With Big Tech Companies Like Amazon and Facebook Launching Services Markets, Competing on Price Is a Race to the Bottom
It seems like every month or so a new major player in the tech world is announcing how it intends to get involved in the home services space.
Late last year, Google announced the ability to book services through Google Home Assistant. This spring, Amazon hired cleaners in Seattle that you can book through its platform. And Facebook recently announced its marketplace is partnering with several other marketplaces to connect consumers with home service businesses.
Related: 7 Ways to Avoid Competing On Price
This is on top of the already robust set of existing marketplaces like HomeAdvisor, Angie's List, Thumbtack and Yelp, and on-demand services like Handy. All this activity means that plumbers, cleaners, landscapers, contractors and other home service businesses are increasingly up against a long list of service providers, many of whom are competing aggressively to do the same work (quality aside) for less money.
Today's consumers are being bombarded by cheaper options when they search for a local painter to make over their tiki-themed basement. What's a small home service business owner to do in this brave new world?
Work with the system, not against it.
In the face of competitive marketplaces and the low-ballers that come with them, it seems there are two options:
1. Focus on winning customers by competing on price -- a race to the bottom.
Competing on price is a race to the bottom. In short, you're reliant on keeping a steady volume of customers coming in the door due to slimming profit margins, and the idea of rebooking customers is secondary. When the focus is on quantity, does the quality of your work suffer? If you're rushed or can't afford to pay experienced techs, the answer is likely yes.
2. Focus on creating customers for life by offering a great service experience.
On the other hand, you can focus on ensuring your customers understand the value you're delivering from the first online interaction they have with your business to the moment they write you a great review for a job well done. The result: You nurture a relationship and become their plumber/painter/cleaner on speed dial.
In other words, you focus on a great end-to-end service experience. You provide high quality work and the service experience you offer before and after you perform that work becomes a competitive advantage in the marketplace, allowing you to price your services accordingly and avoid the race to that bottom on price.
Create customers for life with a quality service experience.
It's important to conduct a lot of interviews in order to better understand customers and their needs. Through conversations with successful business owners and happy consumers we've mapped out the following areas as key to crafting a quality service experience.
1. Make a solid first impression.
Your website, your Google My Business listing, your marketplace profiles -- all of these should be up-to-date and filled to the brim with great customer reviews. Positive reviews allow you to stand out among the cheaper, iffy competition. People are hiring you to come into their homes where safety and peace of mind are top priorities, so prove to them that you're trustworthy and reliable.
2. Speak their language.
Today's consumers want to engage with businesses using whatever tools or mediums are the most familiar to them, and they want to do so quickly. Text, email, phone and receiving work requests from your website -- having all these tools in place helps you connect with busy consumers better than if you only offer a single point of contact.
And this standard of communication should continue throughout your customer's interactions with your business. Offer appointment reminders by email or text; allow them to pay you online so they don't need to run to the bank for cash or checks; and make it easy for them to get in touch with you if they have questions or want to rebook your services.
3. Close the loop.
You've done a great job; the customer is happy and they've paid you on time. But, their service experience isn't over yet! Follow up within an appropriate period of time (a couple days later for a cleaning job, a week later for an air conditioner install) with a quick email and find out if they're happy or if there is a detail they're not satisfied with that you can fix. Once you confirm you have a satisfied customer on your hands, ask them for a review to help you make more solid first impressions.
Related: Don't Be the Cheapest, Be the Best
4. Remember your customer and they'll remember you.
Recently a friend told me she followed up with a plumber about some faulty work, and when he couldn't remember what work he'd done at her house two weeks ago, the plumber's excuse was, "Do you have any idea how many appointments I have?"
That information should be easily accessible on his phone. We have customers who know what they did at a client's place two years ago, including what parts they used, and how much they quoted. People expect personalized experiences like this and the technology exists to provide it.
In the era of the marketplace, technology is your friend.
The successful business owners we talk to don't provide amazing service experiences by sending every email, text and appointment reminder on their own. They're not superhuman, but they're working smarter and more efficiently to work with the system.
In the highly competitive era of the marketplace, every customer interaction counts. You can and should automate many of the details of running your business, so you can be sure nothing is getting missed, no matter how busy you are -- and yes, it can still be tailored for your customers.
After all, if you can automate the routine tasks, then you'll have more time to spend with your customers on the stuff that really matters. Those interactions are much more important to building a brand of trust and leadership in the market than offering the lowest price.