Editorial: Got Any "Lawn Bucks"?
By Daniel Pepper
"The best of us must sometimes eat our words."
(From Harry Potter and the Chamber of Secrets)
— J. K. Rowling: British fantasy author
Does the sound of prepayment intrigue you? Can it work in the lawn care industry? Well I have some powerful facts that might just challenge you.
Did you know that as of present day, 1 out of 5 gift card recipients have not used the cards? That means there are approximately $975 million in unredeemed dollars. That's close to $1 billion. "Wow!" would be an understatement.
About 25%, or 1 out of 4, whichever representation of this stat you prefer, have not used their cards due to the card getting lost or expiring. 50%, or 1 out of every 2 people with a gift card, have not redeemed them because they haven't found the time.
This is what is termed “breakage”. There are numerous lawn businesses profiting from it and some even rely on it in different ways.
We've all seen it. Exchanging real dollars for say "lawn bucks" or something along these lines. Though they may say $25 or $50 lawn bucks it only costs about 2.5 cents to print. Each one that goes home unredeemed or forgotten provides big profit margin.
But before you go running to print up some lawn dollars, there is another side to this story you need to know. The non-redemption of gift cards has to be approached carefully.
You see, the sale of the 2.5 cent lawn buck printed on a piece of paper or 50 cent lawn buck plastic card(for the more professional look) that are for $25, $50 or $100 are obviously very profitable.
But the problem is this. Most of the time when lawn buck cards are redeemed, more money is spent for that lawn service visit and the lawn care business has a fresh opportunity to capture or re-capture that customer’s interest and motivate them to turn into repeat business, so there may be a lot lost than gained from non-redemption. In other words, you may not want people to forget about spending their lawn bucks because, as you know, having the opportunity to turn them into long term customers can be even more profitable.
Think about this idea of prepaid lawn care services. Can you offer prepaid services to your lawn care customers? Will you use a card or printed certificate? What will you do about expiry dates? Will they expire over time or not at all? Lastly, will you try to enjoy non-redemption or will you try and get every lawn buck redeemed?
Keep this interesting idea in mind too. This can also be a form of free financing. Delayed redemption can give you the equivalent of interest free cash to build your lawn business. The non-redemption could possibly turn about $0.50 worth of paper into $50, $100, $200 or more.
This is a very strategic lawn business idea that must be executed precisely. Mortgaging your future lawn care business revenues to pay for current costs is a very tricky business. Do your due diligence.
In the right circumstances, done accurately, this can be a breakthrough for your business growth.
Until next time...