Starting A Christmas Light Installation Business - Don’t Compete on Price - Part 3

Posted by Luke Del Bianco on 4/18/2016

Today I want to help you learn to not base your quotes on being the lowest price. Understand that there is always someone willing to do a job cheaper than you, but that doesn't mean it makes good business sense long term.  

In the seasonal Christmas industry you will never have a good and profitable business trying to build it on being the low cost provider.  You are not Wal-Mart, the customer does not come to your warehouse, you do not have a platform to sell billions of products year round across the globe at low margin and do okay based on volume at the end of the day.  

You are a seasonal service based business, your most valuable asset is skilled hardworking installers, you do custom work, you go to your customers location, your window of opportunity is very small.  No one is in this business working countless hours in the busy season does it out of the sheer love and spirit of Christmas.  You do it because you want to get a paycheck! If you do it just for the fun of it, you are not operating a business you are operating a charity. Which is great if you have the time for that but most of us do this to provide for our families.

You do not want customers who like the low cost providers and have no loyalty.  Long term the low cost providers never win and never stay in business.  The low cost provider will lose all of his low end price conscious clients the second there is a downturn in the market.  If the low cost provider has one client who does not pay it could kill the profit he did make on 6 to 8 of his other low margin jobs. 

Don’t misunderstand what I am saying.  I do often compete on price but I frame it in a way that is good and works best for our business.  

  • I offer discounts for 3 or 5 year lease-installation commitments.  
  • I offer discounts for early product orders before August or bulk orders.  
  • I offer discounts for permission to install a job very early or very late in the season when the schedule is more open.  

Better than discounts I have won jobs simply by being willing to work with customers on payment terms.  An example would be to accept full or partial payment in January of the following year when the customer hits a new budget cycle.  I have gotten more money out of customers by convincing them to bill the building roof lighting portion of their business out of their electrical budget.  

You do need to be competitive and efficient in your operation as well as creative in your approach, but your overall strategy should not be based on winning jobs on price alone.

The best scenario is to educate your client at the end of the day that they get what they pay for.  No one likes this fact and everyone is trying to get more than they pay for, but everyone understands this concept at some level and most commonly when it comes to products (think cars, shoes, phones, sunglasses, purse, clothing, etc.).  You need to help your client translate this understanding into a service based business and what the implications mean for them.

If someone is doing a job significantly cheaper they are probably cutting a corner somewhere.  

Maybe the trees in their quote have fewer strands.  Maybe they have the wrong count or forgot an item.  Maybe they plan on giving the customer old used décor they have extra from another job.  Maybe they are paying their employees under the table.  Maybe the price does not include maintenance through the holiday season.  Maybe the price does not include the storage of the product.  Maybe the price did not include the needed lift rental to complete the job.  Maybe they are cheaper because they don’t have insurance.

Your customer needs to understand that if the holiday lighting and decorating experience does not go well it reflects on them and will become a problem for them if it does not look good or work properly.  Property managers are very busy and the last thing they want to deal with is poorly performing vendor who has caused their phone and email inbox to explode with messages from tenants and the owner.  

I pick up a number of my competitors accounts every year simply because a property manager could never get a hold of them to service their property and it was out most of the season.  

I had one customer go with a cheaper company once and had one of the building pads catch on fire.  In addition to using old lights and causing the fire they had cancelled their insurance mid-season to save money and the damage was not covered.  

I lost a bid at a high end community where we had installed lights on some large trees, doing many branches and going up 15 feet into the canopy.  During the season I drove by and saw the competition had made it all of 6 feet up the main trunks before stopping.  Needless to say the community was not happy and the person who had made the call was no longer there and we had the job again the following year at the higher price.  

I had one high end shopping center go with a super low price competitor who in addition to installing about half of the normal light strands on the palms and trees also simply stopped lighting the property altogether about 2/3rds of the way through the job claiming that was all that they had bid doing.  None of the snow machines worked either on opening night making all the kids that showed up for the snow very unhappy.

Your customer needs to trust you and know that you are going to do what you say when you say you are going to do it.  

They need to know that you are doing right by them and if there is a problem you will be responsive in addressing it.  And finally, they need to understand that to have that level of service and quality of experience they will have to pay a little more for it.  

When you take care of a customer like this they do not even take your competitors phone calls.  If a job has to go out to a multiple bid situation they find a way to tip the scale in your favor despite the fact you are not the lower price.  If they go to a different company and manage a new center they will get you in as the holiday vendor no matter what. 

At the end of the day there are no blueprints, specs, or holiday lighting code for how Christmas lights and décor should look or be installed.  

Not all lighting firms are created equal and each will do a job in their own way for better or worse.  An apples to apples bid situation simply does not exist in this industry as much as everyone wants to bid out their job in this manner.  A customer needs to be educated to this fact and buy into the quality, service, product, and look that your firm provides over your competitors.

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Lupe Nevarez
Date: 7/30/2016

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