January 11, 2012
Industry outlook: good for 2012
Despite economic pressure, green industry businesses can tweak their models for success
BY JUDITH GUIDO
After a successful presentation on market dynamics, trends, and growth opportunities held at the Landscape Ontario headquarters in September, I was asked to share my thoughts and outlook for 2012. The question is daunting for several reasons. First, the volume, rate and speed of change is faster and more furious than ever. Next, as the world gets smaller and communications systems advance, the effects of global political, economic and physical tidal waves can have a direct impact on our businesses within a matter of minutes. For example, current data shows that of 160 emerging countries around the world, we may see as many as 45 holding major revolutions, ousting their current political leadership in 2012. Depending on how these potential revolutions affect the stock markets and major economic indices, will determine whether they affect our businesses. Think back to this past summer and fall; did you ever think that the instability of Greece would cause such world-wide economic ripples? With those caveats covered, I will attempt to paint what I believe our industry will look like in 2012.
Even though the world is getting smaller, our market dynamic periphery needs to expand. We can no longer focus entirely on our micro-markets and those of our next-door neighbours. We need to look at events happening around the world. Why? Because they have a direct impact on both consumer and commercial spending. When global volatility heats up and disrupts markets, this causes a wave of instability, which translates into buyer skepticism and conservatism. Buyers take a "hold" mentality, spending money only on items deemed necessities. Make certain you engage somebody who knows how to read and analyze markets, and then leverage the data into an intelligent and profitable business model. This means looking at local, national and international market dynamics, while listening to the voice of your customers, and analyzing their spending patterns. Utilize social media, the web and low-cost SFA (sales force automation) and CRM (customer relationship management) tools to stay in constant contact with your customers, prospects, media and competition, in order to identify changes in the market, and emerging business trends. Once you've identified market changes and trends, act quickly, leveraging them before your competition.
Green still glows
A market trend that will continue in 2012 is the GREEN movement. Revenues from green construction projects increased by 11.3 per cent in 2011, with projections of 19 per cent growth for 2012. There are several market dynamics that contribute to this growth, including regulatory compliance, but mostly contractors and retailers are listening to the voices of their customers, as 73 per cent percent are demanding GREEN. Green companies will be rewarded with higher revenues and profit margins, lower expenses, greater market share and increased customer and employee retention in 2012, along with significant brand equity growth. Many businesses now view GREEN as an important strategic business tool. Consumer conservatism and risk aversion will reign again in 2012. The renovation market will continue to see strong growth, as people reinvest in their homes, with 39 percent allocating money to outdoor living and landscaping. The commercial market will also benefit by the renovation trend. Position yourself as a landscape investment advisor instead of a landscaper or garden centre employee. Ask your customers how much they intend to invest (not budget or spend) in their landscape products or projects. The word invest implies that your customers will get a return, and it moves you away from being an adversary or expense centre, to an advocate with the customers' best interest in mind. Promote products and services that will produce strong return on investment and environmental stewardship, such as low maintenance landscapes, smart irrigation, perennials, hardscapes and indigenous plantings.
Open — for business
A seismic trend is the increased demand for transparency. Customers expect you to be transparent in your pricing, contracts and information about your company. You need to open your "kimono" to them, as they don't want any surprises. Buyers are risk averse. They've been badly burnt over the last three years. They want to know that you are a financially solid company with a professional team. Tout your education, credentials and expertise, as these communicate low risk. Buyers want to understand your guarantees and warranties easily. Fewer than 20 percent of guarantees are redeemed, so differentiate by making yours the lowest-risk in the industry. Promote the innovations, products and equipment that will save your customers time and money. Those providing dashboards and reports that customers can access easily will be big winners. Providing clearly documented site information, via mobile technology, will earn you business and provide a competitive advantage. Those who don't use technology will be seen as suspect and outdated. Being transparent and proving how you are part of the solution is critical today.
As customers become smarter and more connected in 2012, the need for quantifying and communicating your value will be paramount. Customers EXPECT that you've done your homework, and understand their needs, pains and goals. You'll need to PROVE your value, how you're part of their solution, AND how you're really different from your competition. Make value a tangible and easy-to-understand asset. Align your values with ease of doing business, extraordinary customer experiences, environmental stewardship and differentiation. For commercial companies, developing reporting systems with "before and after" scenarios will earn trust and customers. Learning how to read and translate the voice of the customer, ahead of your competitor, will be a critical skill in 2012. Those who can clearly articulate, communicate and PROVE their value proposition, as it relates to the voice of the customer, will win.
Social media will continue to be a great tool for you, and your key stakeholders, in communicating value to others. Social media really does matter, and will continue to play an even greater role in purchasing decisions in 2012. Customers will use social media to conduct research, identify trends, locate suppliers, find deals and talk about you in either a positive or negative manner. Recent research shows that 80 percent of buyers change their minds about buying from you if they read negative information, while 87 percent of buyers will buy from you after reading positive feedback. Clanning like-minded, successful customers, who continue to grow as a result of their relationship with you and your services, will create incredible sales-advocate channels for your organization. Using social media and managing your online presence is a must in 2012. Either control your brand and communications, or your competitors will do it for you.
Expanding smart partnerships with suppliers, customers and value chain partners will not only increase revenues and market share, but will significantly improve name awareness and reputation, your brand equity. Remember, we're all judged by the company we keep, so choose these partners carefully. Identities of our philanthropic and community partners will play a role in the customer's decision-making criteria. Customers, as long as there is product and price parity, will continue to favour local and smaller players. Farmer's markets will continue to grow in 2012, a great place to partner with locals, promote business and align yourself with the community. Farmer's markets are cost-effective sales and marketing channels.
Embrace technology; it not only saves you time and money, but it increases efficiencies and company valuation, along with attracting and retaining excellent employees and partners. Embracing technology ahead of your competition can earn you significant market share. Customers want to be aligned with innovators, not dinosaurs. Affordable mobile field technology and software, smart irrigation and phones, downloadable apps, GPS, killer websites, sales force automation, hybrid equipment and social media are available to both big and small companies, at a very reasonable cost.
The year 2012 is showing signs of overall growth in the seven to nine per cent range. Those who can read and leverage the markets, deploy technology, and have assembled an intelligent team will lead, earning more than 15 per cent. For those who don't lead, approximately eight per cent will go out of business, 23 per cent will lose money and the remainder will make less than nine per cent. Listen, watch, learn and adapt to your customers and the markets, and make 2012 your best year ever!
Judith Guido, of Guido & Associates, is a California-based business growth specialist. She has helped all green industry sectors with research and product development, training, mergers and acquisitions, branding and strategy, and profitable growth.