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View Full Version : i found a way to eliminate price shoppers from the phone book



huggytree
07-19-2010, 09:48 PM
about 8 months ago i changed all my phone book ads.....they now all read 'we do it right the first time' as the main theme...

i very rarely get phone book calls anymore....sometimes i got a couple a day, but typically a call or 2 a week on average...almost all were price shopping and id almost never get the jobs.

now when i get a phone book call there's a 50 percent chance ill get the job..a price shopper doesnt choose me because i sound too expensive....but the few people who want it right call me.

i looked at my phone book sales and they are the same as last year...(not good, but the same)

do i ever get what i put into the phone book back? not really...i get close to breakeven at best...definately Far, Far away from actual profit....but at least now i dont get calls wasting my time...almost all my calls are possible customers and not price shoppers.

i strongly recommend to all of you to try something similar in your field if you have price shopping problems...sell to the Quality customer.

cbscreative
07-20-2010, 12:23 PM
Dave, I think this applies to a lot more than just the phone book since most businesses no longer need the phone book at all. Your biz is probably one of the last holdouts where phone book ads are still pretty much needed, but as you stated, even then the ROI is minimal.

Your "filtering" would not apply to every business for sure, but I confess to doing the same thing. Although product marketing can and does apply this same principle, it is especially useful to service businesses. In both our businesses, there are "average" providers that fight like dogs for any scraps they can get. Then there are those who hold themselves to a higher standard. For us not to market in such a way that repels price shoppers would cause a serious waste of time.

I'll take this discussion to the next level. What happens if the wrong person gets through our defenses? Policies are the answer. In your case, charging for a quote might work. It's funny to me that so many contractors do free estimates while the kings of cheap (HD and Lowes) charge a fee to have an installer take measurements to provide a quote. It's a low fee, but still a fee.

Some people would consider it strange to deliberately repel customers (or to fire them). But I think you and I are on the same page knowing that some customers are better to inflict on your cheap competitors. Both quality and cheap providers are needed to make the economy work because there are both kinds of customers. All we're doing is matching our service to the kinds of people who appreciate the difference. Cheap customers could never be happy with us, so it makes sense to send signals that you are incompatible with their needs.

It's very rare that I have to fire a client because the marketing and policies help screen them in advance. One of the best revelations that any business owner can have is to realize that "everyone" is NOT your target customer. Identifying who is and targeting strategically is good for business.

huggytree
07-20-2010, 08:53 PM
i also screen them when they call...i ask lots of questions and listen to how they respond...anything seems 'cheap' and i throw them a rough price...its been a while since i even had to do that...almost every phone call is a referral and a job waiting for me...

i was referred by a friend to a new customer today...she went with a stranger because i was $7 more per hour.....the total job will be 2-3 hours...for $14-21 more she could have a referred plumber...instead she's rolling the dice to save $14-21.....i warned her that some plumbers work 1/2 speed....she couldnt see past $7 less ...these are the types of customers that arent for me....they see no value, just price....

Harold Mansfield
07-20-2010, 10:56 PM
I'm with you this one Dave 100 percent ( strange I can't use the percent sign) .

This was brought up in another thread and I stated that I get better calls and better customers the more I change my copy to be direct and to the point, rather than trying to be personable.

I think a lot of people try to be everything to everybody and I have never seen any company pull that off. You find your market and stay on them and some people..many people appreciate getting to the point.

You can name any major corporation in the world and none of them are everything to everybody, nor does their advertising appeal to everyone, or their marketing speak to everyone.

Like we used to say growing up, "You gotta get in where you fit in".

billbenson
07-21-2010, 03:07 PM
I'm with you this one Dave 100 percent ( strange I can't use the percent sign) .


I think what you are getting is the ascii character for the percent sign. VG is aware of the problem.

TravisPetelle
07-23-2010, 12:01 PM
Here's a thought. Stop using phone book ads. The ROI on those things are horrible even with the best copy. You can invest that couple thousand dollars on good mailing campaigns and see much higher returns.

Like you said, when you get a phone book call, it's more then likely a price shopper. One of the first thing I get rid of in every business I consult is price shoppers. You don't want them. I know you might be thinking "this guy is an idiot, of course I want new customers." Price shoppers in most cases are not going to be loyal customers, they aren't going to return to your business for more because they are always going to be looking for that lower price. And there will always be someone that will be offering lower prices...if you are the lowest priced company in your industry, that needs to change now.

Back to the point though, you need to focus your budget on customers that offer a high LTV (lifetime value). Price shoppers offer a one in and one out buyer. That's the most expensive customer you will find. Take that phone book ad money and invest in a direct mail campaign offering your previous clients a free check up of their entire plumbing system. Get them thinking your name again. Once in the door start upselling something you could do for them right that second...or offer a referral program to them.

But, as you said targeting your ideal customers more is always a formula for success. So if you have to do phone book ads, then don't go for everybody.

Harold Mansfield
07-23-2010, 12:12 PM
I don't know Travis...unless I have a recommendation from a friend or know a plumber personally, I am still more likely to look in the phone book for a local guy. Usually when people call a plumber it's an emergency or something of dire nature. If you are looking for that emergency work, I still the think the phone book is a good place to be. Especially if it's not loosing you any money.

The other side is home improvements, construction and upgrades which would seem to take a different type of marketing where you would likely want to discourage price shoppers.
I think there is more than one type of client because there is more than one type of work...therefore multiple ways to market to attract the different clients.

I don't know anything about plumbing so this is just my opinion of course.

Steve B
07-24-2010, 05:29 AM
Hear that Wal-Mart - you need to change your whole pricing strategy. While, the low price strategy is hard to pull off, for some businesses, being the low price option can be very profitable.

Ironically, the only thing that has performed more poorly for me than phone book ads has been direct-mail campaigns. I've experimented with them several times, in several ways, and it rarely has a postive ROI.

Business Attorney
07-24-2010, 01:08 PM
Hear that Wal-Mart - you need to change your whole pricing strategy.

I don't think Dave said that the low price strategy can't work. I think there is room for low price strategies in nearly business, even in medicine and law. The point is that seeking, or even accepting, low priced business is not a good idea for most businesses.

Wal-Mart is successful because its whole business is focused on being the low price leader. They squeeze their vendors for price concessions and terms, they pay low wages, their stores are no-frills, they have state-of-the-art supply chain management, etc... If a local store tries to compete with Wal-Mart for the low cost customer, they will almost always fail at the attempt because they can't get either the margins or the volume that Wal-Mart can.

Other businesses can go after the price shoppers in much the same way - wring every possible inefficiency out of the business processes; look for tasks that can be standardized; and seek high volume tasks where the cost of standardization can be recouped over and over.

The same discount structure can be found in the legal profession. Collection attorneys can routinely file suit over a $200 unpaid utility bill because a secretary can simply push a button and generate all the necessary documents for hundreds of similar cases from a single electronic file received from the utility. Services like LegalZoom can prepare basic documents because they have broken the documents down into simple questions that the consumer answers on his own without getting any personal input from any attorney. Attorneys that handle house closings for a few hundred dollars each have experienced secretaries or possibly paralegals who do all the work, including handling most of the personal contact with the client. All of those services have a place for people who are price sensitive and have matters that fit the standardized profile that those services are designed for.

In the legal field, I find price shoppers generally fall into 2 categories. The easy-to-handle category consists of people whose matters really do fit the standardized profile. I simply point them in the general direction of finding an appropriate service provider and sometimes even make a referral to a more appropriate attorney. The other category are people who have matters that do not fit the mold of the discount providers but expect to pay a comparable fee. Those people are never going to be happy because their expectations are not reasonable.

huggytree
07-24-2010, 10:10 PM
what kind of profit margin does walmart work off of? 2 percent? thats my guess

when you have millions of employee's 2 percent works....but when you have 1 or 100 than 2 percent is just crazy..i do 10 percent on new homes and feel like thats crazy (i get out bid every time at 10 percent right now)...i like 20-30 percent...once in a while i make 40 percent +

i feel i have to be in the phone book for existing customers to find me..if they lose the phone # how do they locate me...the internet is how alot of them would handle that, but not all....because my business phone is a cell phone i dont get a free listing ...since i have to pay for it i just pay a bit more and do a small ad....i may break even every year at best...i do get jobs

the local mini phone book does much better...there's only 5 plumbers...last year i quadrupled my investment...i dont like paying a 25 percent finders fee, but i can live with it....a 10 percent finders fee is what i feel any investment should be...i just went to a 1/2 page ad in that local mini phone book...it was $200 more and should put me first...it gives me room for a photo of myself and a awesome testimonial from a local customer who used me 5x now....

i have an update from that phone number i bought off another plumbing company who went under...i paid $750 for it and in 4 months am up to $15,000 from it...i have at least 1 more job sold, so i know it will go over $20,000....i still get 1-3 calls a month off that phone line....he was a low priced plumber, so many of the calls are cheap customers..but about 1/2 of them use me...no one seems to mind at all that im not him....they trust me when i say he was a friend and trained me....price is the main issue with the 50 percent that go elsewhere...i screen the customers heavily because of this....if they bring up money at all i give them a price over the phone...

Steve B
07-25-2010, 08:52 AM
David - my comment wasn't directed at Dave. It was directed at the statement above from Travis that "if you are the lowest priced company in your industry, that needs to change now." Obviously a low price strategy can work well for some. I guess my sarcasm doesn't come off as clearly on-line as it does in my head.

Spider
07-25-2010, 09:45 AM
I think the "if you are the lowest priced company in your industry, that needs to change now" strategy is rather limiting, too. I guess it's fine if you want to remain a small retail business, but all large businesses that I can think of have to bid for work and the lowest bidder usually gets the job. Do you suppose Boeing gets every order for passenger airliners or might they have to beat Airbus on price to win an order? Do you think IBM gets every computer order out there, or might they have to compete on price with other computer companies? And every building of any size in the world is determined on competitive tender.

In fact, I think, if you add up all the business in the world that is won on price against all the business that is won by other criteria, you will find a good 80 - 90 percent of the world's economy goes to the lowest bidder.

huggytree
07-25-2010, 12:54 PM
completely different pricing between large companies and a small one....

if a job is $1000 and im making a 2 percent profit its pretty easy to lose money

if a job is 1,000,000,000 and im making a 2 percent profit theres a lot more wiggle room

i still think 2 percent is just stupid...anything less than 10 percent for any business of any size is just stupid...but capitalism is what is it....someone is always competing against you making it cheaper..

Toyota vs GM is a example i use for my business....Toyota's are always 10-20 percent more than the GM model...yet Toyota sells more....why?...quality/service....a large business doesnt have to always be the low bidder...the masses will always buy the cheapest thing, but there are still alot of people who will pay a fair profit for a better quality product....

i dont know if the percent is 80-90 for the lowest bidder...its over 50 for sure...my gut tells me more like 60-70 percent...definitely not 90 percent.

business to business would be higher percentage though...businesses always go cheap...