The Commodity Price Trap
Every business is a commodity business in the eyes of your prospective clients. As with any commodity ( take 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 booming years all that was necessary was to do good work, answer the phone and partake of the abundant job opportunities found around every corner. Today the opportunities still exist for contractors willing to embrace change by thinking and acting differently. So how do you get the jobs and still make a reasonable profit in this new economy?
As profit margins drop for contractors it becomes necessary to focus more on what your customers expect and adjust to their expectations.
Here’s 4 steps to avoiding the commodity price trap and succeed:
Step 1 Know what’s really important to your customer.
What are your customer’s needs? Look back through the past several years of projects. Who have been your customers? What do they expect? What neighborhoods do they live in? Where do they shop, worship, play? Who do they socialize and network with? What do they value?
In the early days of my contracting business in New York City I assumed 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 neat and conscientious workman to listen to their concerns and desires.
In return I gave them quality based on my desires, not theirs.
So how do you find out what your customers really want?
It’s quite simple, 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% of the time. Talk only 30%. Make the bulk of the 30% open ended questions about them. Good listening skills are a perfect way to build rapport and trust, step 2 in our formula for success.
Step 2 Build Trust
Take time to build trust and confidence with your prospective customer. 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 leverages your expertise. Organizations are always looking for speakers. Contact your local Rotary Club, Chamber of Commerce, Trade association, or business networking groups.
Step 3 : Network Like Crazy!
As noted above, join your local trade association, 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 the 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.