by Tom Grandy
One of the few things in life that you can count on is change. You don’t have to like it, or even embrace it, but it’s sure to happen.
I’m confident many of you are familiar with the book, “Who Moved My Cheese?” by Spencer Johnson. There were four characters: two mice named “Sniff” and “Scurry,” and two little people named “Hem” and “Haw.” The four characters live in a maze (which represents environment) and their activity is to look for cheese (which represents their life’s happiness and success). It’s a wonderful story about the change that takes place when, one day, the cheese has been moved and how the four characters handle it. If you haven’t read it, I strongly suggest you do!
I have noticed a lot of changes and trends over the past 27+ years of providing business training for contractors. However, there are also some things that really haven’t changed all that much. Let’s talk about both.
Changes and Trends
• Flat Rate Pricing – More contractors have made the shift to flat rate pricing. Although the numbers are growing, our industry is still a long way from where the automobile industry is. The auto industry has fully embraced flat rate pricing to the point that it’s difficult, if not impossible, to find a shop of any size that still charges by the hour. Even 25 years into the program I still find 30% to 50% of my class attendees are NOT on flat rate yet. Those who have embraced flat rate pricing are trending more and more away from physical books in favor of programs that work on their iPads and Smartphones.
• Financing – What made Sears famous? Financing! Sears found out that people will buy almost anything if they can pay $25/month…no matter how long it may take to pay it off. With our debt-ridden economy – where most people have huge credit card debt and little cash – offering financing is becoming a must. Offering choice, while providing a way to comfortably pay for it (financing), is increasing the closing rate for companies across the country.
• Technicians’ Pay and Benefits – Our nation runs on the economic principle of supply and demand. When demand is high and supply is low, the price goes up. Our industry has a huge shortage of qualified technicians, so the results are predictable. The pay and benefits required to hire, and retain, technicians has risen substantially. In case you haven’t noticed, the problem is getting worse, not better. Top quality technicians can make a really nice living in our industry; however, things will not change until we, as contractors, force the issue. We must promote working within the trades industry as a viable option for our young people. That means overcoming the loud voices of those who promote college as the only way to get ahead in life. That means getting involved within the local school systems.
• Technology – Technology is changing everything, including the world of contracting. Paper time sheets, verbal dispatching, flat rate pricing, sales presentations, and marketing literature are all leaving paper behind. iPads and smartphones are commonplace. As the cost of technicians increases in both pay and benefits, the cost of non-billable time becomes more and more expensive, as well. The proper use of technology can help minimize that cost.
• Internet – Our customers are becoming better informed each day thanks to the internet. It’s not unusual for potential customers to literally be better informed about equipment, pricing, and discount offers than we are. As top contractors embrace the internet, you will begin to see amazingly informative websites that will educate the customer. Progressive contractors now offer the ability to schedule service calls online. Maintenance agreements are also being promoted, and sold, online. Customers are selecting contractors based on what they read about on sites such as Angie’s List and the contractors’ own personal websites. Most contractors today have a website, but the contractor’s websites of tomorrow will be far more sophisticated, informative, and interactive.
Also, social media has become a critical piece of every businesses marketing program. You don’t have to embrace it personally, but you better have someone on staff who does, otherwise you will be left behind.
• Marketing – I realize this is a topic that will be covered all by itself in another article. Suffice it to say that the days of only relying on the Yellow Pages is rapidly disappearing as contractors embrace the internet and technology.
So what hasn’t changed over the years?
• How Companies Get Started – This has not changed. Nearly all contracting companies are still founded by technicians who used to work for someone else. One day the light bulb goes on and the technician thinks, “They are paying me this much per hour, and the company is charging the customer a huge amount of money. If I started my own company, I could charge that high rate and I’d be rich!” Sound familiar? Well it’s still going on and it’s unlikely to change.
• Labor Pricing – Grandy & Associates, and others, have been providing classes on how to set proper hourly rates for the past 27+ years, and the industry as a whole has not changed. Sure, quality contractors are setting profitable labor rates; but as an industry, we aren’t much different than we were 27+ years ago. The vast number of contractors still set rates based on what everyone else is charging, and we still beat each other to death rather than charge more…so EVERYONE makes money!
• Basic Customer Needs – What the customer wants has not really changed much either. Most customers still want three basic things:
1. Quality work
2. Have contractors do what they said they would do.
3. Have the work completed when they were told it would be done. (Translated, show up on time!
The number one customer complaint is the same as it was 27+ years ago. Most contractors still don’t show up on time! However, contractors who do the above three things, and mix in a bit of customer service, are finding they have more work than they can handle. Providing these things, consistently, costs money. That is why contractors who provide this kind of service, continuously, are normally charging above average hourly rates AND are making money!
