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How to strengthen your business in an economic downturnSeptember 7th, 2022 by
On top of the ongoing labor and material shortages, the U.S. is facing an economic downturn and a potential recession. Understandably, home service professionals are growing concerned about how today’s widespread challenges are impacting their businesses.
While it is important to be prepared and take preventative measures to offset a decline in the market, there are many actions your business can take to feel more in control of your future.
Keep reading to learn more about the state of the industry and the initiatives our community of home builders, remodelers, and home service providers are taking to stabilize and strengthen their businesses in the midst of economic uncertainty.
The current and future state of the market
Near the end of July 2022, we surveyed a selection of GuildQuality and Customer Lobby members about the impending recession. Unsurprisingly, the majority of respondents – 67% to be exact – reported already being negatively impacted by the current state of the economy. On the flip side, only 10% reported a positive impact.
So, what exactly do we mean by a negative or positive impact? According to our survey data, many members are experiencing increased material and labor costs, fewer leads and calls, fewer sales, labor shortages, uncertainty and anxiety within their staff, and more project cancellations.
Although industry-level challenges like labor shortages and rising material costs are rather uncontrollable, our network of home service professionals is taking action to set their businesses up for success.
Actions to Maintain Business
On a high level, remodelers, contractors, and builders are mostly focused on the following: increasing their attention on customer satisfaction (45%), increasing their marketing spend (30%), and devoting more effort to employee training (26%) and hiring (16%). Survey respondents also reported diversifying their services and adapting their business model.
To take things a step further, we spoke with GuildQuality members about specific actions they’re taking that fall under these general initiatives. Here’s what they had to say:
Focus on communication and transparency with customers
Customer satisfaction is a fundamental component of one’s success. Especially in times of economic uncertainty, or when material delays or pricing spikes are expected to occur, proactively communicate with your customers, set clear expectations, and demonstrate your commitment to their happiness.
Bob Fleming, President of Classic Remodeling says, “If you have an honest conversation regarding labor or material delays with customers, 99 out of 100 times the customer will have patience and understanding.”
To ensure a project is priced proportionally to the current cost of materials, some GuildQuality members utilize escalation clauses. The key to avoiding upsetting your customers is transparency. Talk to your leads and customers about the clause right away and make sure they understand exactly how it works. Taking it a step further, Classic Remodeling shows their clients the lumber index to provide a visual explanation as to why an escalation clause is necessary.
If you’re still worried about how your customers may react to a change in price, Hugh Stearns, Owner of Stearns Design Build reported that in his experience, clients are actually surprised that the end cost wasn’t more expensive, given the current market conditions.
As always, asking your customers about their experience with your company is another way to keep the communication door open and learn what you can do to improve your service. It also provides a way for you to follow up with less-than-pleased customers, right any wrongs, and strengthen your relationship with them – as well as your reputation overall.
Increase or expand your marketing efforts
In addition to focusing on your customer’s satisfaction, strategic branding and marketing can improve your reputation, familiarize consumers with your business, and gain market share. During a recession especially, when many businesses are cutting their marketing budgets, your dollars will go further and result in a higher return.
Anna Olivier, President of Jim Olivier’s Home Improvement Company advises that “history has shown that those who quit marketing lose. It’s the easiest thing to cut, but not the best idea. Instead, sell value and keep it positive.”
Social media marketing has become a powerful business tool to engage consumers, gain a following, and reinforce brand identity. Especially in an industry as visually driven as the home improvement industry, TikToks, and Instagram Reels are captivating mediums for potential clients looking to make changes to their homes. Several GuildQuality members, such as Opal Enterprises and House to Home Solutions, are already seeing results from their efforts. Not only are they able to demonstrate the quality of their products live, but they’re also reaching a newer audience: Millennials and even Gen Z.
Tara Dawn, Co-founder at Opal Enterprises, also recommends using Pinterest to promote your business. The platform revolves around inspired visual boards and uses geofencing, giving you the ability to define geographical boundaries to your ads or posts.
The opposite of social media marketing is direct mail marketing. Although the Pandemic certainly intensified the digital-first approach, direct mail can work beautifully, if executed smartly. Many GuildQuality members reported focusing more on increasing return business, in addition to new.
Sending prior customers a piece of mail – whether it’s to wish them Happy Thanksgiving or inform them about a Limited Time Offer – is an excellent way to stay top-of-mind. Although they may not pick up the phone that day, they’ll remember their experience with your business, appreciate your outreach, and be much more likely to reach out to you in the future, when they do need a service.
You can also send direct mail pieces to homeowners who live next to or within the same neighborhood as a current client. Mailers that acknowledge an inconvenience (i.e. “pardon our dust”) or show off a recent project will build rapport with the homeowner and establish your business as one that cares.
Invest in your employees
Many of our members mentioned that there is no need to undercut quality workmanship if you continue coaching your employees. Developing skilled workers within your organization eliminates the time and energy allotted to looking for new hires, especially with the ongoing labor shortage.
Again, sending surveys to customers with questions specifically about different departments or individual team members will help you identify who needs more training and who may be considered for a promotion, or at the very least, deserve special recognition.
And finally, another way to strengthen your business internally is by checking in with your team on a regular basis. Send an Employee Net Promoter Score (eNPS) survey to learn how valued they feel and determine how loyal they are to your business. This will help you predict future turnover and make improvements to your processes or management style.
Don’t be afraid to adapt your business model
Sometimes the economic environment calls for change. It is important to take the data you receive, analyze it, and adapt your practices accordingly. Remember, consumers today have access to infinite options online, which means they are going to choose a business that meets their needs at that exact moment.
During a recession, consumers often become more focused on staying within or under budget and saving money where they can. Knowing this, Greg McCall, Co-Owner of McCall Homes, shared that during the last recession, he shifted his focus toward the business’s more affordable services. Today, it may be smart to diversify your services and product offerings – within reason – to appeal to a wider audience and increase the number of new leads.
Although there are more sales and marketing tactics beyond what we’ve outlined, we encourage you to try at least one of our members’ ideas! These businesses have survived past recessions, a Pandemic, and more, which is why we believe their advice is sound.
If you’re interested in sending customer or lead surveys or direct mail or email campaigns, GuildQuality and Customer Lobby (our sister company) can help.
Over 15,000 professionals have trusted GuildQuality’s surveying and performance reporting to get data-driven, comment-rich, actionable feedback about the quality of their service. We offer both customer and lead surveying, allowing you to identify your strengths and weaknesses, as well as your shining employees and teams, throughout the entire customer lifecycle.
Customer Lobby, on the other hand, focuses on return business through email and direct marketing. Customer Lobby tracks your history with every customer and uses that data to identify who is most likely to respond to outreach from your business. As a result, you’re communicating with the hottest leads at the right time, every time, and strengthening your relationship with them even when you’re not directly working with them.
To learn more about either, email our Communications Team at firstname.lastname@example.org.