Refining the System: Keeping the Execution of Your Business Plan on Track
Once your retail business model has been established, and you have begun to execute the steps critical for success, comes the time to learn from your mistakes. Not long after the start up of my flooring store, I realized that my plan and its execution were very simple and, to some degree, crude. Ongoing change and refinement would be compulsory if I expected to expand the business at a manageable rate.
The most advantageous avenues to refinement sometimes are not initially clear, but failure to explore those that you identify can be detrimental. With the help of my partner, I've found that building a system for every step of the process -- from sale to follow up -- is imperative for consistency and simplicity.
Systems building, complaint handling, labor charges, and unwanted customers are four categories that consume most of my efforts for refinement. You should welcome opportunities to grapple with these aspects of the business on a regular basis. After all, they represent the fundamental basis for cash flow and profit.
As an entrepreneur, one strives to find information that provides useful guidance and wisdom. In my opinion, one of the best available guidance resources is a book by Michael E. Gerber entitled, "The E-Myth."
In this book, he delves into the success of the McDonalds fast-food franchise. Gerber details how the company's founder had the foresight to realize that, to grow his business to the magnitude it has today, he would have to build a system for every step of food preparation so that it would accommodate the lowest common denominator while consistently delivering the same quality, regardless of location or employee. The McDonalds model proves that a system for every phase of production works.
I've found that building a system can be a laborious process, but the benefits will be exponential once the system has been built and put in place. To build a system, consider every step of a flooring sale from start to finish. Then, write them down so that anyone in your operation can follow the instructions.
My list of systems includes details for pricing flooring, a format for measuring that includes a customer profile, an installation checklist, a change-order form, a customer expectations review, and a pricing checklist that includes a consumer confirmation for color and quality of product. As for the installation of products, we insist on craftsmanship that encompasses the manufacturer's printed installation instructions, professionalism starting with appearance and ending with a 10-point checklist, and infinite detail to critical aspects of the project such as designated work zones for cutting, work times, lock-down procedures, and end-of-day cleanup.
Complaint handling can be the most dreaded task of a flooring retailer. No one wants a complaint. But regardless of your quality, I can promise you that everyone gets their share of them. Because complaints are inevitable, I've tried to turn them into opportunities for sales, fortified customer loyalty and long-term marketing.
Often, a retailer is not judged according to his pricing or workmanship, but rather on his ability to respond to a consumer's complaint or concern. Over the years, I have developed a five-point system for responding to complaints. As a retailer, your improvement in this category should emphasize complaint elimination coupled with the most timely possible response.
Complaints often arise at the completion of the project. Remember, there is no time like the present to solve a problem. Listed below are Reggie's Five Cardinal Rules for Handling Complaints.
1. Develop for your installer an installation checklist that must be signed by the consumer upon completion of the project. This step often identifies small issues that can be costly and time consuming to handle if a return trip becomes necessary. Vacuum or clean the installed flooring so that any loose fibers or damage is easily noticed and immediately corrected. Equip your installation staffers with felt pads to be placed on the legs of all moving furniture. Always send a complementary maintenance start-up kit with your installer and have him or her review and demonstrate proper cleaning techniques. If you opt not to inventory the different maintenance products required, you can send your customers to www.1877floorguy.com on the Internet where they can research each brand-specific floor cleaner. Floor protectors are also available through this Web site.
2. Consumers, by nature, tend not to complain enough. Give them every opportunity. We always send our customer an exit survey to complete and return to us. The survey has four questions that relate to our professionalism, service, overall satisfaction, and quality of workmanship. If we don't receive a "very satisfied" or "extremely satisfied" rating in each of these four categories, we call immediately to discuss the client's frustration. All told, 85 percent of our exit surveys are returned.
3. When a consumer phones in with a complaint, return the call with a plan to respond within 24 hours. Never let a complaint sit. The longer it does, the more difficult it will be to resolve. Time is of the essence. Discipline yourself to immediately look at the problem. Often, you'll find that resolution is as simple as reviewing the maintenance procedures with your customer. You will also discover that, because consumers respond positively to expedient service, you frequently may find yourself measuring another of the client's rooms for a future flooring installation.
4. Fix the problem. Listen, respond with a plan and then fix the deficiency -- or get things moving for a manufacturer's inspection. Talk the talk and walk the walk. It's that simple.
5. Collect at the end of every job. Petty complaints will multiply simply because consumers subconsciously look for reasons not to pay. A professional installation with a quality product should be paid in full upon completion. Time will allow your consumer's friends, relatives and neighbors to provide unsolicited comments about the project. If the consumer has not paid, the comments become welcomed advice. If the consumer has paid, the comments are considered unwanted insults to your customer's integrity.
As time passes, you will find that a residential retail flooring business has a low ceiling when it comes to profit margin. Position yourself to compete but, even more important, be sure to charge for every phase of the work.
Most consumers shop product and basic installation, so you must be competitive in these categories. To boost your bottom-line potential, develop endless upgrades supported by features/benefits and photos to help the customer understand the additional cost associated with the upgrade.
Quarter round installation is another good example of an offering that allows you to maximize your labor charges. We quote quarter round installed with just a reverse bevel cut at the end of the molding where it ends at door casings. For an additional charge, we will cut a small return and give the moulding a finished look that few pass on.
Labor truly is your most valuable asset. Retailers buy the same products. The true profit opportunity lies in labor. Learn to maximize your most valuable asset.
As time marches on, you'll undoubtedly work with a customer whom you cannot satisfy, regardless of what you do. The best remedy for this situation is simply not to work for that person. Follow your gut instinct!
Over the years, I've dealt with fewer than five consumers who fall into what I call the "perpetual pessimist" slot. Most of the time during the sale, your gut will identify certain nuances that make such a person undesirable. Whether they are requesting unrealistic feats or are just overly demanding, follow your gut. Let your competition have that business. Perpetual pessimists can be tricky and you easily can fall victim to their ploys. In such instances, get away from them any way that you can.
Years ago, I was taken by a commercial contractor who intentionally refused to pay $10,000 due me. I told him I would spend $10,000 to get $10,000. He offered me $5,000. I declined and pursued him legally.
I called my attorney to see where we stood. He advised me that things were not going well and that I had already run up $10,000 in legal fees. I instructed him to contact the contractor and accept his $5,000 settlement. I also told the attorney that I had no further need of his legal services on this case.
My point is simple: swallow your pride, make your decision and get out for the least costly amount. Then put the ordeal behind you.
Building systems, complaint handling, labor charges, and ridding yourself of unwanted customers should be considered continuing education. Your goal should be to constantly improve in each of these vital categories. This is an inexact science that varies vastly from retailer to retailer. But these four areas can stunt your company's growth if you don't work to improve.
The next article in my series will address pursuit of business growth using marketing and advertising, follow up, location, and pricing. Trust me, it gets easier!