RANKING AND BALANCING CUSTOMERS
Part of the process of quickly moving from surviving to thriving in your painting business requires that you be selective in who you work for.
Not all customers are created equal. Learning this principle was a 'light bulb' moment for me, after years of trying to give every customer my best, every time. With a bias towards wanting to be a perfectionist, combined with a desire to treat everyone equally, it was a tough process for me to let go and recognize the need to optimize the service I provided according to the quality of the customer.
It is easier to change yourself than to try and change your prospects and clients to fit what you want to provide. Focus on what you can control. Focus on your strengths. Focus on results.
A little backstory...
Six years ago, at the peak of the Great Recession, I found myself in a tight spot. We were expecting our first child. We had just moved to a beautiful house in a paradise-like setting. In many ways life was great. But there were many challenges too. Accessing credit at that time was next to impossible. Cash flow was very tight. So tight I remember not having parking money sometimes on our many visits to the hospital. I had to redecorate our new family home. I was fortunate to have lots of work, but some of it was far out of town making for long days. Some of the work over-lapped and it was very stressful trying to juggle the schedules, turn over my cash, spend time at home with my young family, and so on.
In particular, I had three beautiful custom homes to paint at the same time, mostly by myself. All three were excellent projects. One was for a private home owner. It was a simple house right on the Canada/USA border in Osoyoos. The project was immaculately clean. The house was empty during the painting. The project was straight forward. It paid well. They also agreed to use Farrow & Paint for the clean zero VOC properties and beautiful aesthetic finish. So even the paint was enjoyable to apply. Payment was prompt. It was basically a dream job.
The other custom house was also on the border but an hour away in the sticks. It was for a very reputable builder I had been trying to get in with for years. I was hired to prime the interior and finish the ceilings. It grew into a complete paint job, built-in furniture priming and painting throughout the house, beautiful earth plastering of the entire lower floor, and wood staining of all trim, doors, shelving, etc. It was for affluent clients that were super nice to deal with and had a good budget for interior finishing. The job grew 10 fold from the original estimate. It also spec'd beautiful Farrow & Ball paint. It too was basically a dream job.
The third custom home was also on the International border, up near Anarchist Summit above Osoyoos. It was for my favourite builder who built exquisite homes and was the definition of professional. He was very loyal and sent me repeat work, never tendering the painting out (as far as I know). This home was also very satisfying to work on as half of it featured beautiful faux-finish application, to complement the breathtaking views.
So you can see how I was stretching myself a little thin. Running all over the country side trying to please everybody and keep the cash turning over. Extremely grateful for all this great work in a tough economic climate, while at the same time wishing to be at home more with my new baby and my wife. Part of my problem was not respecting my own capacity, and it was threatening to bring it all down on top of me. But there was something else going on here too. And that is what the point of this article is about...
What I ended up doing was giving my best service to the home owner who was acting as his own General Contractor because he had cash in hand and was on site everyday and was basically the 'squeaky wheel'. The next project to get my full attention was the builder whose project grew 1000%. The jobsite and management was not very organized and communication wasn't as good as it should have been. Some expectations were not realistic and I was getting so deep into the job that I had to bend over backwards to keep them happy. It made it difficult to stand up for myself. The long time loyal builder who paid well, on time and was realistic and patient - well, he got what was left over. Sadly I felt like I could get away with it because of the equity I had built with him. But looking back, this was the worst way I could have handled this whole situation.
Somewhere over the years I had read about the principle of ranking customers. 'A' level customers get your A level service. 'B' level customers get B level service. 'C' level customers get your left over service. 'D' level customers are invited to move up to C level, or they are referred to other companies, if not dumped all-together. It sounds cruel but, your D customers often demand A level service while not bringing much, if any, benefit to your business. In fact, they can cause you to loose your A customers. Your A customers don't deserve your C or D level service. In the story above that is exactly what happened. Even though all 3 jobs were great jobs, they were not equal customers. That home owner/builder was very happy in the end but he will likely never hire me again. The disorganized custom home builder paid me out at the end of the job but there seemed to be some hard feelings over the way things progressed and I was not hired again (they constantly had new trades people for each project). The loyal builder was very happy with our work and we continued to do all his projects but that particular job was extremely stressful for me to try and complete on time. I risked irritating and losing my best customer by prioritizing two other customers who never hired me again. Bad move.
Recently I've moved and started a new painting business. And as I build a new stable of customers I'm trying to be aware of what type of customers I'm choosing to work for. In the start-up mode of a new venture you just need customers, any customers. But the sooner you can get close to capacity, the sooner you need to become selective about who you work for so that you can get out of survival mode and into success mode. Part of this is ranking your customers and trying to match your level of service. For me, the quality of the work is generally non-negotiable. I own my work and my reputation is all I have. I can't afford quality lapses, recalls, or unhappy customers. So service level might involve wait times, completion times, pricing, payment terms, coating selection, process, etc.
But I've just recently noticed another thing to consider beyond ranking customers, and that is balancing customer mix. Right now I have a few A level customers but I have to be conscious of how I allocate resources to them. One is a high-profit, high volume customer but payment terms are long. If I focussed all my service on his projects it would put extreme pressure on my cash flow at this stage of y business, and it would be risky to have all my eggs in one basket. I have another customer that is high profit, quick paying and offers steady work, but the jobs are smaller. This is a great customer but not an ideal business builder because the jobs are very fussy and small one-painter projects. Another A customer sends me really enjoyable artistic finish plastering jobs. So I'm learning the importance of having a variety of A level customers - some that help build your business, some that help turn your cash over, some that offer high than normal profits you can invest in growing your business, and some that are just plain fun.
What makes an ideal 'A' customer for you will depend on your own situation, personality and priorities. Being intentional about who you work for can help you run a smooth business.
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