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May 2009

Surviving a challenging economy through best practices in customer service

Chad Mittleider

Chad Mittleider is owner-operator of Mitts Tractor Works LLC, a Washington-based contractor that provides many services. Mittleider says his Bobcat compact equipment help him provide exceptional customer service by meeting customer expectations for his jobs.

This story is the second part of a series addressing the challenges contractors are facing in this economic environment. In December 2008, as the effects of this recession were starting to impact all sectors of the economy, business owners who use Bobcat® equipment were interviewed and asked to share their insights into the previous year and their plans to keep their businesses viable.

Top of mind for every contractor at the moment is the economy. The greatest concern is making sure that your business survives. While each day seems to bring more bad news, the fact is that many parts of the country have been experiencing an economic slowdown for a while. It’s not impossible for a business to make it through an economic climate like this. In fact, in 2008, some contractors grew their business or had one of the best years they’ve had in some time.

What’s the secret to their success? The way they operate their business. In the opening article of this series, we focused on contractors in Colorado and Minnesota who faced a problem common for any contractor: increased competition in a down market. Low bids come with increased competition, and one of the ways to survive increased competition is to let companies submitting low bids work themselves out of business. Doing a job for less than it is worth costs your business money. Avoiding jobs that are not profitable is a best practice for running a successful business. In this article, we’ll look at some other best practices that can help you keep or gain business when the economy is down.

Contractors who build a good reputation can use their positive image to win work even if they don’t offer the cheapest price. There are a number of ways to accomplish this. Communicating with customers is a simple way to make sure that you’re meeting their expectations.

Communicate: Be kind, be professional

Chad Mittleider and his nephew, Jessie Ottersteter, started Mitts Tractor Works LLC eight years ago and prepare jobsites in the Montesano, Wash., area for construction. The company has never had a down year. The reason? “Our reputation in the area where we work is that if the customer is not happy, we’re going to fix it,” says Mittleider.

In this economy, the customer has all the power because it’s a buyer’s market. Less work put out for bid means more contractors are looking for jobs. Customers will be tempted by low bids, but they don’t have to go with the lowest bid if they see the value of going with a business that provides other types of customer service. Now, more than ever, contractors have to sell themselves and their businesses’ capabilities to potential customers.

Mittleider says that communication with customers is key to creating a good reputation. When bidding on work, he takes customers to previous jobsites so they can see the quality of his work. He meets with customers before he does a job to make sure he understands the expectations. Throughout the job, he stays in constant communication with his customers. “I talk to my customers on a daily basis,” Mittleider says. “Keeping your customers informed is essential to doing good business.”

Communication is also a key to success for Byron Andreas, a second-generation concrete contractor. His father started Robert R. Andreas and Sons General Contractor in the 1940s and most of the company’s business is in residential and commercial flatwork. Based in Cicero, Ill., the company works in the southern suburbs of Chicago. In all of the company’s trucks, Andreas has placed a sign that says “Communication is the key to organization.”

One of the most critical communication points is when Andreas is meeting with a potential customer. Andreas says that due to increased competition, he’s had to sell himself and his business a lot more than in the past, especially on residential jobs. Andreas measures the jobsite with his potential customers and explains the history of his business and the methods they use in construction, such as why he uses rebar instead of wire mesh. Foremen are required to talk with the homeowner, and Andreas retains employees who are willing to communicate with customers. “I only hire polite guys. If I get a bad seed, he’s out of here,” Andreas says.

They’re watching you

Providing good customer service is more important than ever because potential customers have sophisticated ways of checking out contractors. The Web site Angie’s List is a forum for homeowners to post comments about services they receive from contractors. The site does not permit contractors to pay to be listed. A contractor is only added when a homeowner submits a review.

Andreas says that the Web site is popular. He knows because every call into his business is tracked to see how the customer heard about his business. One of the top four ways people become aware of Andreas’ company is through Angie’s List.

While potential customers can check up on contractors online, municipal building departments are also looking at the work contractors perform. Every job that Andreas’ company works on is inspected by the building department. “Our jobs are inspected before we pour the concrete. The building departments in each of the suburbs make sure we have the right gravel down and the rebar is placed correctly,” says Andreas.

One of the other top four ways customers are referred to Andreas is through referrals from these building departments. When these departments see consistent good work out of a contractor, they refer the contractor to residents.

The other top ways that customers find out about Andreas’ business is through the phone book and referrals of previous customers. Whether through the Internet, talking with neighbors or in routine inspections, people are watching your work. Providing good customer service and a finished product of high quality are two practices that build a good reputation, which can lead to business even when the economy is bad.

Last year, Andreas had one of the best years he’d had in some time. Business was so good that he had to hire extra help in September, which is unusual because that is the time of year Andreas’ company is winding down its work season. “People are not building or moving into new homes. They’re taking care of where they are and the reputation we’ve created over our history gets us in the door with people looking to improve their property,” says Andreas.

Anticipate customer needs

Roger Powell, a co-owner of Backyards Only, a residential landscape company in Colorado Springs, Colo., says another way contractors can provide superior customer service is by doing homework to fully anticipate their customers’ needs. Sometimes, customers don’t know what those needs are. The subdivisions in the Colorado Springs area that Powell works in have homeowners’ associations that have design review committees that control the type of landscaping each home in the neighborhood is permitted to have.

According to Powell, many of the homeowners in these neighborhoods are unaware of these regulations when they buy their homes. Powell has familiarized himself with the rules for each neighborhood. This helps him approach customers with a design he knows will be approved. Powell says this eliminates the burden on the homeowner becoming familiar with these regulations and reduces the time getting landscape designs approved by the design review committees. “This has given me an advantage over many other landscapers,” Powell says.

Powell will create a design with a homeowner, but also has standard designs that homeowners can choose from. This way, customers who aren’t sure what type of landscaping they want don’t have to waste time creating a design from scratch.

Contracting is a customer-oriented business. Dealing with customers is not always an easy thing to do, but there are a number of ways to run a business that make interacting with customers simpler. Communicating with a customer before, during and after a project is important for selling your business and abilities, setting and meeting the expectations for the job, and gaining new business through referrals. Good communication with your customers means that your business will be spoken of highly when customers communicate with each other. Customers are researching contractors more than ever, through Web sites and by referrals from friends, neighbors and their local building departments. Finally, anticipating a customer’s needs, especially a need the customer may be unaware of, can make your business an invaluable resource for the customer.

These are just some of the ways other contractors have built a good reputation in their communities. In a down economy, their hard work is paying off through increased business.