Thursday, September 9, 2010

Giving It Away

"It seems that you keep giving more things to your members," I said. "Do you think remodelers should think of ways to 'give' more and better to their clients too? How do they do this without cutting into their profits?"

"I think every business has byproducts of their service," responded Geoff Graham, president of GuildQuality, which conducts customer surveys for builders and remodelers. "I'm not a big admirer of Henry Ford, but he was a really smart guy.... After he built all these cars, he had all these little chunks of wood, so he started a charcoal business. It's now known as Kingsford Charcoal.

"You end with this thing that you've sold, and you also have this other stuff," Graham continued. "Can you package this other stuff in a way that creates additional value? Some of it, you can charge for. Some you can give away for no other reason than to build goodwill."

In Graham's case, the "other stuff" includes, recently, integrating customer feedback with GuildQuality members' Facebook and Twitter accounts, thus maximizing visibility for the good service they provide. Not only has GQ added such services without cost bumps, but the company has lowered its fees in recent years.

Technology both enables and mandates that kind of change in some industries. Thankfully for GuildQuality -- and for companies like Netflix, whose services strike me recently as infinitely better, at a lower price, than they were a few years ago -- "giving away" more has strengthened the bottom line as well as customer loyalty.

Is Remodeling Different?

We all know that remodelers give away a lot, and that it's not because your cost of doing business is on the decline. Moore's law -- basically, that technology gets better while prices go down -- doesn't typically apply to construction labor, material and overhead costs. And still, you give advice and time to prospects who never hire you. You bid on architects' projects that somebody else builds.

As a homeowner, I plead guilty to having taken advantage of some of this largesse -- but I'll tell you, I've also sometimes wished that you would charge me for your time, to alleviate the guilt I feel for being indecisive or asking for your help without really thinking through the decision I'm contemplating.

My friend, remodeler Greg Antonioli, has some advice. First, his company does not give "free bids." Second, he notes in his latest blog on Remodeling magazine, realize that if you properly estimate and plan your project from the get-go, you can "give away" work that other companies might call change order or "extras." And you can reap the goodwill that will follow.

More than anything, says Greg, the best way to se your company apart is by saying to a client: "No, we should have seen that one coming.... We own this one." How do you afford to donate that? By setting aside funds you would have otherwise spent "on postcards and magazine ads, stuff that returns no value to the people who gave you the money in the first place," Greg says.

So, a question: What stuff have you consciously and cheerfully "given away" lately, remodelers? How did that help or hinder your business?

By the way, I'm giving away an iPad to one person who registers for daily5Remodel. You pay nothing to register for the standard subscription, but don't think I'm just giving it away. I'll ask for your participation and honest feedback, and -- if you're happy so far -- invite you to join the "premium" community too.

Leah Thayer


Geoff said...

Leah - thanks for sharing that story! I believe I read about Ford, Charcoal and Kingsford in Rework. I highly recommend that book to any contrarian business leader.

Paul Lesieur said...

I agree that giving things away like time and expertise benefits no one. I felt that I lost jobs because I gave away too much information, I made my prospect shop when I should have made my prospect buy.

In business value is in what you provide and charge for, not in what you give away in the hope of getting something in return. Paul Lesieur

Doug said...

I give away extras all the time, on every job and am happy to do it with three qualifications: 1.I am confident theat the project is profitable at a level I am comfortable with, 2. Whatever I give will be appreciated by a happy and satisfied customer who will be willing to give me a good referral in the future, 3. In doing so I achieve a better final product for the customer. recent examples: A new HW floor in the kitchen of a project I was remodeling, added square footage in an attic remodel at no extra cost, having a cleaner come in after the project was done, even though we cleaned it pretty well before hand.

DavidC said...

Using Greg's example, isn't fair to say that if you giveaway something and receive sufficient customer appreciation in return you have been compensated? A positive reinforcement of the clients experience with you can translate to a stronger referral or repeat sale.

On the other hand, Paul L. refers to giveaways before the sale that may actually aide the competition.

A lot depends on what you're giving away, when and how. It could be beneficial or detrimental.