Ted Garrison is the author of Strategic Planning for Contractors. As president of Garrison Associates, he is a catalyst for change. As a consultant, author and speaker he works with businesses in the construction industry to grow their business by improving profit margins and increasing productivity. He can be reached at 800.861.0874 or visit www.tedgarrison.com.
What is great customer service? Maybe a more critical question contractors should ask is, "Can I afford to deliver great customer service in the highly competitive construction marketplace?"
Not only is the answer to the second question, "Absolutely!" but great customer service is mandatory if the contractor wants to maximize his financial return.
The first phase of any project is defining it. Therefore, the first step to delivering great customer service is defining that. Simply stated, great customer service is exceeding the client's expectations in all areas of contact. The former CEO of Scandinavian Airlines, Jan Carlzon, explained in his book, Moments of Truth: New Strategies for Today's Customer-Driven Economy, every contact with a customer creates a moment of truth where you either meet the customer's expectations or you don't.
For those in the construction industry, this may be difficult to accept because of the adversarial environment within the industry. However, it offers contractors a great opportunity to differentiate themselves from their competition. While the opportunities are greater in negotiated work, there are still significant opportunities for improved customer service in the highly competitive design-bid-build marketplace.
Rewards for Great Customer Service
Here is an example of a success story: A Delaware road builder bid on a road project and was successful in being awarded the contract. Unfortunately, the excitement quickly waned when the contractor realized he had underbid the project. In order to save the day, the company president directed his people to meet with the city officials and attempt to work with them in any way possible to speed up the project so they could earn the early-completion bonus and survive. The contractor's efforts paid off handsomely.
Not only did the contractor complete the project early and earn the bonus, he actually made a profit before the bonus, despite the low bid. The bonus turned the project into a great financial success, but the best news was yet to come. Other cities began calling his company to have them design-build their next road in order to take advantage of their aggressive schedule. This is a perfect example of a contractor in the competitive bid market having been rewarded for providing great customer service. True, this customer service was driven by the contractor's desperation, but it still shows it works.
The bonus and additional work are obvious benefits, but the reality is that an adversarial environment wastes time and increases costs. Therefore, when the contractor works to minimize the adversarial impact both the contractor and the owner benefit. While there may not be immediate returns because some owners may still be skeptical and maintain barriers to efficiency, a continued adversarial approach by contractors will definitely not improve the situation.
The benefits of increased customer service in negotiated work are virtually limitless. For example, a contractor approached all of his clients and asked if there were any other services they could perform. The contractor's clients developed a long list of additional services. The contractor examined the list and said, "We can do all those things, but we will need to charge an additional 1 percent fee." The clients responded, "Fine."
This contractor, who makes $20 million a year, added 1 percent, or $200,000, in fees to his projects, yet the cost to provide those services was only $18,000. The contractor realized a 1,000 percent profit on this additional work, while making his clients happy. Offering greater customer service created a win-win situation.
How Do You Deliver Great Customer Service?
Great customer service starts with improved communication and collaboration with the client. For many contractors, this requires a paradigmatic shift in thinking. I prefer to use the word client instead of customer because client conveys the meaning of a relationship rather than a simple transaction. In fact, one definition of client is "someone under the protection of." Therefore, it's the contractor's role to protect the client. Often the No. 1 person the contractor must protect the client from is the client.
The process starts with an open dialogue. The contractor must use his expertise to help the client obtain the best value, and this starts by first understanding what the client wants and needs, in other words, defining the project. Unfortunately, this is often where a train wreck occurs. On projects other than design-build jobs, the typical contractor believes it's the architect's or engineer's responsibility to define what needs to be done. From a legal point of view, this may be correct; however, it's a poor business approach. The contractor is often held responsible in the owner's mind when something goes wrong or is unsatisfactory. While the contractor may win in a court of law, the contractor certainly loses in the court of public opinion. It doesn't matter that it's not fair. Instead, contractors must be proactive in providing services the client wants.
Even when architects and engineers do their jobs well, they usually focus on only the bricks and mortar of the project. But true customer service goes beyond that. It includes services and the relationship. Some services are identified within the specs, such as schedule, cleanup and how to submit pay requests or change orders, while others are not identified. For example, in a speculative office building, the owner may need to show the building to a prospective renter; therefore, having the contractor provide a clean gravel walkway into the building might be a service that wasn't specified but would definitely be appreciated.
However, the greatest customer service is simply making the entire process user-friendly. In other words, make the process pleasant for the client. The contractor actually builds a sound relationship with the client this way-this is more important than most people think. Have you ever nailed a project-you finished on time, on budget and with outstanding quality-yet the owner wasn't happy? The sound relationship was missing. There were probably annoyances for the owner that the contractor thought were insignificant.
To understand why relationships in construction are so important, consider the following: In most cases, the client is not qualified to evaluate the contractor on his technical performance. Therefore, when someone asks the owner about the contractor, the referral is based not on technical competence, but on whether the owner likes or dislikes the contractor. Again, this may not seem to be fair, but it is reality. On the other hand, maybe it is fair. In most situations, qualified contractors perform the technical work within a fairly narrow range. Therefore, why isn't it in the owner's best interest to select the contractor with whom it is easiest to work? After all, they have other things they would rather be doing than dealing with the contractor.
The Design-Bid-Build contractors might argue that this is nonsense because all the owner cares about is low price. While public entities may have to select the contractor based on low price, I guarantee they have concerns other than just price. Even bureaucrats don't want to come to work and fight with the contractor every day. Therefore, if you learn to work with them and make their lives easier, they often reciprocate by making your life easier, which results in a cost savings similar to the Delaware road contractor mentioned earlier. Also, many public entities have private corporate executives sitting on their boards. If these executives believe your company is a quality contractor that is easy to work with, they just might give you a call to work on their private projects.
There is no magic bullet. Each client must be treated differently. The only way to learn what they expect is to communicate with them. The contractor is the expert; therefore, the contractor must use his expertise to extract the needs of the client and offer solutions that add greatest value. Some of their requests may cost nothing. For example, it doesn't cost anything to avoid confrontation. Free services should always be provided without hesitation. When requests add costs to the project, the contractor can always ask the owner if he is willing pay extra. You never know; he may say yes.
In the end, great customer service is simply the result of excellent communication and collaboration between the contractor and the client. Learn to listen to your clients' needs and concerns. Each client is unique. Maybe the best way to start the process is to ask the client the following question when you meet him for the first time: "What are your concerns about this project?" That question will get you off on the right foot.
I know a contractor told who asked that question when he met with the client after making the project's short list. The owner spent the entire interview discussing his issues. Not once did the owner mention the contractor's bid or price. Despite being the high bidder, this contractor received the contract. Why? He simply started building the relationship before the project started.
Go forth and build your business by serving your clients.
Construction Business Owner, February 2007