Qualifying each service call makes smart business sense. In business, we want to make a profit and we should keep this in mind before making any dispatch decisions. We do not have to run every call, low spending and hard-to-please customers can be referred to the competition. Unprofitable customers block opportunity from high paying and loyal clients.
As I built my Insulation contracting business specializing in new construction batts and blow insulation, delivering excellent service, reliability and establishing strong relationships was key.
My customer base at the time was builders in the new construction market. Insulation as a commodity meant we had to offer competitive prices to customers. My average order was about was $800, and I sold and installed about $2,000,000 worth of insulation per year.
The majority of my business came from repeat customers, who would reach out when a construction project needed insulation.
It was only occasionally that customers wanted a quote up front, but one builder always requested a price before the work, and I would do it. In spite of this, he didn’t remain loyal and would give 10% of the business to the competition.
One day about noon, I received a call informing me that my crew was running short on insulation materials. If they did not finish the job, my builder would have to reschedule other work and lose another two or three days. After all, time is money – he was paying interest on construction loans. The clock was ticking…
I drove to Home Depot, paid two times my normal rate for some insulation, transported it in the backseat of my car and headed to the construction site. The job took up most of my afternoon, but it was completed and the customer was happy. While I was there, he told me he needed a price on the lot next door.
After measuring it all up, I emailed him a quote, but once again he gave the house to the competition. I had gone out of my way to meet the customer’s needs and now I felt frustrated. I didn’t want relationships with customers like this one, I wanted loyal clients and to build strong relationships.
A few weeks later, I received a call from the same builder asking for a quote on another house. I told him I wanted to insulate the house, however, I would be unable to quote a price first. I wanted to avoid competitive situations for every job. At this point, we had insulated forty similar properties, so I was able to give an approximate estimate of $1,500 to $1,700 per lot.
I made myself clear, I would send him the price, only If he confirmed me on the schedule.
I warned him that I wouldn’t always be the cheapest, but if there was an issue with the price we could discuss it further. At this point, I stood firm and said if you want to give the job to the other guy, go ahead. I calmly explained my frustration with the previous lot, where I’d quoted and then lost the job to competitors. Bidding wars for work were not my style, excellent service and competitive prices were always more important.
In the end, he wouldn’t commit to the job, so I didn’t give him a quote. As a result, he offered the job to another company. Instead, I used my time to find other builders who valued my service and established relationships with these clients. I replaced him with several other reliable clients, which offered greater opportunities to grow revenue.
A few weeks passed and I received yet another call from the same builder. He offered me the job on his next lot and I sent him a quote and insulated that house and I never had another problem with this builder again.
The lesson I learned was to establish boundaries for my own protection.
We don’t have to serve unprofitable and disloyal customers. Always profile customers based on relationship, profitability and even the distance from the office. Read more about that here.
In business, we have the option to send unreasonably demanding customers out to the competition.
It’s satisfying when clients say, “You guys aren’t the cheapest, but I value your service – you always do a great job for me.”
Look for the customers who value what you do – they are out there.
I always welcome comments and feedback.