How Changing One Word Will Make Your Business Explode
A few years ago, I was attending the Wisconsin Arborist Association’s Annual Conference when I was awe struck during the keynote session. Jim Skiera, former International Society of Arboriculture’s Executive Director, was speaking on the state of the tree care industry. He asked everyone in attendance to stand up. All three hundred of us, slowly got out of our seats and waited uncomfortably for him to ask us to do something. His direction was straightforward; if you removed more trees last year than you planted, please sit down. I looked around the room and was shocked to see only a handful of people remain standing. He then asked the rhetorical question; if the vast majority of us in this room are removing more trees than we are planting, what does the future of our industry look like? He then challenged everyone in the room to change one word within their list of services. He said to eliminate the word “removal” and use “replacement” instead.
While the concept was very simple it had a huge impact on me. Imagine if you started doing tree replacements instead of just tree removals. First off, you would definitely stand out from the other tree services that your potential customer has talked to and you immediately open the door for future revenue. There are many other benefits to this customer experience approach, but three obvious ones that you would realize are:
- Instantly boost your revenue from the tree plantings.
- Become the valued professional who is looking to take care of their property long term, not just do a one-time job.
- Create an easy future revenue stream by offering to prune the young tree and others on their property.
Guaranteed Cost – The vast majority of tree services have this type of WC policy. A Guaranteed Cost policy gives the insured company confidence in the total cost of the policy. The rate is set at the beginning of the policy period, payments are made, then the premium is adjusted at the end of the policy term according to the actual payroll the tree service incurred during the policy. Injuries only affect future policy premiums, not the current policy year.
Dividend – A Dividend policy acts exactly like a Guaranteed Cost policy throughout the year except the policy holder has a chance to earn some of the premium back after the policy year is over. This premium that is given back to the policyholder is called a dividend. Dividends can be either a set percentage of the final premium (called a Flat Dividend) or a sliding scale percentage based on the claims that happened throughout the year (called a Variable Dividend). The dividend amount is negotiated with the insurance company before the start of the policy.
Depending on the size of your company and the strength of your safety program and financials, you may want to consider the following Work Comp options. These plans are much more sophisticated and require a strong understanding of the risk/reward involved with them.
Deductible – Deductible Work Comp policies also utilize the Guaranteed Cost policy format except they contain a provision for a deductible. The Work Comp deductible works just like any other insurance deductible, where the insured tree service pays the first amount of a claim and the insurance company pays the rest. This can be a small dollar figure like $1,000 or a large amount like $100,000. An aggregate (per year) deductible can be negotiated at the beginning of the policy to cap the out of pocket expenses.
Retrospectively Rated – With a Retrospectively Rated Work Comp policy, the insured tree service pays a fixed cost throughout the policy period and then the premium is adjusted at the end based on the claims that occurred. This plan setup offers the greatest potential savings but also could be the most expensive depending on how the injuries unfold for the year. There is a minimum and maximum premium assigned at the start. A common minimum premium would be 50% of the Guaranteed Cost while the maximum could be 150%.