June 2013

Business Building

Make Customers Your Top Priority

By George Hedley

There are lots of ways to make a profit. They include cutting costs, reducing overhead, improving field productivity, accurate estimating, making zero mistakes in the field, and having an excellent training program. All of these will give you a small improvement in your bottom line, but not enough to make a significant difference.

The easiest way to make more money is to create it! Profit starts with revenue. The more profitable revenue, the more profit. Revenue comes from customers. To make more profit, develop more profitable customers. Are customers your No. 1 priority?

Look at your calendar

Think about what really happens every day. Most business owners and project managers spend at least 90 percent of their time doing the work at hand. You multi-task as you manage employees, subcontractors, suppliers and projects. Your only customer contact is during project meetings, bid negotiations, or haggling over change orders, field problems, and schedule updates. You take repeat customers for granted and assume that, if you do a good job, they will put you on the bid list for their next project.

Your calendar doesn’t lie. How much time do you invest creating deep customer relationships versus getting projects built? Do you make time to take your loyal customers to lunch, a ball game, or a round of golf regularly? Just like with your friends and loved ones, building relationships takes lots of quality face time.

The relationship business

Do you have an action plan to convert repeat customers into loyal customers? A customer loyalty program takes concentrated effort and will return big time to your bottom line. You can be a repeat customer of K-Mart or Wal-Mart, but you aren’t loyal as you’ll shop anywhere the products are available. Repeat customers will use your company again if your price is low enough or it is convenient, but they are not loyal. Loyal customers will only use your company, period! Loyalty is based on relationships and trust earned over time.

Once customers perceive your company can handle projects adequately, you can start building relationships with them. Relationships are more powerful than your track record. Think about the time you knew you were low bidder and the best engineer or contractor for a project, but didn’t get awarded the job. You probably lost it based on your competitor’s relationship with the customer. A strong relationship is the best way to improve your competitive advantage. By making repeat and loyal customer relationships a priority, your bottom line will improve as you get jobs based on relationship, more often than price.

The 40% Rule

Customer-focused company owners and managers spend at least 40 percent of their time with customers in face-to-face relationship-building sessions. This includes meals, sporting events, industry meetings, and sitting on boards of community organizations. I am a member of a private golf country club in our community. Almost every time I go to the club, the owner of a large, respected general contractor in our area is there. He always has three guests with him, including architects, engineers, real estate brokers, developers, or his customers. Sometimes, he even is entertaining my customers!

Put customer time into your calendar and make earning revenue a top priority. Develop a customer priority plan. My action plan includes at least two meals and attending an industry event every week with top customers. Add to that one or two golf games or sporting events a month with current or potential customers. By implementing a similar customer action plan, you will see your revenue increase significantly during the next year.

Phone calls don’t count when building relationships. Job meetings don’t count. Doing good work also doesn’t count. The only way to build customer relationships is in a relaxed setting, where you can really get to know the person. Most contractors only have five to 10 major customers who provide them with most of their business. To keep in touch and build relationships with them requires only a small commitment of time and energy. Make a list of these top customers, and make sure you go see them at least every two or three months.

Time is money. Meaningful time with your customers is big money. Remember, doing a good job, quality workmanship, bids, faxes, emails, job meetings, and phone calls don’t count when trying to build relationships. Make it a priority to invest at least 50 percent of your time with customers. This will return more profit than you’ll ever make out in the field with your crews. Rearrange your calendar, put customers first, and watch your bottom line grow!