Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Down to Earth
The difference between a successful project and one that causes a lot of headaches often has more to do with what the customer expects.
The difference between a successful project and one that causes a lot of headaches often has more to do with what the customer expects rather than the job that is performed. A key element to producing successful remodeling projects involves controlling customer expectations and ensuring they remain reasonable. That means knowing what the customer expects in advance and explaining why things happen as they do.
Steve Lusk, CGR, CEO of Lusk Building & Remodeling, has had to develop a strong process for controlling expectations. In his San Diego business, referrals account for only about 20% of work, which he says is typical for most area remodelers. As a result, he must continually build trust with new clients and convince them of the quality of his work. That process, he says, begins when the customer first calls the office.
"Because so much of our business is driven by our advertising, we’re very careful about how we qualify customers, and that definitely becomes part of managing their expectations of the project," he says. "We target potential customers that we want to work with and make sure they know how we do business before we meet with them for the first time." After receiving an inquiry and gathering basic information, Lusk sends out a questionnaire. Once it’s returned, Lusk calls the client to determine if he should schedule an appointment.
Lusk uses the phone call for three goals: to hear if the customer has a clear idea of what work he or she wants done, to determine what budget the customer is working with and to describe the company’s design/build process. He also stresses to the customer that he expects to walk away from the meeting with a signed preliminary-design agreement so he can proceed with drawings. "I’m not in the design business," he says. "Unless I can design to their budget, I don’t have a job to build. So I have to give them something that’s constructable. Design is a marketing tool I use to do the remodeling, so I have to be certain I’m working with a realistic, focused client before I see them and sign them to begin the preliminary design."
The meeting is a two-way street. "I’ve learned not to do business with people I don’t like -- period" he says. "When I look back at my damage-control file, I see that problems tend to result from situations where there wasn’t a trust in me or respect for the talents I brought to the job." He adds that he often uses humor during the initial meeting to gauge the client’s ease with him. "If they like and trust me, we’ll get through any problems that arise," he says. "But if they’re too serious and too regimented, then I’m not their guy."
Lusk has developed an allowance system that gives customers great control to ensure that their expectations for these products are met. "The goal is to separate product selections that don’t require major installation time to give the client more control over the purchasing process. It doesn’t matter to me who buys it, and this way they get what they want." In fact, Lusk won’t buy door handles and lock sets, bath accessories, other decorative pieces and major, heavily shopped appliances. "Our customers do the shopping; we don’t," Lusk says.
On products requiring significant installation time, such as tile and cabinets, he provides an allowance for the product’s cost. If the customer’s selection exceeds that allowance, the added cost is put on the final bill plus overhead and profit, which usually is less than the contract’s markup.
Lynn Lusk, his partner/wife and a licensed contractor, shops with customers at their request, walking them through selected suppliers’ showrooms to help select products. "Our attitude is that the ‘big-box’ stores are our showroom because we’re not outwardly making money on the selections," Steve Lusk says. "Most people can choose a toilet, but many have trouble finding the right faucet. Every client is different, so you have to size them up and give them the help they need." For some products, such as shower valves, Lusk uses specific items unless the client objects, and the objection had better be good. "Some products have worked really well for us, and the specific brand names won’t matter to the customer," he says.
On showroom visits, the clients may write the check on the spot if they find what they want, and one in five does, Lusk says. More typically, they tell Lusk what they’ve selected, and he buys it, often at a better price. "We’ll try to save them as much money as possible, but if they want to buy products on their own, we let them," he says. For instance, with a $250 toilet allowance, Lusk will rebate $50 if the client shows a receipt for a $200 toilet. If it’s a $300 toilet, they’ll pay $50 more, and he probably will charge them extra for overhead as contracted. He points out that if they find a $300 toilet that he can buy at a contractor’s price of $250, he counts it as meeting the allowance.
Lusk pays careful attention to what is purchased, and he explains the value of having control over the actual purchase and delivery. "I need that control because ultimately the customer is going to hold me responsible for any problems that occur, even if they’re product-related." For that reason, he uses quality materials even in commodity items. That includes drywall made for ceilings, drywall screws instead of nails, and stainless steel screws on decks. And he is careful to tell customers about each one and the benefits, so they know what he’s using. Such elements exceed expectations, he says, because customers seldom think about those details, but they matter.
"It may seem like small things, and they cost more, but they’re worth it," he says. "Stainless steel deck screws will never rust. So when that engineer who lives next door comes over, he’ll be impressed, and he’ll realize that his own deck’s nails are rusting. Those little details pay off with a more-than-satisfied customer." In fact, he says, customers pay particular attention to three key areas: the front door, the paint job and floor coverings. He puts special care into these areas, although he avoids doing the floor coverings if possible.
Because schedules often become a sticking point with customers, Lusk hands out a printed copy only if it’s requested. Surprisingly, he says, many clients don’t expect one. When they do, he uses Microsoft Project to create it. When delays occur, he updates the schedule and builds in cushions. "We stay on schedule as closely as possible," he says. That’s usually easy to do because San Diego rarely experiences inclement weather. "Our philosophy is to work every day at the project from day one until we’re finished," he says. "We don’t want the customer wondering if we’re showing up some day. They become anxious."
Lusk also works closely with his subcontractors to ensure that they can communicate with clients. "We choose the best subs we can find, and we use the same ones on all projects," he says. "We also make sure we make our money when we sell the job, not when we build it. We don’t beat up the subs on pricing once the job starts. We want them on the same side of the table as we are. That makes it easier to put the job on autopilot. The plane doesn’t crash as much when they’re supporting you."
He also works with the customer at the end of the project to go over the punchlist and ensure that all details are finished to their satisfaction. "Our credo is that we want the customer to be completely happy. That’s our promise," he says. "But to keep that promise, the effort has to start at the first meeting. Exceeding the customer's expectations often means controlling those expectations so they are realistic, which gives us a chance to exceed them."
Lusk Building & Remodeling Inc.