At the age of twelve, I started a landscaping service business--the "mow and blow" kind. Landscaping is a quintessential "legacy industry," because: how do you automate the business of cutting grass?
That was in 1997, two years before the term "SAAS" was coined. I had never read a "business book" by that time, and I definitely had never heard the term "system design."
Nonetheless the inefficiencies endemic to the typical landscaping business model drew my attention, and I began thinking (a) about the business model's inefficiencies as a consequence of the model's systems and (b) about who the stakeholders were that benefitted from or suffered from those consequences.
For example, the typical landscaping business has a sales system designed to "land and expand." It begins when the business gives the prospective client a quote for providing regular "mow and blow" service: mow the lawn, trim the edges, and blow off the hard surfaces.
By design, this initial price quote is low, with relatively thin profit margins, the intention of which is to increase the chances that the prospective client will hire the landscaping business anew (i.e. the "land" part of "land and expand").
Customers like low prices, of course. So, they hire the low-priced landscaping business.
The "mow and blow" service is delivered at regular intervals--weekly, let's say, and the client pays the business a recurring fee (usual monthly) in exchange.
However, the actual landscaping service needs of a typical yard exceed the scope of the "mow and blow" service (there are hedges to be trimmed periodically, seasonal leaf cleanup to be done, lawn fertilization to be done throughout the year, etc.), and who do you think the client is going to call when those "extra" landscaping services need to be done? The incumbent landscaping business, of course. That's the "expand" part of the "land and expand" model.
It works in the landscaping industry because, as a grisly old landscaper I used to work for used to say, "the good thing about the landscaping business is that the grass always grows." By that, he meant that everything planted in a yard grows; so, everything will need to be tended to at some point each week, month, or year--cut, trimmed, pruned, irrigated, fertilized, etc.
The prices landscaping business typically charge for those "extra" services have a much higher profit margin than the "mow and blow" prices. Because the average yard-owner is not sophisticated enough about tending to a yard's regular needs to remember, or perhaps even know, at the initial point of hiring a new landscaping company, all of the "extra" landscaping things that will need to be done in the yard each week, month, or year, the prospective client hires a new landscaping company based on an attractive low price without realizing that the contractual monthly price is far from representative of what their total landscaping service needs will actually cost them throughout the year.
This fact--that all of those planted things will need to be serviced at some point throughout the year--underlays a key inefficiency in the legacy landscaping business model, which has multiple facets:
- There is a "touchpoint" inefficiency in that each of those "extra" services beyond "mow and blow" typically require the business and the client to discuss, each time such a need surfaces, whether the client will be hiring the business to perform the service for that need, when, and for which price. This costs both the business and the client time.
- There is a cost inefficiency in that the business is able to charge mucher higher prices for "extra services" based on the client's lack of sophisitication and in that the business must charge higher prices to account for all of those extra touchpoints the business must have to complete each "extra service" transaction.
- There is a planning inefficiency in that both the business and client are deprived of the opportunity to fully plan out the yard's service schedule at the beginning of, say, each year, because neither the business nor the client know upfront which "extra service" transactions will be agreed to and when.
Even at a young age, I got the sense that most landscaping business owners saw these inefficiencies as good thing for the business, because being able to charge higher prices had to be good for the business--right? The business owners would start rubbing their hands together and pressing their lips each time an "extra service" need to be done.
Before too long, though, I began to see that aspect of the business model differently. What if, I thought, all of a given yard's expected service needs were put into a single price quote upfront, and the client was asked to pay a higher monthly fee in exchange for the elimination of the occasion to barter over and pay for "extra services?" What would that look like? Who would "win," and who would lose?
Here's what I decided.
This comprehensive landscaping service sales model would make it more difficult for the business to land new clients, as prospective clients would still be comparing the higher, comprehensive price quote to the lower, "mow and blow" price quote, and, absent any "customer education" occurring, the prospective client's lack of sophisitication about yard care would get in the way of them understanding the advantage of the comprehensive sales model. That just meant, though, that there have to be "customer education" efforts by the business for this sale model to even get across the starting line.
From a marketing perspective--which, to be clear, is also not a term that the twelve-year-old me used at that time, even if I had some intuitive understanding of at least some of what the term meant (i.e. getting peoplle to notice and care about what you are offering)--the necessary "customer education" effort was actually an opportunity for the business to differentiate itself from every guy with a lawn mower in this truck (these are the real masters of the "mow and blow" service model). I began saying to prospective clients in my pitch something to the effect of, "I'm not the cheapest guy in town, but I do good work; and I speak English." Then I would expound on how my sales model was designed to eliminate things that increase costs and place unnecessary demands on the client's time. Without knowing it at the time, I was essentially preachign the virtues of the recurring service model, wherein both the price the customer pays and the service delivered in exchange are predictable.
From an operations perspective, running the landscaping business became much simpler, and, of course, far more efficient, because I no longer needed to spend as much time (hardly any, actually) speaking and bartering with customers about "extra services." Instead, each time I landed a new client, I already knew what the client's yard would need for the next year, and that those needs would essentially repeat each year, and that I already had a comitment from the client that the business would be paid for those services each month, automatically, actually, because, even back then, it was possible to setup recurring credit card payments. So, the client and I would shake hands on a new deal, and then I may not talk to that client for a year, during which time I would reliably show up as needed and get the yard's needs taken care of.
Laslty, it's good habit to also pay attention to how innovations like this make stakeholders feel. On my part, I felt clever, because I had designed a system for my landscaping business that (a) no other landscaping business around me seemed to have and that (b) appreciably improved the experience for both the business and the client. I was proud, and my clients appreciated the fact that thinking about and negotiating their yard's occasional needs was no longer something that competed with their family, work, or leisure time. It was a system design before its time, and it felt a bit like magic.