Losing Contracts Lately? Here's Where to Start.

Consumers everywhere are tired of feeling the effects of inflation, and with pandemic-era supply chain issues dwindling, they’re starting to push back on high prices and shop around for better deals. If you haven’t experienced this personally in your own business, it’s likely you will soon.

So, we asked our partners what companies in landscaping, roofing, manufacturing and other blue-collar industries can do to combat this recent trend.

Tito Caceres, of Bloom Partners Talent Solutions, says the first crucial step is to identify why you're losing contracts.

“Was it due to pricing, quality of work, project timelines, or a combination? Conduct a thorough review of lost contracts to pinpoint any recurring issues or patterns. Reach out to clients who decided not to renew their contracts. Their feedback can offer invaluable insights for improving your offerings and performance.”

The Harvest Group’s Chris Darnell agrees, advising sales and leadership to “conduct market research to understand the needs and expectations of your clients, and work to improve your offerings accordingly.”

With that foundational research complete, and continuous improvement efforts in place, you have a few additional levers to pull as you begin to work on getting sales back on track.

Contracts = Relationships (and require lots of communication)

There are going to be circumstances that arise that are completely beyond a contractor's control that can cause them to lose a signed deal, such as a natural disaster or concerns about the economy. But for those factors that you can control, the best thing you can do is to work to build relationships that are built on trust and performance, not pricing. Become a "partner" to the customer—someone they turn to automatically for all things roofing, or whatever industry your focus is. Being perceived as a true partner will give you the best opportunity to influence what is happening, as well as give you the earliest notice or warning of changes being considered.

— Greg Hayne, Hayne Coaching Group

The key to retaining a contract is follow-up. Stay in continual contact with the customer. Do not wait for a customer to bring up an issue or a concern. Be proactive in asking the customer for feedback and then just as importantly, quickly fix issues that may arise.

— John Gronski, Leader Grove

The key is to stay in constant contact with your clients. It is not only important to build relationships with your clients, but to nurture those relationships. It has been proven time and again that people do business with those they like. If money gets tight, your client may cut back in other areas where the relationship isn't as strong as the one you have built.

— Jud Griggs, The Harvest Group

Hear more contract advice from The Harvest Group:

Relationships are the key. Building strong relationships with your customers so you understand what they need, even through downturns, is important. Everyone needs a roof but it may not be the traditional roof, so be open to listening to the needs of your customers and hopefully offer solutions that save the contract.

— Heidi J. Ellsworth, RoofersCoffeeShop

Build strong relationships with your clients. Engage with them beyond individual contracts and provide value-added services to strengthen your connections.

— Chris Darnell, The Harvest Group

Demonstrate Value, Versatility & Flexibility

Show the customer why the contract benefits them. Focus on saving money for them. Communicate with them on a regular basis to thank them for owning a contract and to give them ideas they can implement to save money, be more comfortable, etc.

— Ruth King, Business Ventures Corporation

Two words: customer success. Having a team that's dedicated specifically to helping a customer get the most out of their contract is critical if you don't want to lose that contract when it's up for renewal. Customer success-oriented organizations have existed in the SaaS world for years, but it's somewhat of a new function for many industrial companies providing 'hard tech' solutions and service contracts. If losing contract renewals is an issue and you don't have a customer success team, making that a singular, dedicated function for at least one individual is a first step.

— Chris Luecke, Manufacturing Happy Hour

By providing many solutions for their client, companies can hold on whereas others who focus only on providing one solution may be viewed as dispensable. Being able to provide solutions to problems that you aren’t even contracted for proves your worth on a regular basis. And a close second place is focusing on creating an easy and accessible customer experience. Make your customer’s experience with your organization the easiest thing they do all week.

— Levi Jett, Jett Facility Consultants

Determine if you have a fall back offering that allows for a lower level of service while retaining the client. You can also build win-back campaigns deployed within 60 days of the cancellation.

— Cullen Talley, Exit Momentum

First, take note of why the contracts are being lost by having a conversation with the client. Then find ways to add value or build relationships with the client outside of your traditional scope.

— Carla Policastro, Cycle CPA

If your main source of contracts is larger products, be open to building them out in phases. Lots of contractors avoid phases, but its a great way to keep a customer that has a vision, but not all of the funds up front.

— Jeremy Huffman, Constant Flow Marketing

Diversify your offerings. Don't rely too heavily on any one contract or client, and instead spread your risk by having a range of services to offer.

— Chris Darnell, The Harvest Group

Keep a Close Eye on Pricing & Scope Creep

First, a company must know what their costs of production are, and what their gross margin by individual customer is. This allows a more individualized approach to price increases rather than assigning a blanket increase to all clients, which may under-charge poor performing clients and over-charge high profit clients.

Second, make sure that services provided and priced in the proposal match the scope of work in the bid. Crews often get into a routine, performing the same services at every property, even if the bid included less or more service than what the crew is providing. Inspecting properties regularly can assist in finding and eliminating scope creep which reduces unnecessary labor costs and improves gross margin.

Taking these steps helps keep companies competitive in the market and allows them to help clarify any differences in contract scope if a client is leaving for a lower price from another vendor.

— Steve Steele, Bruce Wilson & Company

Offer competitive pricing by conducting market research to determine optimal pricing strategies that balance profitability with customer demand.

— Chris Darnell, The Harvest Group

→ Related Reading: Setting Contract Minimums (via NALP's The Edge)

Strengthen Sales & Marketing

Weaker economies, like we're currently experiencing, expose hidden issues within sales teams. Weak sales people and weak sales processes have worked for the past few years when the economy was better, but now securing both existing and new contracts is much more difficult. It may be that salespeople lack the will to sell, don't have the right DNA, or need additional sales competencies to be successful. Or perhaps the person doing sales management isn't delivering on the needs of the salespeople. Lack of sales results can also be due to an ill-defined sales process that doesn't provide the right key performance indicators.

The solution for companies is to get the equivalent of a sales MRI to discover the issues using a scientific and validated assessment. If you want to get a quick and easy free grade of your salesforce, check out the sales force grader.

— Neal Glatt, Grow The Bench

Implement a growth and marketing strategy. A lot of companies pull back on their marketing budgets during economic down turns, so its always a good time to double down and take advantage of the lack of effort from your competitor.

— Chris Darnell, The Harvest Group