Deregulation Of Utilities: It hasn’t been very many years since the government deregulated the telephone companies. Instead of a monopoly run by one large company offering local and long distance service, there are now many companies who offer long distance service. They are free to compete without many restrictions. The same changes occurred in the airline business in the late 1970s. It seems to be a trend, one that is growing.
The deregulation that affects our businesses the most right now is the changing structure of the power companies, the gas and electric utilities. Typically, they are restricted in their local area to offering gas or electric power to residences and businesses. However, they are being deregulated and permitted to offer many more services than they could in the past — services that may directly compete with the services you offer. For example, they may be offering, in addition to electricity for the home, air conditioning, plumbing and electrical repair services. Soon, everything you do, they’ll do.
Utility companies entering a new marketplace are going to present a very different challenge than simply additional competition. Companies enter and leave the service and repair business all the time. However, the utilities have a few aspects of the business in their favor. They will rewrite the rules of the service and repair business. This is how:
- Mailing Lists: First, they have all their customers on a mailing list. And who are their customers? Everybody. That’s because everybody uses electricity and gas. Since most of their current customers have been their customers for a long time, the customers, generally, trust the large utilities. So they are inclined to welcome them into their home for repair services or for selling them appliances or fixtures or almost anything. With their reputation and ready-made lists, they are ready to market their services and products.
- Credit: Additionally, the utilities are in a position to offer extensive financing and leasing options to customers. With their customers’ credit already established in many cases, these new competitors can sell whole systems for convenient monthly payments. Not all of our businesses can offer payment plans as attractive as these programs.
- Service Agreements: You’ve heard me discuss or read my analysis of using service agreements in your business for a long time. Now, I am going to urge you to get a service agreement program in your business. You’ll need one to compete. The utilities are organized to provide service to residences, so implementing service contracts for their new service and repair business will be easy — and they intend to do it. They have the capability and the mindset to simply offer a wide range of services to consumers — including long-term agreements, which will make it easy for customers to call one place for all their needs.
Many utilities will go beyond the standard service agreement that I advocate for your business. They are going to offer a complete home warranty. If anything goes wrong, call them and they will fix it — and it’s already paid for. For a small deductible the homeowner will be able to just call the “repairman” and their worries are over. Calling the same repairman for all jobs will be simple and attractive to customers.
- Subcontracting: The utility companies probably won’t do all the work themselves: they’ll probably contract with some firms to do plumbing or HVAC, for example. Nevertheless, they will back all the appliances, fixtures and systems in the home for a fee. And the customer will call the utility company for anything and everything.
- Flat Rate: The utilities will be entering a competitive business and they know they will have to watch their costs and serve customers. So, naturally, they will use flat rate pricing schedules for their services. Customers like them better and they provide the profitability needed to offer top-notch service.
Consolidators: Another influence that will continue to change our business in the future is the consolidation companies. And I believe the effects of larger organizations buying up local companies with good reputations will continue. Since the consolidators are public companies they will be driven to increase market share and profitability. This healthy competition will force the companies offering poor service or sending out untrained technicians to rethink their decisions or shrink.
My advice on this factor is simple — run your company like it was for sale. Similar to selling a car, you fix it up before you offer it for sale. For a car, it may be a tune-up, wash, wax, shampoo for the interior — all the things that make it attractive. With your business, the aspects that make it attractive to a buyer also make it attractive to customers. Cleaner trucks, better trained technicians in clean uniforms, neat and tidy shops all contribute to that ready-for-sale appearance. Of course, you need not sell, but you have to remain competitive. A tune-up for your business will work for your benefit, no matter what you decide to do.
Home Centers: We have been facing the threat of home warehouses for a few years now. We know that they offer customers low prices on everything from kitchen disposer units to furnaces to electrical equipment. And a certain segment of our potential market will choose to do some of the service and repair work around their home themselves — or at least give it a try. What’s new?
Consumers are more aware than ever of what these home warehouses offer and are patronizing them for their services as well as their discount prices on appliances, fixtures and equipment.
Conclusion: It’s not just do-it-yourselfers who buy from these home centers. Competition From Contractors: Overall, I am pleased more contractors are getting the message about using modern business practices. It has been my goal for a long time to assist as many contractors as I could on ways to increase the profitability of their business and better serve customers. It’s working! Contractors are updating their businesses in record numbers. They are switching to flat rate pricing, improving their call taking procedures, pricing their services at realistic amounts, controlling their costs, sprucing up the appearance of their trucks and, finally, many are training their technicians. Customer service has become a priority with the most competitive contractors. All these techniques are working. These days, you are either the market leader in your area, or you are losing business to them
Government Regulations: Another influence that will affect our businesses in the future is more government regulation. New laws — some already in place — will require more energy-saving, water-saving and safer devices for our homes. It’s hard to argue against saving water and energy, so it’s time to go back to school and learn what is required and what is available for our customers.
Today there are a number of avenues a consumer has to complain and try to get some response from merchants and service companies for oversights or just plain rip-offs. There are government agencies, local organizations and news teams who will take up the cause a customer has, publicize it and try to remedy the situation. You don’t want your company on TV this way. A company’s goodwill can be destroyed overnight for a small slip up. Be careful, and train your people. One mistake no longer means giving back money or a redo, it could cost you your business.
Shortage of Technicians: No list of predictions would be complete without mentioning what we already know about the availability of technicians. They are in short supply — and it’s going to get worse. Look at it this way: Who are you going to convince to get up early and face a grumpy dispatcher, an upset boss (due to cash flow), get in an old — maybe unsafe — truck and go to a customer’s home who is unhappy because something doesn’t work? And then do some heavy, possibly dangerous, work? And do it all for $20, or thereabouts, after years of training and experience? No wonder technicians aren’t sprouting from the earth, Everyone wants to hire technicians, but no one is willing to train them from the start. We have to be willing to develop people to make them valuable for our company. Unfortunately, it takes time.
I predict the successful companies in the future will be the ones who have the best training programs for technicians. They will be able to offer current training and be known for excellent customer service. They will be able to pay their people well because they will produce top quality work. Customers will pay for the best service and the business will prosper. No need to wait. We can start now.
You don’t need a crystal ball to look at your business and see where it’s headed. By reflecting on the changes occurring in the industry every once in a while, you’ll stay ahead and lead the market rather than trying to keep up.