The Importance of Establishing Customer Expectations
Most anyone sho was trained in this business was taught at one point or another that, “the customer is always right.” Can’t you just hear it now, one of your first managers telling you that as you stocked shelves and helped customers in the store? I’m sure it made sense at the time and has provided a basis for a customer service philosophy that drives many a good business. But, let’s face it. The tired old saying is wrong. The customer isn’t always right. In matters of trying to keep a customer happy, it is certainly okay to give them the leverage of being right more often than not if it helps earn their business. But sometimes, the customer is so wrong that it doesn’t make business sense for you to work with them. If you have a customer like this, it’s okay to fire them, but only if that relationship can’t be salvaged.
The best way to avoid having to cut a customer loose is to establish expectations from the beginning. This includes the biggest expectation that a customer probably has: Price. A simple math equation can help avoid a lot of potential problems with customers. Keep this situation in mind and I bet you will see that you will ease a lot of customer tension on upcoming deck project sales.
I use a square-foot formula to calculate how much a deck is going to cost. As a builder, I don’t have the luxury of going back to a customer and telling them that I miscalculated something and it’s going to cost more than what I estimated. I can avoid such situations because I always refer to the same formula when providing estimates. For example, if I were to build a 300 square-foot cedar deck with aluminum railings, I would take 300 (size) times 53 (multiplier). Each market is different, so you will have to figure out your own multiplier. For this example deck, I would charge $15,900, or $53 per square foot to build it. I then take that answer and multiply it by 0.45. So, the cost for materials would be $7,155. At least that’s how I’d start out the estimate conversation with the homeowner. If I take that total, and divide it by 300, then materials cost is $23.85 per square foot. I know that the real cost on that is probably around $20, but I’ve purposely built in extra to help develop the appropriate expectation.
I tell the customer that the deck I’m building costs $15,900 and I’ll never come to you and ask for money throughout the project even if there are unexpected costs. Why? Because the costs are already built in. I know that adjustments may be made, but when they are, neither of us has to worry because the cost of those adjustments are already covered.
If the customer decides to build on his own, then he has that $23.85 budget in mind, and it’s there if he needs it. He may not use it all, but it’s there if he makes a mistake. Later on in the building process, he might find that he’s short a post or there wasn’t quite enough railing. But if he runs into that kind of issue, he’s still below the original estimate.
If you don’t already have a formula figured out, you should. Just take 10 decks from your files, and add up the square footage and divide it into how much it cost per square foot. But remember that deck math is a little different than the math you learned in school. 10 times 10 is 100, but 10 times nine is also 100 since you can’t buy 9′ boards.
Now, you have a formula for providing deck estimates that will take the tension out of any strained customer relationship. When that customer comes in and is asking for that extra part for free, (and every lumberyard has had this happen) then I can pull up that original document and show him that he still hasn’t even reached the original budget for materials.
It all comes down to one of my favorite philosophies for building a deck: The best way to know how much a deck is going to cost is to add up your receipts when you’re done. By over-estimating instead of shooting for the lowest number to get the business, you are establishing expectations in the beginning that just may salvage a customer relationship when the time comes.
I also like to use the analogy of a road trip vacation. You know how many miles you’ll drive, you know how much gas costs and what your gas mileage is. What you don’t know are things that may come up along the way, like a repair cost. By using a safe formula, (space times material price), you should have a steady resource to use for every transaction.
There is no perfect way to build a deck, of course. If you’re selling materials, you have no idea how those materials will be treated and utilized once they leave your lumberyard. By establishing reasonable expectations in the beginning of the relationship you have a documented plan that will allow you to show them what the original estimated cost was agreed to be, and how they likely haven’t yet reached that cost. It will feel great to say, when a customer is upset, that “you’re still under budget!”