Build It

The end of the experience?

I was just reading an article about Starbuck's recent attempt to counteract the attack of McDonald's and Dunkin' Donuts on their coffee stronghold.  For those of you who don't visit a Starbucks often, I'm talking about Starbucks recent introduction of instant coffee, ready to be made anywhere at any time.

I imagine for those regular Starbuckers, instant coffee seemed like the last thing that Starbucks would put out.  Isn't Starbucks supposed to be about the experience?  About coming to a local coffee shop, hearing the beans being ground, seeing the barista that knows your name and drink from memory?  Is Starbucks really lowering themselves to bulk instant coffee by the pound?

You have to hand it to McDonald's.  They brought the coffee giant down to their level and in some cases, are even beating Starbucks in taste tests.  The Execs over at McDonald's somehow timed their entrance into the specialty coffee market just right to coincide with the drop in the economy.  It seems that it's no longer about perfection and experience.  It's come back to speed and cost.

I tell you that story, to tell you this story...

I met with a Business Development person from an Architecture firm recently.  I asked about her company's value proposition to prospective clients.

I asked her, "Are you going in to these clients saying, 'Yes, we may charge 6% compared to 4% from our competition, but that's because we're better overall, have fewer change orders and offer better design and that's why we're worth the extra 2%."  She answered that that was the old way of doing it and that now all the Owners care about is that extra 2%.  Their firm has had to swallow their pride in their work and get down to fight in the gutter with the lowest bidding architecture firm.

If you're in the AEC space, this is probably a very familiar story right now.  Seems that everywhere I turn companies are having to throw in the towel on experience and overall value in order to just get the work in the door.  Getting business in the opposite way that they're used to.  As much as I hate to say it (and I really do), the price has finally (but not forever) become the great equalizer.

Some day my prints will come...

I have full faith in the fact that one day soon, life will return to normal, value and experience will again be the new black and we can go back to charging normal rates for our services, but it may not be this day.  

The challenge then, is to figure out that if you can't beat 'em, join 'em and how you're going to make money at whatever level you have to stoop to.  In fact, find out how you can use this "once in a lifetime opportunity" to open doors you couldn't open before.  Go back to those clients that haven't worked with you because of your rates and show them you're hungry.  Since value and experience have gone out the window, they're more likely to be looking at anything that comes their way right now. 

 If you can take it on the chin, smile, ask for more and grow your list of clients, you'll come out happier and more profitable on the other side.

Jared Willis

Value of time

I was at a General Contractor's field office the other day, and the white boards in the Conference Room (as usual) were all marked up with meeting notes.

However, the notes were not about best materials placement, or value engineering, they were about saving time.  The board was filled with strategies on how to shave days off the schedule in order to get the project completed faster.  They were not only measuring the days saved by certain measures, but also the days they'd be penalized if they didn't do something correctly leading to a net loss of time on the project.

Concurrently, I'm reading the book "Construction Funding: The Process of Real Estate Development, Appraisal, and Finance, 4th Edition" (which I highly recommend for those that want to know more about how Development actually happens).  The book covers an end-to-end development process from the Developer's point of view.  Reading about some of the extraordinary pressures the developer is under from investors, creditors and lenders regarding time, made me really understand the project's insistence on saving as much time as possible.  The developer's time crunch becomes the GC's time crunch.

The takeaway for you is to remember that when you're selling in construction, the real cost to any project is the cost of time.  You can always find more money to fund your project.  There's always another investor, or getting the bank to lend you more capital, but no amount of money on Earth can buy back a day.  A day lost is simply that.  If you lose 15 iron beams, you can buy more.  If you have to hire another person to get the job done, there's money built in for that.  But there is no way you can buy time.

If you show your clients, especially owners, how what you're doing will save them time (which we all know is equal to money) you'll be talking directly to their primary concern and you'll get their attention.

Jared Willis

Reliability is the key to success

I was recently at a McDonald's in the LAX airport and after enjoying my Quarter Pounder with Cheese, something occurred to me about the success behind places like McDonald's, Starbucks and In-and-Out that I think has a lot to do with any product or service business, including reprographics.

The thought came to me that it's all about reliability of your product and service each time a customer interacts with you.  Consumers crave reliability.  They want to know that they can go to your place of business, for a particular item they know you carry, and that they don't have to worry about the process of buying that thing because they've been treated well at your establishment before and you charged a reasonable price for that thing.

I chose that McDonald's over other (likely healthier) choices in that airport because I knew what the burger would taste like, what I would pay and how I would be treated.  Granted, my choice may not have been the best tasting, cheapest or friendliest option there was, but I knew what to expect and was rewarded.

Consumers Don't Want To Think

I first came across this idea in the great book Selling To The Old Brain.  The authors talk about how people don't really want to think about most decisions we have to make every day.  That if we were forced to weigh the pros and cons of each individual fork in the road, that we would be paralyzed by analysis and never get anything done at all.  Therefore, the brain invents shortcuts to help us get through our day.  

Expectations about service and reliability are these shortcuts.  In order to satisfy my primal hunger need, my brain saw the 6 different eateries that were available to me and quickly calculated the quickest and most reliable way to satisfactorily meet my hunger and pleasure needs.  It saw McDonald's and remembered that I had eaten at countless McDonalds over the years and that there was a very high probability that I could get the same pleasure and hunger satiation that I had in times past.  My brain directed me to eat there and its logic was quickly rewarded with an accurate experience of my expectation.

Now, while my brain will remember this positive experience and save it away for future use, an experience that doesn't match my brain's expectation will start to create doubt in the system.  Doubt that by going to a McDonald's again I will receive a similar satisfactory experience as I had before.  If any one McDonalds screws up my order, or it doesn't taste as I remember or if the price is more than I was expecting, my brain will remember that misfire and may make it more likely that next time I go to Burger King or some other establishment.  Even if that was McDonalds was a rouge establishment, it will have soured part of my memory of that restaurant and cause me to doubt my intuition next time I'm hungry.

Think about this in your own life.  What brands have you trusted for years, at which you then had a bad experience or product and now you are hesitant to trust them again?  If you'd eaten a meal at your favorite restaurant for years and one night (out of 1000) when you go in, there's a hair in your food.  How would that change your view on the restaurant even though that bad experience has an incredibly low percentage chance of happening again?

Reprographers Should Reproduce Reliable Results

Reprographics, at its core, is a service business.  We all sell the same paper; we all have the same inks and trucks and phones so service becomes the only true differentiator.  A customer comes back to you and stays loyal because they expect a certain level of service, product quality and price from you and hopefully they receive it every time.  If they do, they will come back over and over again.  However, if any one of the above three varies too far from the norm, that customer will doubt his own intuition and will likely look elsewhere to get that same happy feeling of trust and reliability back again.

Your customer wants to make an easy decision about using your company by placing you inside of a box where he can get reliable service he doesn't have to think about.  Your business model should be directed to remove inconsistencies in service, quality and pricing.  I'm not saying that you must be the highest quality, best service and cheapest price, but you do need to be consistent in whatever you choose.

If you have any stories that are good examples of having your faith/trust in a company diminished by a poor experience, please leave them in the comments section.  Thanks.

Jared Willis

How Saturn lost my business: A reprographic parable

My 2003 Saturn Vue is in need of repair. 

Calling my semi-local Saturn dealership recently, I told them what my problems were and their answer back was that this seemingly quick fix was going to cost me $800.00.   Now I had my own mechanic look at my car ahead of time and he could tell me what was wrong, but also that this problem had to fixed by the dealer.  He said the whole operation should take the dealer roughly 2 hours.

This frustrated me because I felt that for such a quick task, with relatively little work on the part of the service tech, that $800 amounted to highway robbery.  However, I then remembered that just that week, a client of ours became upset with us after hearing what we were charging for CDs of drawings.  The client felt that since it mostly a computer operation, and that it took almost no time, that our charge was outrageous. 

Aye, There's the Rub

Now if you're a good reprographer, you're probably saying  "Well, the client doesn't understand all the work and costs that go into that CD" or something like that.  In both of these situations, the price of the service caused both clients to say "No thanks".

This little predicament got me thinking about two things mainly:

1. My lack of desire to pay $800 to fix my car just means I won't get it done at that dealership.  It doesn't mean that I don't still have the problem.  However, now I'm going to look for alternative methods for solving my problem.  These may include finding another dealership, using my own mechanic to fix a problem he's not trained for and trying to do the work myself.  At least 2 of those options could potentially put me and my car in danger, especially if the problem was more serious.

2. Not that I have any real experience valuing car services, but I feel that I would have been happy to pay somewhere in the neighborhood of $250.00 to get my car repaired.  Would the dealership have been better off with my $250 instead of not having my $800?  Could they pay their employees at $250?  Would they risk the monetary value of their other services by discounting this one to me?

I think my experience with Saturn and reprographers in the digital age have some similarities, especially when we look at the issue of CD burns.

Reprographers HAVE to get paid for furnishing digital information, whether on CD, over the internet or wherever.  It's a simple fact.  The value of your services HAS to be in the information providing, regardless of the format.  However, clients have been trained to believe that paper is more valuable and they therefore feel more comfortable paying for a physical product that looks voluminous.  The problem here lies in the value gap of our clients.  They simply don't assign the same value to a CD as they do a full set of plans.  

Where do you go from here?

So now you have the reprographer who has to charge basically the same as a full set, contrasted with a client who doesn't see them as equal and feels that you can't charge him the cost of a full set for 15 minutes work.  Where's the middle ground?

Maybe the answer lies in still charging the client a fair amount of money, but reducing your fees to make it seem more palatable.  If you are able to reduce the cost of digital information you will receive a few benefits:

• You'll get the money from the CD burn or download.
• The client will view you as the one place to go for information, in any format.
• You still prop up the value of that digital information; that it has to be paid for.
• You prevent the client from going elsewhere to have his problem fixed.  Because the place that client goes is almost certainly more dangerous for him than just paying you to do it right.

I am definitely not the authority on how to charge for digital services, but I see this "value gap" between clients and reprographers all the time and there has to be someway to meet in the middle.

The one thing I will say with certainty is that you must get paid for your digital information fulfillment because eventually, that will be all there is.  Create value for your services now so you'll be around to provide that value to your clients in the long run.

Jared Willis

Of construction delays and Pepto Bismol

I've been watching a lot of Construction shows recently.  Stuff like Build It Bigger and Colossal Construction.  These shows offer a great inside look at some of the world's biggest construction projects.  In fact, they even profiled the Grand Canyon Overpass project I blogged about a few weeks back.

One thing that has really stood out to me about these shows is the drama they create around project delays.  At a particularly critical junction, the announcer comes on and says something like, "If they can't get this concrete up on the structure before the thunderstorm hits, the project will be delayed and will cost another million dollars to re-attempt."  First of all, I think, 'A million dollar concrete pour?', but when you add in all the labor, materials, schedule delays and other costs, that number is not exaggerated.  In fact, on the Grand Canyon project, they had a concrete event called the "Million Dollar Pour".

And stuff like that is always happening, all the time and with all the trades (although concrete seems to be involved a lot for some reason).  Every time the announcer tells me how much that one screwup costs, I literally get a knot in my stomach and a little heartburn; and it's not even my money on the line.

We know this happens in real life too.  We were just talking to a GC about a new project of theirs that's slated for a $700 million construction budget, and he said that he fully expects the project to go a year longer than projected and another $100 million over budget.  That blew me away.  This guy, who is very knowledgable in construction costs, expects that they'll spend 1/7th of the job cost in overage.

I started this post to talk about communication, but I think the message that has developed here for Reprographic salespeople is that if you're not helping your clients find a way to prevent wasting an entire 1/7th of their job cost overage and loss, you shouldn't even be talking to them.  If I was that developer, I imagine that the only thing I would want to hear about would be how you're going to help me cut down on overage, risk and schedule delay.  I would imagine that minor savings on materials cost that I could get by hammering subs would be pennies compared to savings in workflow, efficiency and delay.

Bring that message to your clients, help them undo those stomach knots and I bet you'll have their ear and their project.

The Biology of Pricing

I'm reading this great book right now called "How We Decide" by Jonah Lehrer.  Jonah basically takes a look at how humans decide anything from a neurological and biological viewpoint.  He helps you understand the science behind why people prefer one thing over another. 

As a Sales Professional, I am finding this book incredibly helpful in dissecting what my clients are thinking, or moreover, HOW they are thinking.  In all honesty, it can give you a bit of mind control over your clients (which of course you should use only for good).

Although I could write hundreds of posts about the information in this book, I want to focus on one part concerning pricing of services.

The Price Anchor

Lehrer talks about this phenomeon called the "anchoring effect" when it comes to numbers and pricing.  The anchoring effect basically states any number shown to a person can have a strong impact on subsequent decisions.  The number can be totally random, but it will stick in someone's brain (anchor) and provide a basis for all other calculations or comparisons in that moment.  This experiment is a great example:

"Daniel Kahneman first demonstrated the anchoring effect in an experiment known as the United Nations game.  He asked people to estimate the percentage of African countries in the United Nations.  Before they guessed, a random number was generated - directly in front of the participants - by spinning a roulette wheel." 

 "As you might imagine, people who saw higher numbers on the roulette wheel generated significantly higher guesses for the percentage of African countries in the United Nations than those who saw lower numbers."

Is your mind blown?  Now put that knowledge in terms of pricing for services.  What happens when you go to buy a car?  Is the MSRP what you should actually pay for that car?  No, it's a starting off point.  It makes whatever the salesperson actually sells you the car for seem like a great deal.  "Well, the MSRP was $20,000.00, but I talked the salesperson down to $15,000.00."  Little do we know that car only cost the dealer $7,000.00 to buy so we didn't make that good of a deal, but that MSRP anchor defined the rest of our thought and value processes about the car.

When you give your clients the price of your services, are you giving them some point of reference?  Their mind needs a starting point, an anchor, in order to determine the value of your offering.  Your challenge is to define that anchor and not let your competition define the start point.  Show the true cost of doing business with you versus the true cost of doing business with your competition and you will make it a much easier decision for your client to choose your services because they will see and understand the value.

The Book

I highly recommend this book for anyone that wants a look into how your clients are constantly evaluating you and what will make them choose you over the other guy.  You can buy the book from Amazon.com here.  Also, Jonah Lehrer has a blog at http://scienceblogs.com/cortex/.  Enjoy.

 

Jared Willis

What happened to the dinosaurs?

Watching my local news tonight, they covered a company called Plastic Logic that makes a digital newspaper reader, kind of like the Kindle for newspapers.  This story was part of a larger piece about the possible demise of the San Francisco Chronicle. 

This got me thinking about how the Chronicle will continue to make money and survive in the future.  If devices like the ones that Plastic Logic is making, as well as the state of the economy, get rid of the paper edition of the Chronicle as we know it, what does the Chronicle become?

My guess is that they figure out how to charge for digital subscriptions because there is still value to the reporting, just no value to the physical paper they produce.  When you really look at it, the paper itself is valueless without the excellent reporting that goes into making a newspaper.  The Chronicle will likely continue as a "content provider" not a newspaper company.  They'll be paid for their information as their product.

Extinction or evolution?

The dinosaurs existed for millions of years on the Earth, and the environment allowed them to grow to massive sizes, massive populations and total control.  After a while, the Earth's environment changed.  Food became more scarce, winters more difficult and then there was that whole meteor thing that was really unpleasant.

But what happened to the dinosaurs?  Did they go extinct?  Some did for sure, but many of them  evolved to fit the current Earth environment.  They turned into birds, or small lizards, or basically smaller versions of themselves (like crocodiles or pygmy Mammoths).  They were the same brand of dinosaur, but had to change and get smaller in order to survive.

What does this mean for the Chronicle and what kind of company they will be after the change, the evolution?

Genetic restructuring

My guess is that companies like the Chronicle (and many, many reprographic companies) will undergo big changes in the way they operate and what they look like.  For instance, newspapers are supported by advertising which requires an entire Ad Department.  If your business model changes to pure subscription-based revenue, you can remove that entire department while maybe keeping the same level of revenue from increased digital subscriptions.

That means the Chronicle could get the same amount of revenue, with lower costs which means more profit.  If the Chronicle does it right, they may have a workforce half the size they do now, reduce their costs dramatically and maintain their revenues and possibly increase them by charging for the information and not having to pay upfront costs for paper production.

Paper vs Paper

These are some of the concerns I've had about reprographics recently.  If we are truly successful in charging for digital content, and the printing continues to reduce significantly, we have to be prepared to adapt to a new business environment and a new business model. 

What will your company look like in 5 years?  How can you set yourself up now for future profits and lower costs?  How many employees will you truly have if plan production reaches new lows?  Will you need the same amount of staff and overhead to manage digital information?

However, I feel the biggest question you face is whether you are the kind of dinosaur that will evolve or go extinct.

Jared Willis

Making Your Own Soap

We had a meeting with a General Contractor today, and a large part of the conversation dealt with this GC's plan to create their own, internal system that will not only manage the RFIs, Change Orders, Accounting packages, Scheduling, Contracts and much more, but also manage and store all project-related documents, essentially eliminating the need for those darned "printers".

I wrote about this back in November, about the desire of many construction companies to become their own source for document management on their projects.  The mindset, I feel, behind most of these desires is that document management is simple.  I believe that they feel there is not much more to document management in Construction than sending files around to different parties on the project.

There's More Than Meets the Eye

To be quite honest, companies like that are over-simplifying the process and steps that go into preparing, organizing and making perfect those documents for immediate use by the GC.  Reprographers go through a lot of pain and suffering to wrap up these complex document processes so that it gets delivered to the end client in a nice pretty bow.

I guess what I'm really trying to say, is that the Construction community should, in my opinion, recognize that everyone has a certain expertise and that it's probably not the best course of action to attempt to do everything yourself.  In the General Contractors case, they are not experts at the individual trades which is why they hire Subcontractors.  Attempting to become experts at every little piece of construction is inefficeint and unprofitable.

So...

The moral here for reprographers is to demonstrate to your clients, always, the full value and hard work that you put into protecting them from document screwups, delays and risk.  Otherwise, they may think that's it's a simple process that anyone could do which means you're nothing special and you can be bid out against your competition.

Be different.  Be valuable.

Jared Willis

My PetSmart Experience

Did you realize, that for $40 a night, you can put your dog up at a "Pet Hotel" inside of a local PetSmart.  This buys your pup a private room, lambskin bed, treats and a TV that views dog-centric material.  It's staffed 24/7 and includes 3 walks a day, play time with other dogs and even a "Bone Booth" that allows worried dog owners to call the PetSmart, and PetSmart will put your dog on the phone so you can talk to them.  

Did you realize that PetSmart also has Doggie Day Care, a Veterinary Clinic, Training rooms and more?  

Now this isn't a thinly veiled ad for PetSmart (although I wouldn't object to them sending me some money), it was something that got me thinking about crafting an experience for your customers that separates you from everyone else.

What does Dog Food have to do with Sales?

PetSmart has to compete with PetCo, PetLand, online sites and a myriad of local pet stores.  Most often, they are likely having to compete on price, like most things viewed as a commodity.  In order to not be treated like dog food, PetSmart has decided to create and entire pet experience to draw you to their stores, more often than any other store.

PetSmart is appealing to the whole pet experience by making themselves the one-stop-shop for all things that have to do with your pet.  As a pet owner, when I look at all the services they provide for my dog in one place, I am far more likely to drive and shop at PetSmart because I feel that if I need it, I can get it there.

By comparison, my local PetCo (which is closer to my house) seems unorganized, cold and uncaring.

Clever Chew Toy Analogy Here

When you get down to it, products are exactly the same at different companies.  In order to gain that edge over your competition, to be their first choice for all their needs, you have to create the whole experience.  Become your clients trusted source for answers, service and support.

To take the PetSmart analogy further, are you providing a place for your client's dogs to stay over the weekend?  A vet clinic?  A playroom?  Do you offer all the services your clients require, in whatever business you are in, that will make them loyal and repeatable customers?

Take a look at your company; from the Customer Service Reps, to the Drivers and on down to your lobby entrance.  Think about how you can use them to develop that sole source, that one-stop-shop for your clients and your business won't go to the dogs.

Jared Willis

P.S. Sorry for the bad dog puns.

Architectural brethren

I wanted to post this quick link to a blog, for Architects, that is warning against dropping your fees just to get work in a down economy because it will devalue the work later on down the line.

Hmmm....doesn't that sound familiar?  Companies dropping rates in order to get work and subsequently messing it up for everyone else?  We're not all that different when you get down to business issues like value:

http://www.bdonline.co.uk/story.asp?storycode=3132638&origin=BDdaily

Jared Willis