4 Steps to Avoid Being Priced Like a Commodity
Tips to keep your business from being a victim of the fluctuating housing market
In the eyes of your potential customers, your business is a commodity. As with any commodity, gasoline, for example, it's all about price. In the new economy, contractors need to understand that they must think and act differently to gain market share and create success.
During the boom years, to be successful you had to do good work, answer the phone, and partake of the abundant job opportunities found around every corner. Today, opportunities still exist for contractors willing to change by thinking and acting differently.
As your profit margins drop, (and let's be honest, they probably have) it's necessary for you to focus more on what your customers expect, and then adjust to their expectations.
Here's 4 steps to avoiding the commodity price trap and still make a reasonable profit in this new economy:
John Stahl is a former contractor and building-product developer. Currently he owns The Growth Coach, a business coaching firm that concentrates on working with contractors.
Step 1: Know What's Really Important to Your Customer
In the early days of my contracting business in New York City, I wrongly assumed that my customers' top priority was quality. I perceived quality as perfect miters, skillfully coped inside corners and a perfect paint job. I was wrong!
I was giving them what I wanted , not what they wanted. Why? Because of my technical tendencies I was a carpenter first and a businessman second. This belief cost me big time! By assuming I knew what my clients wanted I stopped listening.
My customers wanted quality yes, but their version of quality, not mine. They wanted their phone calls returned in a timely manner. They wanted their house left clean and tidy at the end of the day. They wanted a neat and conscientious workman to listen to their concerns and desires.
So how do you find out what your customers really want? It's quite simple: All you have to do is ask.
Ask and then just listen. Really listen. Never assume what's important to them. It's remarkable how little most of us really listen to our customers. Practice the 70/30 rule of listening. Listen 70 percent of the time. Talk only 30 percent. Make the bulk of the 30 percent open ended questions about them.
Step 2: Build Trust
People buy from people they know, like and trust. To avoid being perceived as a commodity, the second step is to focus on building a trusted relationship.
Is your company well known? Do influential business owners in your community know you, like you, trust you? Bankers, Insurance agents, product suppliers can all be there to help your business grow in the new economy when you take the time to network with them, listen to them, and work to create a professional alliance.
Additional ways to build trust and credibility is speaking before your target market on a topic that shows you are an expert in your field. Organizations are always looking for speakers. Contact your local Rotary Club, Chamber of Commerce, Trade association, or business networking groups.
If you don't feel totally comfortable speaking in front of a crowd of people you don't know (and few of us really do) find a projector and show slide of your best jobs. People love looking at pictures. Talk about each one for a half minute, then ask the audience if they have questions. You'll be a star.
Step 3: Network Like Crazy!
As noted above, join your local trade association, and participate in community service organizations. These are excellent ways to increase your knowledge and get your name and company out to your market and potential alliance partners.
Step 4: Work on Your Business, Not in Your Business
Take time each day to step aside from your daily routine to think like a CEO. Ask difficult questions about the direction of your business, your company's visions and goals, limiting beliefs and negative thinking. Face the reality of what's working and what's not.
You can't afford to sit and wait for the old economy to return. Consider this definition of insanity:
"Doing the same things and expecting different results." Start doing different things, embrace the new economy, beat the commodity price trap and succeed.