Last month we talked about the fact that some customers need to be fired. Firing a customer means that you and that customer no longer do business together, but does that mean your customer’s needs are destined to go unfulfilled? In some cases, your ex-customer may be so contrary that they are forced to flip through the phone book in search of a new contractor every time they need service.
But what if you could figure out a way to profitably serve these contrarian customers? For one thing, you know you’d have a customer for life, since few other contractors would want to deal with them. The question is: At what price would you be willing to serve a misfit customer? Let’s examine a few situations.
Tight MoneyNo money, no deal. It sounds pretty simple: If a customer doesn’t have enough money to pay for your services, then you have little choice but to fire them. But is that a cut-and-dried policy? Obviously, some customers aren’t able to afford your plumbing services. More often, though, the question isn’t whether they can afford you but whether they’re willing to pay for something they need. Before firing a customer for lack of funds, first make sure you’ve made a solid case for the benefits of your service.
Since there’s only one “cheapest contractor” in town, it’s not likely that getting the lowest price is the only criterion a customer uses when deciding to purchase your services. Reputation, timeliness, warranties - these factor into the buying decision, too, so first make sure your sales process does a good job of presenting the benefits of these features.
If price continues to be a hurdle, consider expanding your services to meet the price problem head on. One way to soften the price is to break it into more manageable payments. Before turning your back on financing, take a look at the automobile sales business. How many used car dealers would be in business if they didn’t “tote the note?” Would we have a 12-month cycle for new models of automobiles if auto dealers couldn’t sell cars with financing? Which do dealers hype more: the price or the payments?
Most contractors shy away from financing for good reason: They don’t usually have the cost of financing figured into their selling prices. Comfort contractors are far ahead of plumbers in this regard because they deal with much larger average invoices, but many still don’t understand how profitable financing can be. For a frame of reference, consider financing costs the same way you look at the cost of liability insurance - just another cost of doing business.
As with all costs, figure financing into your pricing budget so that the cost of financing will be included in your pricing. If your pockets are deep enough, and you don’t mind jumping through your state’s legal hoops, you can do your own financing, but many contractors choose to use outside financiers instead. Either way, there is a cost involved, so be sure it’s in your pricing.
With financing in place, a customer who can’t afford a single toilet replacement may be able to replace all three toilets in their home when the payments are spread out over a year or so. Your company gets the benefit of increased sales and marketing efficiency since more customers are now qualified to purchase from you.
The customers you were going to have to fire for lack of funds have now become a profitable niche for your company.
Meet The FinickysThe shrubs along the hand-laid brick sidewalk to the cut-glass front door are intricately shaped and trimmed like huge poodles. The lawn is more like a thick, green carpet than grass. The driveway is an epoxy aggregate so clean you can eat off it. How can you possibly clean this customer’s kitchen sink drain without making a disturbing mess? All the neighborhood holds its collective breath as you approach the door to Mr. and Mrs. Finicky’s home.
Are you up to the challenge? Is it even possible to be neat enough for this customer? Or should you just save yourself the grief and fire them before unloading your tool box?
For decades now, Plumbing & Mechanical has extolled the virtues of being a neat and tidy service contractor. Even so, cleanliness is still a novelty rather than the norm. But some customers expect an even higher standard - almost to the point of being surgically clean. Can you afford to please a customer like this? You can if you budget for it. Your budget should include surface protection, and plenty of time for a thorough clean up, as well as training and coaching to make sure the job is done right.
There are multiple benefits to serving the Finickys, customer retention being one of the first. Once the Finickys find a contractor who can keep them happy, they’ll call again and again. They’re also likely to listen to preventive maintenance advice, such as seasonal tune-ups and high-performance filters on their comfort system. And don’t forget preventive drain care and regular service on plumbing fixtures.
Another benefit to working for the Finickys can be found up and down their street. Neighbors aren’t blind. They see how meticulous the Finickys are, so if a PHC contractor can pass muster with them, then he should be able to tackle anything. That’s a powerful recommendation.
The first time you meet the Finickys, you may be inclined to fire them, especially if you lose money on the job because you have to replace the Berber carpet in the hallway. But if you commit to satisfaction, you’ll learn some valuable lessons, and perhaps open a niche for your business that will pay off in the long term.
Capricious CustomersDoes it drive you crazy to try and take care of customers who just can’t make up their minds? Their fickleness makes you want to fire them. But what if there was a way to help them make a decision and stick with it? Sometimes fickleness is more about a need for attention than the inability to make a decision.
When working with fickle customers, be sure to ask lots of questions as you walk them through your design process. Offer options, but make them starkly different: A simple repair vs. a complete replacement, for example.
Is there a price at which you could profitably let them try a toilet for a month before deciding it’s the right one? Is there a price where you can profitably install a fully zoned comfort system designed to meet the comfort level they want to achieve? Be willing to take the extra steps necessary to take care of your fickle customers, but be sure they know the price tag. This will help them come to a decision while giving you a profitable client that most contractors would fire.
Serving misfit customers is not for everyone; otherwise, they wouldn’t be misfits. For some contractors, the headaches and hassles are just not worth the trouble at any price. Sometimes you will get bitten in the pocket book. But contractors who keep the bigger picture in focus will chalk up the learning experience as an investment into a potential niche market where few care to tread.
The key question to ask is not “Should I fire this customer?” Instead, ask yourself, “How can I say yes to this customer?” If the numbers add up, and the customer agrees, then congratulations on another new niche market where the competition is slim and the profits are fat.