, says they prefer to have a healthy mix of one and three-year contracts.
“The renewal dates on the three-year contracts naturally stagger year over year as we grow the business,” Weller says. “What we are always trying to avoid is having a disproportionate percentage of the three-year contracts renewing on any one year. Ideally around a third of the contracts renew each year to limit our exposure of losing a large chunk of business at once.”
He says they aim for a 92% renewal rate. Weller says currently they fall a little short of that, but they are digging into the reasons why clients leave.
“Real estate, especially multi-family, in our market has been switching hands a lot over the last few years, which makes it tough,” Weller says. “That new owner may have a different preferred vendor or sometimes even have an in-house maintenance team, which makes it really tough for them to justify the cost of keeping us around.”
Weller says when they step back and look at the clients they lose for reasons in their control, like price and service quality, they don’t lose many clients that they don’t want to.
Bob Hursthouse, president of Hursthouse Landscape Architects, based in Bolingbrook, Illinois, says they have a 98% percent renewal rate for their annual maintenance contracts, and he says those who don’t renew are individuals moving away.
Anna Brooks, owner of Arcadia Gardens, LLC, based in Bridgman, Michigan, also says they rarely lose a contract.
“When we do, it’s because the property was sold and the new owners were either unreachable or decided to use another company, or there was a change in financial status (i.e., retired and doing it themselves, or job transition),” Brooks says.
Contract Renewal Strategies
Brooks says almost all of their maintenance clients have an auto-renewing seasonal contract. These are sent out in January or February of the current year (e.g., 2025 contracts go out in January 2025) unless requested sooner by the client.
“The verbiage included with the contract explains that the contract is in effect unless they contact us to cancel it via email or phone call,” Brooks says.
She says their clients appreciate knowing what to expect upfront for budgeting purposes, and they can see how much of the budget is spent at any point.
Hursthouse says they conduct their renewals in August and September when they are still on site. The first thing they ask is how they are doing and if there is anywhere they can improve. After taking care of any requests, then they’ll come back with their renewals.
“You ink your spot on the schedule,” Hursthouse says. “They’ve got a right of first refusal to keep their day and time. Then, let’s make sure we get dormant pruning scheduled and now we want to plant flowers this fall for next year, so our flower schemes for our containers and beds are set.”
Hursthouse says customers who value how their garden looks and is maintained are the ones who engage with their services.
Weller notes that you need to perform well and earn clients’ trust if you want to win contract renewals.
“Many of the facilities managers, property managers or site owners that we are pitching to have a laundry list of other things they are responsible for, and frankly want to work with someone they trust,” Weller says. “If we perform well in a one-off service, it is easier to move them to a one-year contract and get more of their services. If we perform well in a one-year contract, it is easier to move them to a three-year.”
Advice for Others
Hursthouse says retaining your long-term contracts all comes down to relationship-building.
“We take the time to find out what’s important to this family,” Hursthouse says. “What are the things that we can do to make a difference? Our maintenance manager actually carries a pocket full of dog treats because nothing makes a client love you more than if you take care of their dog.”
Brooks agrees that you need to listen to your clients and offer them what they need instead of trying to fit them into a cookie-cutter program.
“Be flexible, but provide them with consistent results without hassle,” she says. “Provide solutions to problems before they have to ask. I read in a business book once that the reason chain restaurants are so successful is because the customer knows what to expect. We try to do the same – provide consistently excellent service every time while making it as easy as possible for the client to do business with us. We may have hundreds of landscape accounts, but they only have one landscaper.”
Weller notes that if a client has already hired you, you have already had a chance to earn their trust and hopefully succeeded.
“At that point they are a warm lead, you should have a much easier time closing that client than you do someone calling in off of a Google ad,” Weller says. “If you are having a tough time converting, maybe take a look at who you are sending to meet with them and how they are presenting the information to the client.”
