I’m a firm believer that in the home services market, there are three kinds of customers: cheap, value and “sitting on the fence”. In a nutshell, the plumbing. heating and air conditioning, electrical and roofing market is divided into thirds with one third for each of the aforementioned customer types. Your challenge, should you choose to accept it, is to identify which ones you want to do business with.
Before I go any further, I want to point out something very important: most people think anything “value-priced” is aimed at cheap people. That’s wrong. (And there’s nothing wrong with cheap people, either. Lots of people are cheap and the reasons they’re cheap are many – we’re not going to focus on that.)
My definition of value is one in which the customer sees a proportionate amount of personal worth or “what’s in it for me” in a service/product in relation to the service/product price. In short: you be the most expensive guy in town for new air conditioners, but the homeowner needs to see, touch and feel a proportionate amount of “what’s in it for me” in relation to your price. So if your price is $1500 more than your competitors, you need to give that customer PREMIUM service to such an extent that they want to tell everyone how amazing your company is.
The good news is that if you are already delivering the kinds of things I advocate for here at Home Service Profits (clean trucks, uniforms, booties on your technician’s feet, guarantees, club memberships, free safety inspections and so on) then you don’t have to worry about getting a value customer’s business at all.
And you don’t need to worry about getting a cheap customer’s business because, let’s face it … why would you want a cheapskate as a customer? My experience coaching one of Canada’s leading home service companies for a decade was that cheap customers are put on this earth to drive you crazy. They always ask for discounts. They are always unhappy with the service you provide because they don’t see value. They can’t see value. It’s not embedded into their DNA. For the cheap customer, it is and always will be about getting “the cheapest price”. And the irony is that so many home service companies chase after the cheap customer because they think the lowest price is the only thing that matters!
Value customers are amazing. They are leery of “cheapest price” because they know on a visceral level that if you go cheap, you get cheap. It’s as simple as that.
So for you, the growth process for your business means that you need to focus on the “sitting on the fence” types. They will swing toward cheapest price if you aren’t offering premium service but they will swing to the value side of things if their customer service experience is mind blowing and that consumer buying equation (Benefit over Price equals Value) is answered in their minds.
Here’s some hard and fast rules to remember:
If you’re on time and material, you’re not a premium company
If you don’t offer upfront pricing, you’re not a premium company
If you don’t insist on clean technicians in clean uniforms in clean trucks every day, you’re not a premium company
If you look to generate business by advertising on Kijiji or Craigslist, you’re chasing the cheapest customers possible.
If you don’t offer home protection plans, you are not a value company
If you don’t offer to fix the things a customer isn’t aware of and you just focus on the repair, you’re not a premium company
Don’t get me wrong, you could be all these things and be an honorable, well run company, but you won’t grow your business and you won’t experience the kinds of rewards that come with knowing you are at the top of your market.
So, which customers do you want? Which ones will grow your business? Which ones will help generate wealth for you and your employees?
It’s on you to make the change, if you want to. My experience is that cheap customers are more trouble than they’re worth and that you will actually wind up losing money you could be making with value or “sitting on the fence” customers.