|EASTSIDE LANDSCAPING INC.|
Be warned, cut-rate contractors. Ned Cultrona and Jim Freireich have a firm grip on their residential market and they don’t plan on letting go any time soon.
Throughout the snow removal industry it’s commonly accepted that residential work is the dominion of cut-rate, or low-ball, plow jockeys. These independent operators, typically equipped with a pickup, a cheap plow and no insurance or know-how, offer rates so low that legitimate contractors simply can’t compete and make a respectable profit.
Armed with a sound business strategy and a rock-solid reputation for service, Cultrona and Freireich’s Eastside Landscaping proves legitimate snow removal contractors can still dominate their residential markets.
"We’ve created strict boundaries with a high density of clients that allows us to plow a lot of driveways," says Freireich, the firm’s vice president.
"And by providing our clients with good and reliable service, this gives us a real high renewal rate every year," says Cultrona, the firm’s president.
Cultrona and Freireich formed Eastside Landscaping and began pushing snow just east of Cleveland, Ohio in 1985 with 500 clients. Their operations peaked in the winter of 2001-02 with 2,200 driveways.
Since that blockbuster season a combination of factors, such as weather, labor and economics, have forced Eastside Landscaping to scale back its residential snow removal operations. But during the typical snow event this winter, 20 Eastside Landscaping plow trucks will clear nearly 1,800 residential driveways in less than six hours.
"In all of the years we’ve plowed we’ve never missed a snow – ever," Cultrona says. "Our competitors have and they end up getting chased by the cities they plow in."
Word-of-mouth marketing is Eastside Landscaping’s greatest new-client generator. However, the firm also has success with direct-mail advertising pieces.
From its South Euclid headquarters, Eastside Landscaping is prepared for the worst winter has to offer. It’s Dec. 1 and Northeast Ohio is bracing for the region’s first significant snowfall of the 2006-07 winter season.
Cultrona and Freireich don’t seem the least bit worried. Snow is a welcome sight in this part of the Midwest.
But traditionally, residential snow removal has been a high profit center for Eastside Landscaping. During really heavy winters, Cultrona and Freireich realized profit margins of more than 50 percent. Lately, an increase in costs have reduced profit margins for residential snow removal to around half that amount, they say.
"Still, snowplowing has been good to us," Cultrona says. "Some years, plowing is what makes this company survive."
Early on, Cultrona and Freireich established strict boundaries for their snow removal operations. Eastside Landscaping pushes snow in only five communities in roughly a five-mile radius from its headquarters. Doing so has given them a residential market with a 13,000 driveway potential.
"We created a density that gave us the ability to tend 2,000 driveways," Freireich says. "It’s given us the ability to grow the quantity of driveways we plow without expanding our service area."
During the winter, Eastside Landscaping’s plow trucks are always gassed and ready to go. It’s not unusual for a lake-effect snow storm to develop suddenly and dump six inches along Cleveland’s notorious "snow belt."
When the call goes out that two inches of snow have fallen, the drivers arrive, route updates listing new properties or site problems are handed out and they’re on their way. The goal is to have driveways cleared for when it counts most for clients – prior to morning and afternoon rush hours.
"Our contract states that we go when there’s two inches of snow," Cultrona says. "If the snow falls early enough during the overnight hours we’re there by 7 a.m. If it snows during the day, we’re there by 6 p.m."
"Our goal is to average about a six-hour time frame through the routes," Freireich says. "Feasibly, we could be out plowing three times during a 24-hour period. During heavy snow it’s not unusual to get back from a route, gas up the truck, grab something to eat and be out on the road again to plow your route."
Routing is essential to Eastside Landscaping’s success. As the snow season approaches, each driver is required to memorize their routing pattern. Every plow truck is assigned to tend a specific geographic area that very rarely, if ever, changes during a season. Each client’s driveway inside those designated areas is staked with a distinct blue-tipped marker, easily identifying it as an Eastside Landscape customer.
Another important component is the way drivers plow driveways. Eastside Landscape teaches its drivers to plow with a technique, developed early on by Cultrona and Freireich, to maximize snow removal efficiency and minimize the amount of time devoted to any one driveway.
"I have new guys say to me, ‘Oh, don’t worry, I have a lot of plow experience,’" Cultrona says. "Forget it. We’re going to teach you how we plow snow."
The Eastside Landscaping technique, Freireich explains, involves plowing forward as much as possible with a back-drag method tied into it. "You end up with a much cleaner driveway done in less than half the time," Freireich says. This is essential, seeing as each driver is responsible for plowing as many as 100 driveways during a six-hour period.
|THE LABOR CHALLENGE|
Securing talented and reliable workers ranks at the top of many snow contractors’ lists of business challenges.
Another key to Eastside Landscaping’s success is the pricing matrix Cultrona and Freireich developed about a decade ago.
Prior to its development, Cultrona and Freireich would go up and down the streets in their five-city territory and price driveways. Needless to say, it was a time-consuming process.
Ten years ago, in an effort to simplify this ineffective and inefficient business system, they had a computer software program custom designed to bring price quoting, billing and aspects of marketing into one function. The program, based around Microsoft Access, is database driven. Cultrona and Freireich inputted prices for every residential driveway in their five-city coverage area, regardless of whether the property owners were clients or not.
Now, with a touch of a few key strokes, not only can Eastside Landscape immediately renew client contracts, but also they can see who is not a client and focus its fall direct-mail marketing campaign at those individuals.
"Once we created the new software and had everything priced in the system we were able to do direct marketing and contract renewal with much more efficiency," Freireich says. "When you’re dealing with the quantity of clients that we’re dealing with this made handling them that much easier."
Likewise, signing new clients became an in-office function. Previously, preseason sales was performed manually, with pre-priced marketing materials hand delivered to potential clients. At times, Cultrona and Freireich admit, sales leads would get lost in the shuffle.
Now, whomever takes the call can access the resident’s address, reference the predetermined price quote, sign up the client for service and send the contract out in that day’s mail.
"Sure, we’ll have residents move in and out of homes," Freireich says. "But the driveways essentially stay the same."
Also, Eastside Landscaping operates with a two-payment contract, with half due in November and the remainder due in January. They offer a small discount if clients pay all at once.
Cultrona pulls no punches when he addresses his No. 1 business headache.
"They’re idiots," he says, exasperated by cut-rate snow contractors. "These guys are out there pricing driveways for what I priced back in 1979.
"These guys cut our throats when it comes to pricing, they offer horrible service and they’re nearly all being sued in just about every community they work in," Cultrona adds. "And they’re still out there pushing snow."
Cut-rate contractors have gone so far as to copy Eastside Landscaping. Competitors have mimicked promotional literature and duplicated contracts and snow removal policy details.
And it hasn’t ended there. It’s not unusual for competitors to keeps tabs on when Eastside Landscaping’s is dispatching trucks and plan to plow a particular snow event.
"We’re very cautious about when we plow, in that sometimes we’ll go when its slightly under 2 inches," Cultrona says. "These guys want to know if we’re going because they don’t want to get their clients calling them complaining that we came out and plowed their neighbor’s driveway and theirs was still full of snow.
"Heck, we’ve had guys pull up next to us at stoplights and yell, ‘Why are you plowing?’" he adds.
In fact, they’ve negotiated agreements with their truck dealers to not resell their previously leased trucks to their competitors.
"We’d turn the vehicles in and our competitors would come in, buy the vehicles and then have a similar look to us," Cultrona says. "In all the years we’ve been doing this, I don’t think there’s anything I haven’t seen yet."
So how have cut-rate contractors been able to grab hold and keep market share?
Low-ball competitors, say Cultrona and Freireich, have capitalized on client unease brought on by the recent shaky economic climate.
"As the economy tightened some clients have become disloyal," Cultrona says. "People start shopping around and are willing to accept less service for less money. They’ll switch companies for a $5 difference in price."
And while Eastside Landscaping charges a higher rate for residential snow removal services, it offers its clients a more inclusive contract than any of their competitors, Cultrona and Freireich say.
However, bargain-hunting homeowners don’t always appreciate what this buys.
For pricing, Cultrona and Freireich know they can’t go blow-for-blow with the cut-rate plow jockeys. But if they’re going to do battle, they win with quality of service and reliability.
"What a lot of customers don’t realize is what happens when that guy doesn’t show up," Freireich says. "It’s very inconvenient. You’re late for work, you can’t get out of your driveway and so on."
So far, the proof of their reputation is evident in their numbers.
"Last year we took on 113 clients who were old customers and who had skipped a year to go with someone else," Freireich says of the company’s recent sales season. "They got fed up and came back to us. Last year, we took on 319 new customers, many word-of-mouth referrals, who had never used us before and were fed up with their contractors."
In addition, Eastside Landscaping maintains a 90 percent renewal rate without offering salting and sidewalk/walkway snow removal. In the past Cultrona and Freireich toyed with adding these services, but realized they weren’t interested in this segment of the snow removal business.
"To be honest, very rarely does a resident ever request these services," Cultrona says. "If a client calls and wants to know about salting, then we try to refer them to a contractor who does do provide that service."
Instead, the firm has built a reputation for not letting snow pile up in clients’ driveways.
"That’s how we’ve managed to stay competitive – reputation and integrity," Cultrona says. "Our clients know Eastside Landscaping is going to be there when it snows. They can’t say that with any confidence about the cut-rate contractors."