How T&K Roofing gets help solving problems from thecompanies that reject its bids
As much as we hate getting questionnaires, we decided it might be a good idea to start sending them out," said Tom Tjelmeland, CEO of T&K Roofing Co., with a sigh. That was back in 1988, when the Ely, Iowa, roofing contractor had sprung a leak. Profit margins had dwindled from 5% to 1% that year on sales of $2.5 million -- and Tjelmeland wanted answers. To get some, son Kurt, T&K's vice-president, designed a questionnaire that goes beyond the usual how-are-we-doing customer survey. For starters, T&K had noted a disturbing upward trend in rejected bids. So the Tjelmelands decided to go right to the source with what they refer to as the Lost-Job Survey, questioning would-be customers about their specific reasons for not accepting T&K's bid.
Half the survey questions were designed to get an idea of how T&K was being represented in the field. "We weren't sure if what our salespeople were telling us was true," says Kurt. Other questions were designed to provide Tom, who found himself increasingly removed from the battle lines, with an intelligence hot line that provided clues to why competitors were nipping away at T&K's 68% market share. The survey has also proved an important marketing tool, serving as one more form of contact with prospects -- one that ends the relationship on an upbeat note.
Often the questionnaire keeps alive a relationship that might have otherwise ended. When prospects return forms that tell of a particularly harrowing experience with T&K, they get a call from the president, who wants to know all the details. They may even get a gift certificate for dinner. "We call it a value-added apology," says Tom Tjelmeland. Several respondents have eventually asked T&K to submit bids for other projects.
Over the past three years an estimated 1,500 surveys have been mailed out to prospects, and 1,000 have been returned. Those surveys go directly to Tom, who then passes them around to everyone who had a hand in losing the job. The results have forced people to stop pointing fingers and start correcting the errors. Some employees who were chronically at fault eventually quit. Others were let go.
In 1990 the Tjelmelands converted their commissioned salespeople into salaried customer representatives who shepherd jobs from the initial bid through cleanup. That way customers get the best solution for their needs, rather than the solution that will earn the sales representative the biggest commission. Then, by giving out project-by-project bonuses based on gross-profit margins, T&K has gotten its employees to focus on solving the problem that inspired the use of the questionnaire in the first place.
Survey results have even taught Tom, a 29-year veteran of the roofing industry, more than a thing or two about the operations side of the business. "It forced us to ask prospects what they wanted, instead of offering them what we thought they needed," he says. For instance, he thought they needed indestructible roofs, but found out the prices for that kind of quality were out of the ballpark for most customers. So he added a less expensive, but still good-quality, roofing system to the T&K line.
Since it began using the Lost-Job Survey, T&K has managed the difficult shift away from thin-margin, low-bid contracts to the more lucrative but difficult-to-sell negotiated-bid projects it had been losing before. At the same time, it managed to almost double sales to $4 million (even though eight new players have entered the market) by being more price-competitive than ever. But according to Tom Tjelmeland, the most important effect the survey has had can't be seen on the books. "It keeps me humble," he says.
On the following page, Tom and Kurt Tjelmeland illustrate the kind of valuable information that can be gleaned from their surveys, and they explain how they put it into action.
At T&K Roofing Company our number one priority is to provide and deliver goods and services that our clients want and value. By completing this evaluation, you will assist us in assessing why we did not meet your requirements.
Please identify the following items that effected your decision NOT to accept the bid submitted by T&K Roofing. Please feel free to be completely honest as your feedback is very important to us and your responses will remain confidential in my office. Also, note any comments or questions you may have on this form.
Thank you for your assistance.
Thomas M. Tjelmeland, President
Were any of the following a major factor in your decision NOT to award the contract to T&K?
2. T&K Reputation (Integrity)
3. Service Offerings
4. Available Warranty
5. T&K Location
6. Project Schedule
7. Roof System Requirements
8. Billing Terms
9. Established working relationship with another roofing contractor
10. Please list the main reason(s) T&K Roofing was not awarded the contract?
11. (Optional) Name contractor who was awarded the contract.
12. If price was the reason for losing the contract, by what percentage was T&K's price higher than that of the selected competitor?
13. If service offering and capabilities affected selection, what services and/or capabilities did T&K not offer that the competition did?
Please rate the effectiveness of the presentation made by our sales representative. This information will be kept confidential from the representative.
15. Receptiveness and understanding of the project requirements and the needs of your firm
16. Presentation of T&K Roofing's capabilities, products, service offerings and recognitions.
17. Presentation of Bid Proposal and Project Strategy.
18. Willingness and Ability to answer all of your questions.
19. Professional Appearance.
20. Demonstrated respect for competition.
21. Timeliness or response time of initial contact until bid presentation.
22. How many times after the representative submitted his quote, did he call you to see if you had any additional questions?
Reputation Is Everything
"When we started this form, we were getting wonderful publicity. Pretty soon the corner grocers and dry cleaners who used to be our bread and butter thought, Hey, this company is huge -- it isn't going to take care of my roof, because the big companies take a couple of weeks to get back to people with bids. So we decided to promise to inspect a roof within 24 hours and submit a written proposal within 72 hours." -- Tom Tjelmeland
"One thing this questionnaire put a fine point on for T&K was that we were trying to mandate quality for the customer -- something we didn't want. That forced us to ask the customers what they wanted. We also found out our sales force preferred selling some systems more than the others we carried. As a result, we began selling not only the three lines we formerly didn't push, but also a new, lower-cost line to rival our larger competitors'."
-- Kurt Tjelmeland
"If this [question 9] is marked yes, it tells me my people are out there slapping prices on jobs instead of developing relationships. Establishing a relationship takes time, but you learn more about what the customer wants besides a low price. I found out my sales force was moving T&K into the position of winning jobs based on low bids rather than the negotiated bids." -- T. T.
"We once found out that one of the largest roofing contractors in the country was making inroads into our territory. All of a sudden there was a competitor who possessed a pool of incredibly talented roofers, and we were getting beat. Then new competitors started popping up because manufacturers were setting up contractors to sell new roofing lines. Five years ago there were 10 roofing contractors in my niche; today there are 35 to 45." -- T. T.
The Price Is Right?
"In recent years the roofing industry has become extremely competitive and sensitive to pricing. We found we were losing 20% to 40% of our bids on price, especially during the winter months. Then when summer would roll around, and there would be more work, small contractors would raise their prices, so we would lose fewer jobs because of price. I'm currently comparing the cost of renting equipment with the cost of buying it, and I have laid off nine employees and closed a branch office to cut overhead." -- T. T.
"When we first started using this form, scheduling problems were making T&K lose jobs. At the time we had a backlog of six weeks of work. We were'nt flexible enough. Now we adjust to the prospect's schedule." -- T. T
Selling the Positives
"On question 17 we wanted to see if the salesperson was finding out what the customer really needed and taking care when placing the bid. Question 20 tells us if that salesperson was trying to sell by bad-mouthing the competition. Selling on T&K's qualifications is more difficult, but it pays off in the long run. For a while we had a raft of unqualified competitors selling shoddy roof systems, and we just kept quiet. If a salesperson brings that up to a prospect who has a good relationship with that contractor, the prospect will turn against us in a second." -- T. T.
An Educated Sales Force
"Since we had grown, we had hired a lot of people, and this question [#18] was designed to find out if they were performing up to expectations. We were concerned that they lacked the experience to answer questions adequately, and we were right. One salesperson was let go because this box was marked too often." -- T. T.
"We wanted to make sure salespeople were following up on proposals. I expect prospects to be called at least three times before the decision is made, since things can change in the interim. One salesman who was routinely marked with a low callback rate was let go. Ten callbacks would normally be too much, but we listed that many choices to see if any of our salespeople were being obnoxious."
-- K. T. n