How much would your customers pay you?

Business 101

A recent article speaks of an alternative music band, Radiohead, from Europe that is letting their fans decide how much to pay for their newly released CD after the fans have heard its contents. There hasn't been any feedback yet on how the new marketing idea is going, but it got the attention of some pretty big producers in the music industry. "Brilliant" was one response from a producer who has worked with Paul McCartney.

Can you imagine allowing your customers to determine just what they thought your work was worth to them? I've had some contractors sarcastically admit to me that the customer "Ain't going to pay one dollar more than they think the work is worth." However, this comment is usually associated with customer negotiations before the bid is signed.

Let's consider the possibilities of a contractor who would perform work for customers and then allow the customers to determine its value. What might be some immediate problems with this approach?

First, most customers are not familiar with price of materials, labor costs, equipment costs, etc. Second, a contractor would have to have some financially deep pockets to front the money to pay for needed materials, equipment, labor, secure proper local licenses, etc. Third, there is the issue of profits. It would initially appear that most customers would rather pay less for their work, not caring how much less money in profits their contractor realized.

Lest you think this argument is over, consider still the possibility of a contractor, maybe even you, doing something totally different in your marketing effort than any other contractor has ever considered. What would you have to be sure to take care of to give you the best chance of getting paid what you think you are worth? Let's take a look at five "non-negotiables" that would have to be in perfect working form.

1. Establish A+ customer relationships
No customer is going to want to pay you anything over a bare minimum without having a great relationship forming or established. Bottom line is, people like to do business with people they like. What does it take to establish an A+ relationship with customers? Consider just a few of the following items for starters.

  • Call customer back within 1 to 2 hours of their call to you.
  • Kill customer with kindness; don't let questions/objections send you into a tizzy.
  • Follow-up with your customer after each interactive contact.
  • Ask the customer what his or her needs and expectations are...and then listen!
  • Demonstrate an interest in the customer's situation, family, hobbies, etc.
  • Provide an accurate representation of what you propose and how each element of the proposal directly benefits the customer.

2. Pre-plan & organize jobs
Too many contractors still do very little pre-planning. They will create a customer project file, place the general contact information and even include any drawings or prints that they may have developed. Whoever sold the job may spend a little time with the crew foreman and give him some heads-up items and talk a little strategy on how to get in and out the safest and fastest, but that's about it.

To pre-plan is to literally line out a process made up of the steps that will be followed to execute the project. This may or may not be time-sequenced but I would always recommend putting a time line to the process steps. Then, the contractor needs to sit down with the customer and walk through the pre-plan list of events.

Additionally, a complete organization effort needs to be created as well that identifies where crews will enter and leave, parking areas, staging areas for materials and equipment, proof of coordination with other subcontractors and instructions for the continual cleaning of the project site.

3. 'Quarterly' customer updates
Look at your project and conceptually see the job in four fairly equal periods of time or levels of progress. After each "quarter" provide the customer with an update on the progress, any concerns, changes in time expectations, etc. Most general contractors on large jobs provide all of this on a regular basis through a website that their customer can access 24/7 and comes with either live video feed or periodic digital pictures of improvements.

4. Prepare customer for finale
Just before finishing up your project, alert the customer so they can get caught up in a little excitement. Think about the fans of a race when they see the leaders getting ready to break through the finish line tape. No one hangs around with anticipation for the runner who came in last, unless it's a parent of course, but rather, there is a great amount of energy and excitement associated with the finish. Get your customers excited about the job's completion, maybe even dressing it up a little with ribbons and balloons.

5. Follow-up with 'thanks'
After any project, no matter the size, begin giving the customer some form of gift that signifies the level of the project. I've seen contractors give away ball tickets, have barbeque catered to the customer's home or business with invited friends, and even a contractor who sponsored a mini-carnival for the family's kids to enjoy their new expanded driveway with basketball and tennis courts.

Following up also requires the contractor to make personal calls, some by phone and some in person to the customer. Such follow-up resells the feeling that a contractor backs up his work, is proud of his workers, and believes in his level of professionalism.

Now, if you could employee each of the five elements just listed, consistently, do you think your customers would pay you what you think you are worth? We may never go as far as Radiohead and literally market our customers that we do the work first, and you pay us what you want, but we can go a long way toward making the customer better understand why we charge what we charge. You never know, they may just begin to feel like they are getting a great deal, maybe even more than they paid for!

Good luck!

For more information about how to drive greater customer understanding and appreciation for your work contact Brad Humphrey at [email protected]. Or visit Brad at the upcoming World of Concrete in January 2008 in Las Vegas.