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View Full Version : my builders partner keeps wanting to bring in a competitor



huggytree
01-02-2009, 11:20 AM
I have a new home builder who has hired a VP with a 10% stake in the company....basically its his right hand man....

The VP has a friend who is a plumber and he wants toget competitive bids and give his friend some work...basically get him in and me out.

I have a perfect relationship with the 90% owner...ive taken him and his wife out for a $250 meal, we sent them our family christmas card...they know our kids names, ive given him a $350 toilet for free and installed it all for free as a christmas gift.....Ive always given him perfect service...im the first sub done everytime.

The builder keeps bring it up....the VP says 'his plumber is good', 'his plumber already works with that product', 'his plumber,his plumber,his plumber'.....he says that HE makes the decision and i have nothing to worry about...but he brings it up EVERY time i talk to him in some way....he is my biggest customer (by alittle)....maybe 10% of my business....

my solution to this problem is to become the VP's friend also...i am going to work on his house soon and offered to give him fixtures at my cost AND call all the suppliers and get him a plumber price...basically 30% of list vs the norm 80%....its HUGE!!!....thousands of dollars and now he can afford some top of the line fixtures...he will think of me every time he uses his bathroom... also i need to take him and his wife out to eat....i need to get to know him better, because right now he's not acting like a friend to me!

Sooooo, today i asked for his VP's plumbers name.....its someone i know...and he is bad....possibly the worst plumber i worked with....so i look up this plumber....found him on craigs list....called him up....talked for 15 minutes...small talk, some business.....found out alot of bad stuff about him (no suprise).....

here's what i decided to do!....i called the builder right back up(the call was about some other stuff, not just to rip on his VP's plumber)....told him i know this guy and know what kind of plumber he is and am not worried "if you want a $60 per hour craigs list plumber with no insurance, works out of his pickup truck, is a service plumber who has only done a couple of houses in his career then he's the one for you'....he laughed and said i had nothing to worry about again....

should i have done that?....i like to squash all competition as not legitimate and not comparable....thats what i did....

I keep records of all my competition...i know their weak points

vangogh
01-02-2009, 12:07 PM
Generally I prefer not to trash my competition. I think if you do it too often it comes back to haunt you.

I've had friends who always complained about other people. The first couple of times you think there must be something wrong with the other person since my friend is complaining. After a few more complaints though, you realize it's not the other people it's the friend who's doing the complaining. If they complain about everyone else why should you expect they aren't complaining about you as well.

Similarly in business after awhile your complaints about your competition end up reflecting more on you than on the competition. You can end up with a reputation you may not want. I know if I interviewed two people for a job and one person told me about all the ways they could help my business and the other person told me about all the ways the first person was bad at what they do, I'd hire the person who offered reasons why my business would be better off. I wouldn't hire the person who complained.

Aaron Hats
01-02-2009, 12:18 PM
My first thought is that if the VP's plumber is so good why is he having you do his house? That right there should tell the 90% owner what he really thinks of his plumber.

KristineS
01-02-2009, 12:38 PM
I'm with Vangogh about not trashing the competition. I think I would have gone with Aaron's angle instead. If his guy is so good, why is he working with you? If it's just to get a deal, then he's really not worried about quality, he's simply in it for what he can get.

The only thing you do by trashing the competition is make yourself look insecure. I'd let your work speak for itself and not worry about the rest. There are always going to be some people who will focus only on the lowest price or what have you, but do you really want to work with those people anyway?

Business Attorney
01-02-2009, 03:18 PM
I agree with vangogh and Kristine about trashing the competition. Comparing yourself to the competition is fair game, but you should stick to the facts and let your listener draw their own conclusions.

In my own case, there are huge law firms that charge an arm and a leg for the same things I can do (and for many things I could not possibly do) There are also sole practitioners who do everything from house closings to divorces and who will also handle business matters, and typically charge lower rates than I do.

Most of the potential clients I meet understand the difference, but I usually point it out to them anyway. However, neither of the alternatives is necessarily bad, and I never say anything negative about their potential choices. I just point out that they will get what they pay for. Occasionally someone opts for a bigger more expensive firm and sometimes they opt for a cheaper alternative. In fact, when I truly think that they need the resources of a larger firm or have a matter that could be much more efficiently handled by someone else, I steer them in that direction.

billbenson
01-02-2009, 08:19 PM
Ya, you are confusing your competition as your enemy. I frequently give competition product information etc that they don't know how to find. Better to make friends than enemies.

huggytree
01-02-2009, 09:53 PM
i am insecure about this for some reason...thats why i had to find out who it was...i just dont want to lose this one i guess.....

i also called the VP today and had a nice friendly chat with him and let him know about the fixture deals im going to get him....he shared some of his personal life with me...so we are obviously alittle more than just business....ive kind of ignored him because he is only 10% and because he's only been around for a few months.when he is around i need to stop and chat with him instead of a few quick words and back to work...i need to stop ignoring him....after his house is done ill take him out to eat to celebrate.....or in the middle of the year ill take both the 10% and the 90% out to eat......he's a nice guy and his plumber friend is in a bad place right now..he just want to help him out...he has bad business sense because he wants a friend who works out of his pickup w/no insurance instead of the guy who has it all and does it all for him(me)

it just proves how important friendships with customers is...friendship blinds people to reality.

orion_joel
01-03-2009, 12:47 AM
I think that maybe one of the problems may be that the VP has the mentality to help the little guy. Probably being a friend is what has him mostly trying to help. But i would guess his point of view on the situation may be that he sees you with where you are and what you do as something that his friend doesnt have and wants to help his friend to try and get to the same place, without really thinking about how it may be a detriment to his own business interests.

huggytree
01-03-2009, 09:15 AM
a perfect example is the project i just finished for them yesterday

its a $10,000 (plumbing)mother in law suit addition

they are spending over $100,000 on the project total....maybe $150,000....

would they want a guy showing up in an unmarked pickup truck for that kind of money?
a stairway tread cracked in 1/2 on me and i almost fell...he has no insurance
it needed to be done quickly...he has hardly no experience with large projects...would the homeowner like him showing up for 2 weeks, when i did it in 3 days?

it would reflect on the builder, which would hurt his business...He is not the cheapest builder and likes above average quality products...how would a homeowner like paying for a lexus and getting a Geo?

if he decides to use this guy i know it will only last 1 project...i just dont like hearing about it everytime i see the 90% owner...its annoying....

huggytree
01-03-2009, 09:17 AM
orial...his plumber friend has more wrong about business than i did when i started...he's at $60 per hour when im at $97....$82 is cost...i suspect his business will fail....i let him know $82-90 is a typical 'at cost' and he was incorrect charging less than $85....he said 'someone has to plumb for the poor'

orion_joel
01-03-2009, 09:36 AM
One consideration when thinking about cost is that your cost is probably sitting at $82 based on your situation, with insurance, a better truck and the other costs you have of a more professional business.

For him, because he chooses not to have these additional costs, it is of course a detriment to his business, however at the same time his costs will be lower then what yours is, meaning that while you need to set your rate at $97 to make a profit he is probably making a profit on $60 per hour.

There will be three potential outcomes, either he will realize these things and eventually catch up, he will remain oblivious and continue stumbling along where he is, or he will remain oblivious and eventually figure he is better off working for someone else.

In general while it is probably a good thing to know your competition and such, it is maybe not worth your time to worry about them to much. Focus on your making your business better, and you will eventually become one of or the most respected plumber in the area, because of your service. While it is annoying to have to hear about it everytime you are talking with the owner, sometimes in business we have to deal with annoyances, and just grin and bear it, and just be happy with the fact that you are the one getting the work. My biggest peeve when i was busier was that to many people would try and get me to price match to the competitor that offered the lowest price in town, while occasionally i gave in for a good client and a large order, i tried to resist it as much as possible, because matching price while i could handle the cut in margin on some orders, it was just more annoying to have to always check competitor pricing. The client that started down this road is no longer dealing with my business, but i think that is for the better, they were pushing on price so hard that the actual profit in it for me was just enough for me if i did not have any problems with warranty issues down the track.

Aaron Hats
01-03-2009, 10:21 AM
In general while it is probably a good thing to know your competition and such, it is maybe not worth your time to worry about them to much. Focus on your making your business better,

Great advice. For the first couple years of my business I was always checking our competitors web sites looking at the brands they were stocking and price matching every hat we had in common. I finally realized it was causing me more stress and worry than it was worth. I still occasionally check the competition but it's more like once a quarter than four times a week.

orion_joel
01-03-2009, 06:44 PM
This is just right Aaron, knowledge of your competitors is good for your business, but obsession is what will hold you back to their level.

I think it comes down to know they exist, know roughly what they offer. With this information you will be able to be able to say you know of them when questioned by a customer. This really should take you maybe an hour or two every couple of months keeping on top of who is your competition. If you are spending more time then this you are giving away to much of your time on a cause that wont help you business.

billbenson
01-03-2009, 09:16 PM
On a "web" level, I always try to reverse engineer my competitions websites. It's always valuable to know what your competition is doing. It's probably once a quarter, but a quick glance more frequently wouldn't hurt. They might be doing something smart that you haven't though of????

Evan
01-04-2009, 12:32 AM
The old saying of "keep your friends close, but your enemies closer" seems to be the general sentiment here, and I'd agree.

KristineS
01-04-2009, 10:27 AM
I have to agree with those who say that you should be true to your own business and monitor your competitors but not worry about them too much. Getting wound up in what your competitors are doing only distracts you from pursuing your own goals, whatever they may be.

billbenson
01-04-2009, 11:17 AM
I remember in pre internet days, companies I worked for worrying about competition getting their data sheets. Stupid IMO because your competition will get them anyway. Meanwhile, we were at trade shows not giving out brochures to real customers because of management fear that they might end up in our competitions hands.

orion_joel
01-04-2009, 06:01 PM
The silly games that some companies play, in the apparent quest to maintain an advantage. Oh no we better not promote ourselves it is just what the competition want us to do.

huggytree
01-09-2009, 05:17 PM
I spent hours on the phone helping get the builder a display toilet and a tankless water heater for the builder expo this weekend!
builder just sent me a really nice card inviting me to dinner with his family. His wife says they want to spend more time with me and my family.

protential threat eliminated!

vangogh
01-09-2009, 05:32 PM
Congrats. I think you went about it the right way too.

orion_joel
01-09-2009, 09:55 PM
Great work Huggy, Hard work often does pay off in the end.

KristineS
01-10-2009, 10:21 AM
Good for you. Staying true to your goals and plan paid off.

huggytree
01-20-2009, 03:43 PM
latest update on this one..

this builder is 'green' and i had a customer 1 month ago who wanted to do a whole house remodel...she loved me and said i WILL be doing the plumbing no matter who the contractor is..i recommended the 'green' builder...and this week he got the call...its potentially $100,000+ of work for him...5 bathroom house...he's in the bidding phase...i told him he owes me a $100 steak dinner if he wins....whether he gets the job or not ive just made myself more than just his plumber....i find him leads...high end leads...

the last guy i got a good lead for dumped me over price..it was only a $15,000 bath remodel, but i am still angry with him....some people appreciate it some dont...

orion_joel
01-20-2009, 06:07 PM
This is really what mutually beneficial business is all about. Sometimes it is hard to compare if you are giving or getting more, but often things find their way of working to that both parties end up happy.

dynocat
01-22-2009, 10:44 AM
A few comments from a newbie (not to business, but to this forum). If I'm out of line, feel free to ignore me.

In your posts, huggy, I see a lot of emphasis on expensive dinners, Christmas cards and gifts. (The word, "groveling," comes to mind.) While those are all great ways to show your appreciation to customers, who support your business, I really think the emphasis should be on your quality work, excellent products and efficient service. IMO, most customers will judge you by those things. A friendly personality doesn't hurt either and it sounds like you already have that.

I also agree that none of us should feel the need to apologize for what we charge. We are worth it and it shows in the work we do. The customer will see it and appreciate it.

I understand the idea of giving potential customers a deal too good to pass up. I've been guilty of that a time or two myself. :) What I've learned though is that most customers--even those who ask for a discount--don't necessarily expect to get it. There's nothing wrong with their asking. At the same time, there's nothing wrong with you saying that, although you would like to, it's not possible. That's when you have the chance to mention your high standards and happy past customers.

My 2 cents, for what it's worth.

huggytree
01-23-2009, 07:37 PM
i treat my customers well...expensive dinners when they do something nice for me..yes!

i cut a wire which was hidden behind one of my pipes in a spot with 40 wires around it...i had to lay on my stomach and reach in a dark hole to work on my plumbing...anyways i cut the wire and took out the power for 1/2 the house for 4 days (that same power was just out for 2 weeks and finally back on the day before)...i sent the homeowner a $100 gift card for an expensive restaurant...i saw her today..she ran up the stairs to say hi and asked for business cards(i thought of joking with her and say "that was my kids christmas money i gave you")....those expensive gifts work well...i made very good money on the project and was thrilled to know a $100 meal made her forget about the problem and only remember how nice i was..

i just took out another contractor to breakfast today...he has gotten me many decent projects lately...nice guy, were friends...when i went to pay for the meal i saw they had cookies for sale...i bought 8 large ones that a kid would like and gave it to him as we left....$4 for those stupid cookies got me the biggest smile(we both have little kids the same age)...he's really into his son.....got a call tonight from the wife saying how nice i am and also his son went on the phone to thank me.....

giving gifts to reward people who give you business is the smartest idea....i do it often....it strenghtens the relationship....especially when i take their whole family out and get to know their wifes and kids....i want them to feel like their cheating on their wives when they use another plumber.....i feel i have that with atleast 50% of them...

doing great work is obviously the MOST important thing i can do to keep customers, but every customer likes alittle gift or meal once in a while....were talking $1,000ish a year vs $308,000 in business last year....its .3% spent on meals/entertainment....its an unbelievable bargain what i get for that .3%...plus i enjoy the meals also!...so does the wife..she likes to meet the people i talk about when i go on and on about my work day.

obviously im insecure about that with the customer in this post...i dont know why since he is the one i am closest to....something i need to reflect on...hmmmm

huggytree
01-23-2009, 07:49 PM
dynocat-no one offends me or is out of line..i want your idea's!...

maybe i dont know the meaning of groveling.....isnt meals out just a typical sales technique? im just trying to be closer to my customers...make them friends and have a customer for life!


my old boss used to give christmas gifts to his customers...i got christmas gifts from my sales reps at the supply houses i use....

the christmas card idea was fantastic...they all talked to me about it...one of them i saw sitting in an important place at a builders house....it might have been a joke, but i dont think so!....they like my wholesome family...

i will always send out christmas cards from now on and strongly recommend it to everyone....it really does something and its just a nice thing to do!..win,win

the christmas gifts i reserve for the top customers...i really only gave 1 real gift, but did do a few 'free labor' jobs also...

vangogh
01-23-2009, 08:10 PM
huggy I think offering the gift cards are a good idea. I can understand where dynocat is coming from though. I'm guessing you probably don't need to give those cards to everyone, but given the nature of your work I suspect $100 isn't exactly a large amount compared to one new job. The cards seem to strengthen your relationship with your customers and lead to more work.

In the end it's really an inexpensive form of marketing.

orion_joel
01-24-2009, 08:19 AM
I think the idea of wining and dining clients, is really something that is in the eye of the beholder. It is also something that works for some and not for others, and is really a hard thing to judge.

For some it is seen as a trick and a bad way to do business, while others see it as gold. I would agree that if you operate your business in a professional manner, and provide good quality work, it may not be something that is needed, but at the same time you can also be 100% sure that it is what sets you apart. So many business books that i have read suggest exactly this, and getting to know your customers families and such is also important.

Every little bit helps and knowing this can be the key to the success that you are achieving. The main thing to remember is that if it is working for you don't stop it. You could be in an industry and be the only one that does this wine and dine, or greeting cards or any of the things you do, and that is your key to the success. your competitors may see it as a dirty trick, however that should not be your problem.

Steve B
01-24-2009, 08:35 AM
"i want them to feel like their cheating on their wives when they use another plumber.....i feel i have that with atleast 50% of them..." What a great way to look at it.

It sounds like giving nice gifts is worth every penny for you HT. I like to hear real life examples of what works and doesn't work! So much advice that I hear and read seems to be from people quoting theory. Then, other people read their books or articles and re-quote the same theories.

huggytree
01-24-2009, 11:08 AM
Steve B...when i used to call around looking for work (some would call it begging and thats why i dont do it anymore)...anyways i ran into a few who said those exact words...using a different plumber would be like cheating on my wife.....it suprised me the level of commitment that a contractor can have for his sub....my goal from that point on was to strive for the same level of commitment from my customers...

i think ive got it on a few and am building up to it with a few more...i can tell the ones who will never be there...they dont want to get close with me...i still try, but always figure i may lose them at anytime...

quality and service are important, but making your customers into friends is just as important and maybe more important.

billbenson
01-24-2009, 03:51 PM
As a field sales guy for 20 plus years, my sales strategy was always "make friends out of your customer and all things being equal, people will buy from their friends". I'd always try to set sales calls for 11:30am. Its a no brainer to take them out to lunch.

Domestically, customers usually wanted to go home to their family after work, not go to dinner, so other than trade shows I didn't take a lot of people to dinner. Internationally, I did a lot of wining and dining for dinner and it worked well.

I always tried to make friends with my boss as well, which I generally did.

huggy, you are in a different situation because you live in the same area as your customers. You can take them out to dinner around their schedule. I think its a great idea and 100% agree with the concept of making friends with your customer.