Do You REALLY Know Your Customer? I Mean REALLY? (Part 2)
Bill Floyd
Last issue we talked about really knowing your customer, how the Internet has changed the information they need and expect, and how wrapping products up with the correct information makes the contractor's life easier and therefore makes those products a simpler choice when it comes time to purchase. Today we're returning to the ongoing discussion on how important is price?
A video interview we released a while ago with a large contractor had him quoted as saying, "The prices are just the prices. They really don't vary a lot from supplier to supplier." He went on to say that all his risk was in the labor. He said that if items that were promised for delivery on a certain day didn't make it and he had electricians standing around, that's where he was losing real money. Simply put, he really valued service above everything else. (Watch the video) I would argue that this is true. Several surveys that were presented a while ago showed that materials purchased by contractors made up about 33% of the cost of the job. Labor and other overhead was the rest.
When I was a distributor we did business with largest contractor in the city. The reason they chose us was SERVICE. We had a truck at their dock at 7:00 AM with all the material they ordered the afternoon before without fail. They had a good handle on prices and let us make a profit. If they felt what we were charging was getting excessive, they'd call us in to discuss it. But we never were treated unfairly. Did they give us ALL of their business? Of course not. They knew how big we were. They knew if they got a huge job that went bad it could put us out of business. Those went to the big national chain that could serve as a bank for them, and we understood why. They knew that we didn't carry every gear or fixture line they needed. So before we even started, they knew what percentage of their business we were going to get. I dare say the same was true of our competitors. They treated us fairly and we helped them continue to be successful. There wasn't a bigger contractor in the city. They could truly demand rock-bottom prices from almost any supplier and would have gotten them. But they didn't. They were smarter than that. That's why they remained #1 and we grew with them.
Price IS important but nothing to obsess over. If your contractor is a savvy business person he already knows this. If he's not, then teach him or move on to somebody who is teachable and can understand that both parties need to make a profit or the relationship will fail.
Tell us what you think. Email us today: bfloyd@electricsmarts.com
A video interview we released a while ago with a large contractor had him quoted as saying, "The prices are just the prices. They really don't vary a lot from supplier to supplier." He went on to say that all his risk was in the labor. He said that if items that were promised for delivery on a certain day didn't make it and he had electricians standing around, that's where he was losing real money. Simply put, he really valued service above everything else. (Watch the video) I would argue that this is true. Several surveys that were presented a while ago showed that materials purchased by contractors made up about 33% of the cost of the job. Labor and other overhead was the rest.
When I was a distributor we did business with largest contractor in the city. The reason they chose us was SERVICE. We had a truck at their dock at 7:00 AM with all the material they ordered the afternoon before without fail. They had a good handle on prices and let us make a profit. If they felt what we were charging was getting excessive, they'd call us in to discuss it. But we never were treated unfairly. Did they give us ALL of their business? Of course not. They knew how big we were. They knew if they got a huge job that went bad it could put us out of business. Those went to the big national chain that could serve as a bank for them, and we understood why. They knew that we didn't carry every gear or fixture line they needed. So before we even started, they knew what percentage of their business we were going to get. I dare say the same was true of our competitors. They treated us fairly and we helped them continue to be successful. There wasn't a bigger contractor in the city. They could truly demand rock-bottom prices from almost any supplier and would have gotten them. But they didn't. They were smarter than that. That's why they remained #1 and we grew with them.
Price IS important but nothing to obsess over. If your contractor is a savvy business person he already knows this. If he's not, then teach him or move on to somebody who is teachable and can understand that both parties need to make a profit or the relationship will fail.
Tell us what you think. Email us today: bfloyd@electricsmarts.com
