Tuesday, January 5, 2010

Just Because the Economy is Bad, Don't Change Who You Are

As a restaurant manager in Dayton, OH during the nasty recession of the early 1980’s, Rick Crossman learned a lesson that he applies to his 20-year-old design/build business. In that bad economy, restaurants struggled to stay busy even on Friday and Saturday nights; but there was one restaurant in town that did a brisk business throughout the week. Other restaurants, in spite of promotions and tinkering with their menus, couldn’t get consistent traffic and of course, many failed. The key for the successful restaurant was in providing its customers with predictable quality; with reliably good food and service at a reasonable price – not the lowest price, but a great value for the price.

The analogy applies to the remodeling industry in the current economic downturn. Too often, Crossman says, even a quality contractor will use the tight economy as an excuse to change his system: traveling outside his normal operating area to run any lead, qualified or not; chasing after projects he didn’t sell before the recession; cutting his material specs, or bypassing the permit process to offer a cheaper price. He begins improvising whatever it takes to get the sale--just like the back-of-the-pickup-truck contractors.

Crossman’s company, Archadeck of Southern Fairfield County (CT), serves the middle to upper-middle market. They serve the same customer with the same product they did before the recession, rather than chasing lower-priced projects. “Wherever you’re pigeonholed, stay in that hole,” he says. “Follow your process – don’t think you need to improvise to win. It’s the same customer.”

Crossman seeks to understand who his customer is and why they buy from him. During the first five months of 2009, his consumers’ attitude seemed to be finding out how little they could spend on a project. Then there seemed to be a learning curve as people started to understand how the national economy affected their personal economy. Their purchasing behavior changed from “how much” to “how well” to spend.

Acknowledging that times are tougher, Crossman believes that it’s more important than ever to qualify prospects to ensure that there’s a match with what you offer. Recently he declined to see one prospect because they lived outside his operating area. The wife called back upset that he had refused to come out for a design consultation. After apologizing for unintentionally offending her, he asked the homeowner “If this is a project I can help you with, would you be willing to do it in the winter instead of next spring?” She said yes. That was a buying signal that justified Crossman’s decision to proceed with an initial visit.

Crossman sold that project in spite of the fact that it’s outside his preferred range. But it’s scheduled to be built this winter when there’s no conflict with projects closer to home, and keeping a crew busy during the slow season offsets the disadvantage of the extra travel. But the project he sold will still have solid copper flashing and stainless steel screws, it’ll be designed to the same rigorous structural standards, he’ll provide the same warranty, and he’ll escrow the down payment rather than use it to pay invoices on other projects. His customer will receive the same product and the same service she would have received when times were good. This may be one reason Crossman’s referrals drive the majority of his business – a business which is actually ahead of his 2008 sales, even in the worst economy since the Great Depression.