Words: George Hedley
There are lots of ways to make a profit in the construction business. They include cutting costs, reducing overhead, improving field productivity, accurate estimating, reducing field mistakes, and having an excellent training program. All of these will give you a small improvement in your bottom-line, but not enough to make a significant difference.
The easiest way to make more money is to create it! Profit starts with revenue. The more profitable revenue you create, the more profit you make. Revenue comes from customers. Profitable revenue comes from satisfied customers who want what you provide and will pay a little extra for your excellent service. To make more profit, you must find and keep more profitable customers. Are customers your #1 focus? Do you have a business plan to take care of your customers and put them first? Studies show it costs and takes five to seven times more money to find new customers than to keep existing customers satisfied. Maximizing profit is dependent on satisfied customers – current, repeat, loyal, and future.
Are You A Money Maker?
Are you focused on making or saving money? What do you spend most of your time doing? What are your top priorities? Do you really care about your customers and what’s best for them? Do you keep your commitments? Return customers calls immediately? Man jobs properly to finish on-time? Do you keep your customer’s jobsites clean? Schedule jobs based on what’s best for your customer or what’s best for you? Visit jobs on a regular basis before customers call to schedule you? Do you check-in with customers before, during and after projects to see how you performed in their eyes?
Money makers are focused on making money. Money is made by taking care of customers. Look at the hotel business. The large successful hotels are 100% committed to giving their guests a great customer experience from the minute they enter the front door until they checkout. They treat customers as guests and strive to give them what they want. These hotel managers don’t focus their time trying to save as much money as possible or scheduling people based on running the most efficient hotel operation. They focus on creating satisfied customers who’ll come back over and over again and don’t mind paying a little extra for service beyond what is expected. This customer focus creates profitable repeat loyal customers. It also stops customers from shopping price when choosing a hotel chain to frequent.
The cheaper budget motels in contrast, are money savers and do whatever they can to save every penny possible. The furniture is bolted down to the floor, you only get one thin towel, you don’t get a morning newspaper, you can’t remove the clothes hangers from closet rods, the hot water is turned down to warm, and the hotel clerk’s goal is to make your life miserable. These motels offer poor service, average quality, and cheap prices. Guess what? These cheap hotels are like most small businesses. They sell low price and customers are there only for the low cost. They don’t have loyal customers and they also constantly struggle to make a significant profit.
What’s your focus?
What do you do to give your customers a great customer experience? Have you forgotten where your money comes from? As your business grows, you get busy and don’t have time to take care of your customers the way you really want to. But those who make customers their number one priority, make 100% more money than those who provide mediocre service. The vast majority of small business owners and managers focus their energy on getting work done and saving as much money as they can. They don’t focus on making money by creating profitable revenue and satisfied customers. Meeting their customer’s needs and providing great customer service is an afterthought in their every day activities. Small business owners start their company with a dream of working for themselves, calling the shots, making a lot of money, having some freedom, and extra time off. They were good at running jobs, estimating, or installing materials. But never spent much time focused on taking care of customers.
The typical business owner is a good worker and builds a good product or service. So when they start their companies, they don’t have trouble getting customers. They get busy doing the work and then hire some people to help them get the work done. Because employees aren’t as efficient as themselves, the owners scramble to get everything done and forget to take care of their customers. They get overwhelmed, overworked, and don’t have enough resources to hire or train enough qualified people to stay ahead of their workload. This causes customers to get upset as schedules and completion dates begin to slip. This causes their overall company operation to leak customers, people, money, and profits. The business owner is now stressed-out and doesn’t know what to do to fix it. He works as hard as he can, but it isn’t enough to keep all the balls in the air.
Business owners mistakenly focus on saving money instead of making it. What’s your focus? Are customers your #1 priority? How much time do you spend satisfying customers? Do you have a customer service training program? Or do your customers seem like an interruption? I once heard a customer tell a rude store clerk: “You don’t get it! You are overhead, I am profit!”
Do you lose customers?
Have you ever been to a store and waited in line to pay while the clerk talks on the phone? What do you do? Scream and yell. Wait patiently. Tap on the counter. Look for another clerk. Go to another cash register. Give them a lecture on customer service. Ask for their supervisor. Studies show that eighty percent of customers have stopped using a store forever because of long lines or long waits. What ticks off your customers?
- Not returning phone calls or emails quickly.
- Over-promising and not delivering what you guaranteed.
- Not sending enough workers to jobsites to stay on schedule.
- Not ordering the materials until too late.
- Missing scheduled installations.
- Leaving a mess during and after your crews leave.
- Not doing your own punch-list.
- Not coming back to finish all the little things required by contract.
- Not enough men on the job.
- Don’t show up when promised.
- Not protecting adjacent work.
- Not properly funded.
- Crews not trained.
- Foremen not able to make decisions or commitments.
Customer Focus Test Rate on scale of 1 – 10
- We regularly survey our customers to find out how satisfied they are or a ask for suggestions to improve.
- We regularly review these suggestions & make positive changes.
- We have a customer mission or values statement.
- We track customer satisfaction, quality, service, on-time schedules, errors, problems, punch-list, and call-backs.
- We continually train our entire staff in customer service at least twice per year.
- New hires get an in-depth training which includes customer service.
- Our compensation & incentive pay includes customer satisfaction ratings.
- We regularly reward & recognize team players for great customer service.
- We don’t have any stupid rules that are not customer friendly.
- Everyone has the authority to do what ever it takes to satisfy our customers.
It pays to please!
According to surveys satisfied customers will pay up to 10% more. They also tell 2 to 3 people about your great work. But the bad news is that dis-satisfied customers will tell 10 people how bad your company is. This makes it imperative to remember that satisfied customers are the #1 reason for your daily activities, your job, and your company. Your customers are not interruptions, distractions, or problems. They are why your company is in business!
Your customers don’t care how busy you are, the economy or unemployment rate, or about your employee problems, your cash-flow issues, your broken down equipment, your chain of command, or your company rules or policies. They hired your company to perform and not make excuses. Your problems are your problems, not your customer’s.
Check your calendar!
Think about what happens every day. Most business owners and project managers spend at least ninety percent of their time doing the work at hand. They multi-task as they manage employees, subcontractors, suppliers, and projects. Their only customer contact is during project meetings, collectiong mopney, bid negotiations, haggling over change orders, fixing field problems, and scheduling crews and materials. They take repeat customers for granted and assume if they do a good job, their customers will put them on the bid list for their next project. This may be enough enough to build a business in good times, but what about during a slower economy?
When new customers call with project opportunities, you immediately drop everything and put them first. You then call your existing customers and cancel meetings to allow time to wine and dine potential customers. You put on your best clothes, take them to the finest restaurant, and present them your shiny brochure filled with glossy photos of your company’s accomplishments. All while current customers wait for you to return their calls or fix a project problem. Sound familiar?
Your calendar doesn’t lie. How much time do you invest creating and nuturing satisfied customers versus getting projects built? Do you take time transforming current customers into repeat customers by finding out what they want and then delivering it to them on a regular basis? Or better yet, do you make time to take your loyal customers out to lunch, or a ball game, or a monthly hunting trip or round of golf to get to know them better?
Does your company have an action plan to make every customer satisfied? A customer satisfaction program takes concentrated effort and will return big-time to your bottom-line. You can be a repeat customer of Wal-Mart, but you aren’t satisfied, so you’ll shop anywhere the products are available. Satisfied customers will use your company over and over again and pay you more than your competition. People want to help those who help them. Look for ways to help your customers make more money. Be more of a business partner than a provider of services. Before I meet with customers, I try and identify how I can help them be successful. I come prepared to share a business tip or trick that will help their bottom-line.
Time is money. How you focus your energy will decide how much you make. Meaningful time satisfying customers is big money. Make it your priority to invest at least fifty percent of your time focused on satisfying customers. This will return more profit than you’ll ever make ordering materials, scheduling crews, or supervising operations. Rearrange your calendar, put customers first, and watch your bottom-line grow!
As a professional construction BIZCOACH and popular industry speaker, George Hedley helps contractors increase profits, grow and get their companies to work! He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available at his online bookstore at www.HardhatPresentations.com. E-mail GH@HardhatPresentations.com to sign-up for his free e-newsletter, join a peer mastermind BIZGROUP, attend a BIZ-BUILDER Boot Camp, implement the BIZ-BUILDER BLUEPRINT, or get a discount for online courses at www.HardhatBizSchool.com.
George Hedley CSP CPBC
Phone: (800) 851-8553