Have you ever thought about letting 30% of your clients go to increase your profit while keeping the same number of employees? Well, that's exactly what one of my clients, Tory, did. And we just went skiing together and we're at the base of the mountain and he shares an exciting story about how he used the 80/20 rule, the Pareto principle, to make some big changes in his service offering, including offering unlimited snow removal to his residential snow clients, and how he's using his CRM to make some big decisions that have ultimately freed up his personal life and massively increased his profit. So I hope you enjoy today's episode.
Using the 80/20 Rule For Better Profit
Jack Jostes:
Hey, everyone, Jack Jostes here. Right now I'm at the bottom of Copper Mountain in Colorado with Tory Chlanda from Better View Landscapes. And we had a couple of Rambling Jackson clients out here from Texas and Colorado. We went skiing yesterday and here we're going to talk about how Tory is able to go skiing and some of the challenges he solved in his business using the 80/20 principles. So Tory, before we dive into that, tell us a little bit, who are you, where is your company, about how many people work for you.
Tory Chlanda:
I am the owner of Better View Landscapes. We're now in our 26th year of business. We're out of Hadley, Massachusetts, have about 10 full-time employees and anywhere from 15 to 18 during the peak season. So we fill in the rest with part-timers. And love living in the valley where I've lived pretty much my entire life and I love skiing.
Jack Jostes:
And what are the services that Better View offers?
Tory Chlanda:
We're a full service landscape company so we offer landscape design, build, maintenance, lawn mowing, snow plowing in the winter as well. So pretty much a full service. And that's our goal is to be a full service shop for our clients to take care of their property.
Jack Jostes:
And you joked during the week here that you're a maintenance company with a design problem. What-
A Maintenance Company with a Design Build Problem
Tory Chlanda:
With a design build problem. Yes. So yeah, I mean, my roots in my original company started as a maintenance company, lawn mowing in high school with my good friend. And that's really where I thrive, I love doing that, but I also really love design. So as I started to grow my business, kept getting into design and that's where my creativity really flows. But it's probably a quarter of my business and the rest of my business is really maintenance and caring for properties. But we also enjoy taking care, installing things for our clients as well. So again, makes us a one stop shop.
Jack Jostes:
Yeah. I love that. So tell us, we're going to get into, you made some big changes recently with your pricing structure. You no longer work with some clients in some certain areas. Before we get into that, what were some of the challenges that you were experiencing in your business with labor and with route planning and things like that?
Tory Chlanda:
Yeah, specifically, we were having issues with our winter work. It just, for many factors for staffing and things like that, we found that we were having to try to staff up a lot for the winter time and in New England, our part of Massachusetts, we're about 40 inches or so of snow a year. But as winters have been kind of wonky year to year, it was really hard to plan. Also, really hard to staff and to buy equipment for, because it just was not reliable income. We could have winters where we didn't do much at all and we'd really be really hurting. So that was one of the pain points.
The other pain point we had was that we were just over extended with our plowing work. We offer a really interesting residential plowing service, really good communication, really good high level service. And we found that, well, utilizing the 80/20 that a lot of the clients that we had, the 80% were not taking any of our other services. So they were really just working with us for our snow service. So that was our biggest challenge. And I was having to be in the field. I wasn't being able to enjoy being on a mountain as much as I'd like to be, winter time. I've got two kids and love being up in the mountains, on the mountains. So yeah, those were kind of the main point, just trying to keep my labor or try to maintain what I have and do the work that I need to do with that.
Jack Jostes:
Yeah. And so for people who are watching or listening, maybe they haven't heard of 80/20 principle. It comes from an Italian economist, Pareto, who observed, I think, was it 16th century? [crosstalk]. 17th, yeah. I can't remember.
Tory Chlanda:
Pea patch was, so the, the whole thing was he noticed that in his garden that 20% of his peas produced the amount of the actual peas. So that's kind of where it all started and snowballed from there.
Jack Jostes:
Well, and then he also observed that the top 20% of Italy owned 80% of the real estate.
Jack Jostes:
So 80%, basically this can apply to health. It applies to how 80% of the traffic happens on the top 20% of the roads. People wear, 80% of the time they wear the top 20% of their clothing. And it absolutely applies to business.
So Tory, we've established what the 80/20 principle is. How have you used this with your pricing and applying it to your customers?
30% Fewer Snow Clients With Better Retention, Service, and Revenue
Tory Chlanda:
We applied it to our snow plowing operations, because that was the one that we were having the most trouble with as far as trying to meet the needs of our clients with our staffing. And also just to adjust our pricing so that way, we can keep a consistent budget throughout the winter and have a baseline. The first thing we did, we took our snow plowing client list and we sorted it by who has the highest revenue basically generating. So we took the top 20% of our clients and we created two new plowing packages, basically. One, what we call legacy or per push, which is a standard in the industry. You push someone's driveway, you plow it, you get paid for that time that you're there. And then we are offering, we started offering an unlimited plan with a lot of extras built into it, to really build value and to just really build just a better service to really better service our clients.
And so the top 20, we just said, you're on a per push and if you want to do this unlimited program, it's this price. We based it on, we used a lot of math. We use a CRM software. We know how many times we've been on a property in the last five years, three years, seven years. So we really had a lot of data to work from, which gave us enough confidence to make this decision. And then the 80%, the lower 80% were offered unlimited only. And that was the only way we would be able to do plowing service for them. Our intent was to lose about 30 or so percent of our snowplowing clients. We wanted to reduce our list for one because we couldn't keep going at that. I wanted to free up my time, I needed to run the business and not having to be pulled out into plowing operations during the wintertime.
We ended up losing about 30 ish percent of the snow list, which is exactly what we were trying to do. And so the outcome now is that if we have a comparable snow year from the year before coupled with the unlimited clients that we have, we'll actually stand to make about 25%, 30% more in that year alone with about 60 less clients and with the same staffing that we normally have. So we're not having to staff up heavily or equipment up heavily to meet people that aren't utilizing our other services.
Better Able to Serve Our Hell Yes Customer By Adding More Value
Jack Jostes:
So, you're getting more profit with fewer clients and basically the same amount of staff?
Tory Chlanda:
Yep. Exactly. And we're able to, and ultimately, and the goal was, is to service our clients better. So we actually were able to, for our unlimited clients, they're getting, we're able to come back more often and it doesn't cost them a dime, we'll go clear their mailboxes or clear little spot that got missed for free because it's part of it. And we're adding a lot of value. I always people, we're not selling snowplowing or winter services, we're selling safety, because really that's what we're in the business of selling, safety, keeping people to get to their homes, to their cars, loved ones from getting to their houses so they don't get hurt.
Jack Jostes:
I love it. Well, what are some of the risk reversals that you've built into the offer for the client because in a year, let's pretend I'm a homeowner, "Well, I'm paying for unlimited snow and they only came twice this year," or "I didn't snow at all this year," or whatever.
Tory Chlanda:
Yeah. And that was an absolute concern of mine because that's not what we're trying to do. We're not trying to gain people or anything. How we're solving that is if, we get 40 inches of snow per a year average and if we get 20 inches or less, we're actually going to discount their next season's worth by upwards of 35%. So we're going to offer them a discount off of the price. And our goal ultimately is by going to this unlimited scenario, we hope to reduce our pricing over all as we build out more clients that take on more of our services, we can make our snow operations a little cheaper for everybody.
Jack Jostes:
And that's built into the contract?
Tory Chlanda:
Yep. That's built into the contract and we really, I'm always looking for more ways to add value. We take a lot of client feedback and ask them about what can we do better? What would you like us to do? And we take that feedback really serious and try to implement wherever we can and whenever we can.
Jack Jostes:
And then how do you protect yourself in a snow year where you're just getting dump after dump? What's the protection for the company?
Tory Chlanda:
Yeah. Which is great because this is how the 80/20 then works on the other end. We have this big baseline of the 80% of the client, that 80 with debt unlimited, but 20% of our plowing operations is not as unlimited and per push, and here's where we get heavier snow. Yeah. We might be not necessarily losing money, but not making as much or a standard rate on the unlimited, but our per push or legacy clients are actually making up the difference. So that's how we've done that and have balanced that to keep it so we're safe and free and clear of risk. And that's really ultimately the thing too. I can buy equipment. I can staff properly and provide really good service throughout the season.
Entrepreneur Literally Means 'Risk Undertaker'
Jack Jostes:
So the thought of losing 30% of your clients, that was a calculated risk you were willing to take, but what if all of them quit or whatever, how did you have the confidence to really make this bold business decision?
Tory Chlanda:
This was probably the hardest decision I've ever made. It was. But I really had a lot of trust in the theory. I also had trust in our clients. Through working with Rambling Jackson, I really even better know my client now and understand my, hell, yes client. I just was like, "Okay, people really love our service. We have really great reviews. People really like what we do." And I ultimately want clients to value what we offer. And so I said, "If I lose 50% of those, okay." Because ultimately we found that people that did drop out. We were taking on clients that were unlimited snowplowing, but also signing up for all the summer services, which was exactly what we were trying to do. We were trying to round it out so that they're not just utilizing our, so really we are wasting a lot of time on single service clients and limiting our capacity and our profitability too.
Jack Jostes:
Yeah. So we've been working together for a couple years and you came to our landscaper summit a couple years ago. And part of that is the exercise of figuring out your hell, yes customer. And it's a few things. One of it is the services that they buy, the service area, what neighborhoods, cities are they in, the budget and then also lifetime value. And so this is something that you're talking about that I don't think a lot of business owners spend enough time thinking about is, the lifetime value of a hell, yes customer, they're not just snow removal. They're going to buy snow. They're going to buy construction. They're going to buy installation. They're going to buy maintenance. They're going to have you do fall and spring cleanup. They're going to spend more with you over their lifetime.
Tory Chlanda:
And that's what we need. And that way, we don't have to actually grow out our staff as much either, we can just tighten routes. And with the snowplowing thing, we actually ended up removing some clients on the outskirts because we couldn't service them the way we wanted to.
The Importance of Using Data to Make Informed Business Decisions
Jack Jostes:
Well, and so one of the things that I love about this is you had the data to make the decision. Tell me a little bit about your CRM. How long have you been using it? Which one are you using? And what kind of reports do you pull from there that give you this kind of piece of mind. We joked about waking up at three in the morning and checking QuickBooks. I do that sometimes. And I like having the data. I'm like, "Oh, okay. We're not going out of business," or whatever, I can go back to sleep. So, tell me, what are you doing and how are you tagging things so you can actually use the data to make these decisions?
Tory Chlanda:
We've been using Service Autopilot, I want to say since 2011. So we've been with them almost 11 years. And since then we've tracked everything. We know how long we've been on a client's property. How many for snow plowing, how many visits we've done per season? We know pretty much everything about them. What their client value it as, how long they've been with us. Some of those reports are already made in that program, which is great. So we can find out lifetime value. We can do that.
We also use QuickBooks, we'll extract it there on the accounting side. But yeah, we pay a lot of attention to what each client brings in on a yearly basis to help go, and also to see where, "Hey, what do we need to sell?" It's like, "Oh, we have a bunch of clients that aren't taking lawn mowing or fertilizing or whatever." And we go, okay, we use that to upsell them. That's, again, rounding out our entire year with all of the clients that we have. So we don't necessarily need always to get more and more clients. I mean, those are nice, but also maximizing the ones we have and selling more services and rounding them out is really important.
Less Clients, More Profit, Same Staff
Jack Jostes:
And what I love about this story is that you figured out a way to do more, make more profit with less, with fewer customers and keeping your current staff. And then that also helps with employee retention.
Tory Chlanda:
Absolutely.
Jack Jostes:
Because they're not stressed out needing to visit as many clients and maybe when they're maxed out like that and understaffed, then the clients complain more.
Tory Chlanda:
Absolutely.
Jack Jostes:
And your people want to do a good job and they want their customers to be happy.
Tory Chlanda:
Yep. That's exactly it. So we even built in, by doing this, we were able to take out an entire team. We called them the floater team and their sole job is to fill in or help out other teams during a storm. So if someone is slower on a route or can't make it in until later, that person's job is literally to just make up the slack and that we could never do before. And that has been huge. And I used to have to take on some of that when we were at max capacity, I was the person that had to run out and do a couple driveways here and have to leave my office and leave doing work that I need to get done on the business as well.
Jack Jostes:
So, I forgot what I was going to say because there's people walking around. Oh, okay. So, running a small business is stressful, entrepreneur literally means risk undertaker, it's a French word. So you've now really gotten to a place where it's, is it worth the risk that you've put into the business? And tell me a little bit about, why are we skiing and making a podcast on a Thursday morning in the winter time when you run a snow removal business?
Tory Chlanda:
Exactly. No it's definitely been worth it. It took a big leap. I mean, we're in year one and I have a lot of things for year two to help out and make sure to maintain value for them clients, but we're basically already applying it to all our other services and the business in my whole of really looking at okay, what, even by service, is this service worth doing? Applying the 80/20 to that, how much are we getting out of this service? Is it worth offering it? Can it be done cheaper? Is it a profitable service? So yeah, that's the next phase, utilizing all the numbers that we've collected and doing just that. So yeah, it has freed me up a bunch. I'm able to come out here, like you said, middle of the week, standing in front of a beautiful mountain, skied a bunch the last couple days, it's been great. It's definitely helped boost my lifestyle, gives me some freedom in my own home with my family. And that's really, I think ultimately my main objective is to free up my time so I can spend time with my girls skiing on a hill, wherever, taking them to school, doing the things that I really want to do and making my life just a little bit easier.
Jack Jostes:
And you're probably a more enjoyable person to work for as a result of that. Not that you weren't before.
Tory Chlanda:
I like to think I'm a pretty... No, it takes some of the stress out of it for sure and I can let my employees do the work that they want to do and do it well. And give them the resources both by not overtaxing them with work and also being able to provide them newer equipment and buying the best stuff to help them do their job the best because as I know what I have to spend. I know I have budgets now based on it, because I know I have a baseline of an income for the winter specifically.
Worth the Risk
Jack Jostes:
Right on, well, hey, it's been really fun working with you on this and being a small part of it, but it was really a lot of you just having the data, analyzing it and then making a decision. One of the things I wanted to ask about, what are maybe some decisions or risks that you've taken in the business that haven't panned out and then how bad was it really when they didn't?
Tory Chlanda:
Well, as you mentioned, entrepreneur is the French for risk. I mean, I've taken a lot of risks and I was thinking about it, nothing was as big as this current one, but small things, name change, or not even a name change. Although that was another thing we did do, which-
Jack Jostes:
It was time.
Tory Chlanda:
Yeah. It was time, but yeah, small things like service offerings that I thought were going to be a good thing, but they ended up being distractions. That's usually with more, for me, it was more like, oh, let me try this out or, and they just don't pan out and I put a little too much money into it and invest. But after 26 years, I've taken a lot of risks. It's just sort of, you learn from them, keep moving. I think that's the key at the end of the day is if you, every entrepreneur, you want to learn from any mistake or whatever. I don't consider them mistakes, just experiences and move on and learn from that and move forward.
Jack Jostes:
Well, one of our core values at Rambling Jackson is grow or die and that's part of it is, is growing. And that requires taking risk and stepping out of your comfort zone. And I found, you always learn from it and it's never really as bad as... Every time I've made a big decision like this, I'm like, "Oh man, why didn't I do that four years ago?" Or something like that.
Tory Chlanda:
And I feel exactly the same way about with this snow thing. It was how, why we've been struggling so long? We want to keep this level of service up. But yeah, it was so refreshing, okay, this is great. So such a hot sigh relief.
Man, it's been a great experience. I'm glad to come and experience the mountain with somebody and with people that love mountains as well. So especially with all the Rambling clients, that was just the coolest thing.
Jack Jostes:
Yeah. That was really fun. This was great. Yeah. So, all right, everyone, thanks so much for watching today's show. I hope you got some ideas. Do the work, analyze your customer list, who are your top 20% of your customers? Who are the bottom 80% and what are some decisions that you could make based on this inspiration from Tory.
Jack Jostes:
My name's Jack Jostes. Thanks so much for checking out the Landscapers Guide. And I hope to talk to you next week.