McCadden: If Clients Are Satisfied You Have Likely Failed
authors Shawn McCadden
Many remodelers believe their work sells itself. And they may be right. However, if every contractor in town (including you) does good work and customers are looking for good work, you may be what I refer to as a “commodity contractor.” If you want to differentiate your business and thus charge more than the commodity contractors, you need to offer more than just good work. You also need to offer a high level of customer service. If you are already doing so and your customers say they are satisfied with it, you have probably failed at differentiating your business.
Being satisfied is a low bar to shoot for, achieve and be proud of. Instead, to really stand out, you must find real ways to provide great customer service that your prospects and clients may never have experienced or expected. What you need is a good inside reality and a way to make sure the marketplace knows about it and recognizes your difference.
Market Your Difference
In his book, Selling the Invisible, Harry Beckwith shares the concept of an “inside reality.” It is what customers come to know about you and your business through actual experience working with you and your team. Inside reality has nothing to do with your work. Prospects and customers can see your work, but only those who have experienced working with you will have felt your inside realities.
To differentiate your business, in addition to pictures of your great work, your marketing should also include stories about how the way you conduct business has been a benefit to your target customer type. Does your communication style, when paired with your design process, help prospects gain confidence about their project, their investment and ultimately their decision to go forward? Have you trained and mentored your lead carpenters to keep clients informed about the progress of their projects and proactively address their questions and concerns? The goal is to give your customers reasons to be way more than just satisfied.
The Catch 22
Remodelers often resort to dropping their prices in order to be competitive with others who market themselves by only the quality of their work. This sales strategy makes sense because if your work is the same as everyone else’s why would anyone pay you more than your competition? But, if you provide a high level of customer service, your business will need to charge more to cover that service. Your job costs will go up because your lead carpenter will need to be paid for the hours it takes to manage and service your client on the jobsite. Your overhead will go up because you will need to pay for the additional marketing needed to communicate your positive inside realities, as well as the expenses related to delivering those positive inside realities. But, at the same time, if you can really deliver a great inside reality and you target customers who see value in those realities, you can charge more and earn a greater net profit. Many remodelers have shared that by charging more money and also delivering great customer service, they get more referrals than they did when they were trying to be “competitive” on price.
Don’t Be Afraid to be Known for High Prices
When you deliver a higher level of customer service and charge for it, your business will likely become known for being more expensive than others in your marketplace. Getting the higher price will likely be challenging in the beginning. But, if you constantly market, deliver and get your past customers to tell others about your inside realities, the good news will spread. And it will spread to the right people. Remember, clients who value good service and are willing to pay for it typically hang out with and will refer you to other people just like them. The goal here is to create a brand that people in your market wish they could afford. The idea is to be thought of as worth your price, not too expensive for what you offer.
To be able to ask for and get higher prices you must be confident about your higher prices. This confidence must come from two different but complementary considerations. First, you need to know and fully understand what it will cost your business to offer a high level of customer-recognized customer service. Once you know what it will cost you to do so, you can use that information to determine the markup to use and selling price your customers must pay to do business with you. Think about it: Until you know and understand how to properly price your projects, how could you ever be confident to ask for higher prices? Second, you must also truly believe you deserve to be paid well for what you do, and your business also deserves a high net profit for investing in as well as taking the risks of being different.
In other words, if you’re not satisfied with your personal income and your business’ net profits, it may be because your customers are only satisfied with your work. |QR