The value of the independent is worth every dollar

 

BY GREG NIEMI

guest writer

 

The recession has pressured many contractors into thinking that homeowners are only hiring the lowest bidder for plumbing, heating, cooling and electrical home services. This is not true! We do know, however, that the competition for business has increased as others have entered the market. Competition has also driven consolidators (e.g., national service companies, utilities and big box retailers) to seize the opportunity to buy out contractors who are burned out and panicked about what their futures hold.

Under these market circumstances, service can and, most likely, will suffer, leaving customers with a bad impression of our industry. Where does that leave high performing, reliable, independent residential service contractors? It puts you in a great position to strap on your cape and be the hero in your marketplace. Save the day and win customer loyalty by bringing value through their front door.

As president and ceo of Nexstar® Network, I have the privilege of serving hundreds of independent home service companies across the continent; providing experienced coaches, surefire systems and incredible peer connections to help them lead and grow their businesses. One of the ways we help them do that is by teaching one of the founding principles of our organization: Build your business around quality and value, not by trying to be the low-price leader.

Here is some good news for the independents. According to Web Visible, 83% of consumers choose to patronize a small, local independent business over a larger chain. Consumers are smart enough to know that much of the money they spend stays in their community in the form of employee wages, vendor services and more. They like to work with independent contractors who service their neighborhood, and they prefer family-owned and operated businesses. The Business Alliance for Local Living Economies estimates that as much as 70 cents of every dollar spent locally stays in the community. Also, a poll released by Pew Research Center, dated May 5, 2010, showed that the public has general dissatisfaction with large corporations, which score in the low 20s and 30s.

It’s no secret. The recent rise of the large “commodity” service players has shaken some longstanding beliefs among independent home service contractors. Have you questioned yourself by asking “doesn’t quality and loyalty mean anything anymore?” It does. Be absolutely certain of this.

Selling the value of your service may be trickier today than it was just two years ago. Now, thanks to the Internet and social media, each customer is more educated than ever before, and they’re looking to be impressed before they part with their hard-earned money. But remember, when they walk in the door customers have no idea what a job is going to cost. All they really want is to be treated with respect and to know that they are getting the greatest value for their money. So, instead of painfully slashing your price, increase customers’ confidence and reduce the risk factor in their minds by giving them the assurance of your value. Wow them with a 100% satisfaction guarantee or an extended or lifetime warranty.

Home maintenance agreements with a big utility company may seem attractive to some homeowners because the agreements are inexpensive, and because the homeowner knows that the utility will remain in business. At the same time, consumers really don’t like paying their utility bills; most homeowners do not want to give any more of their money to their utility company than they have to.

Consumers know who’s on top in their marketplace; if you’ve worked hard to stay on top by delivering value, don’t make a knee jerk move! Hold true to your service commitment. The independent is and will continue to be a highly valued service provider for the foreseeable future. Don’t slash prices, don’t cut corners on customer service and don’t be panicked to sell your business. Well-run, successful companies, whether they are independent or not, will always have an exit strategy, because they will always be attractive for others to buy. Which begs the question, Why would you want to sell your well-built, highly profitable company when market prices are devalued? When you’re a market leader, there’s always a market for you.

Training is the best way to assure your value and business sustainability, and it goes far beyond requiring techs to wear shoe covers. Begin by asking yourself these questions:

1. What new training and customer service processes have you introduced in your company to create more value with customers? What new marketing strategies have you implemented to communicate your value — to your existing base of customers as well as to new customers?

2. Are you 100% sure that your employees are using the skills they learned in training in the field with every customer? Are you following up to make sure that they are doing what you expect?

3. Have you downgraded company employees who are unwilling or unable to provide value in excess of price?

4. Are you doing all you can as a company to create value far in excess of your selling prices?
If you answered no to any of the above questions, start there before you print new price sheets and succumb to the siren call of “a price cut.”

At Nexstar, we train members with the Nexstar Service System®. It takes the company and all employees through the entire customer care process from the incoming call to scheduling, arrival at the home, greeting, performance and the final step of assuring the complete satisfaction of the customer. We know that, in these difficult economic times, consumers are more stressed, and they’re finicky. Their word of mouth means more now than ever before, and it can make or break you, so the better your customer service the more positive their word of mouth will be.

Your single best marketing tool is your technicians. They have the power to present and strengthen your image and to build value. They have influence over your repeat and referral rate, and repeat and referral business is the best business you can get.

In addition to great marketing and business savvy, a fierce commitment to customer service took Nexstar member Horizon Services, a plumbing and hvac home service company in the Wilmington, Del., area from $1.2 million to $43 million in revenues within 14 years.

Exemplary customer service also built value in the eyes of Frank & Lindy Plumbing & Heating customers in Peekskill, New York, leading owner Bill Raymond and his company to the No. 1 position on Phc News’ list of Top 20 Contractors of 2010.

Nexstar remains committed to the independent that desires to remain independent. By design, we are member-owned, which means that we are not beholding to any other parent organization of any kind, so we’re able to train, coach and support our members and remain true to our focus on the success of the independent contractor. Don’t let anyone fool you; the future looks bright, so seize your marketplace by building value and being the local, independent market leader of choice.

Greg Niemi is president and CEO of Nexstar® Network, a business development and best practices organization that provides business training, systems and support to independent home service providers in the plumbing, electrical and HVAC trades. Nexstar members get rapid results, guided by experienced coaches, surefire systems and incredible peer connections. For more information, visit www.nexstarnetwork.com.