Steven Knight, an Entrepreneurs' Organization (EO) member in Edmonton, Alberta, Canada, is a partner in Mosaic Home Services Ltd., a group of nine home improvement businesses. We asked Steven how he helped his business evolve into a more specialty niche and why doing so benefits business owners. Here's what he shared:
If you've ever attended an entrepreneurial learning event, you've likely experienced an "Aha!" moment. A brief few seconds of clarity where you connect with the content, and mind-map a way to apply it in your business or personal life. I had such a moment while listening to David Rendall, author of Pink Goldfish, during a lecture at EO's Key Executive Program in 2019.
In the home-improvement sector, it's incredibly common for service scope to creep. For example, a customer may hire us to wash windows. We do a great job, so they ask, "Can you clean the gutters while you're up there?" Sure, we're already on a ladder, so we can do that. Next, they say, "My gutter is damaged, can you fix it?" Sure, we can run to the hardware store, pick up some parts, and fix it. Eventually, they ask, "Can you replace all of my gutters?"
If I'm not careful, my window-washing company might start doing more gutter replacements than window washing. I'll need trucks, metalworking equipment, tradespeople--none of which are necessary to wash windows.
Define Your Core Customer
Until I heard David Rendall's talk, I made the same mistake many entrepreneurs in various industries make: They don't narrowly define their core customer.
Digging deeper, I realized that my core customer is homeowners. I always thought, "A homeowner is a homeowner, right?" Wrong.
The single mother of two hiring a plumber to fix a leaky tap on a Saturday morning has very different expectations, purchasing behaviors, and budgets than the family who hires that same plumber to remodel one of their six bathrooms. Once I looked deeper into the market and analyzed our customer data, I was amazed at what I learned.
Cut Out Distractions To Avoid Scope Creep
That's when my partners and I implemented a new campaign with our marketing, sales, and customer service teams: "We're not for everyone."
When we introduced that concept, it was met with anxiety, frustration, confusion, and a litany of other emotions. One of our best sales representatives exclaimed, "What the heck do you mean? We're supposed to turn customers away?"
That's precisely what we did. We looked into our market, deeply defined exactly who we were for, and cut out all other distractions. We published marketing campaigns and social media posts about who we are for, and who we are not for.
We empowered sales reps and client care teams to say no and give our competitors referrals. We turned away more business than we had ever done. Every bone in my entrepreneurial body ached. The experience made me cringe, and I endured many sleepless nights. But, within two weeks, my business became so much simpler, more efficient, and my team was so much happier. Why?
Benefits of Eliminating Scope Creep
We eliminated "coupon clippers" who demanded discounts before we even began service. These clients were notoriously difficult to make happy under the best of circumstances. As a result, warranty callbacks decreased by 49 percent within 30 days.
Plus, monthly sales increased by 35 percent within 14 days because our sales team suddenly had the agency to say no to projects that were not for us and referred them to other providers.
Additionally, turnover in our customer service department dropped by 75 percent within 90 days. Representatives no longer spent most of their time haggling with clients or listening to complaints about underperformance. Average accounts receivable days decreased from 78 to 15 within four months because we cut troublesome clients who kept us busy but never paid on time.
The "We're not for everyone" campaign sparked heated discussions online and in our office. Some love it, while others ask, "How could you possibly say that? It's 2021; you're not a progressive company."
The truth is, we're an incredibly diverse group of men and women, young and old, with a wide range of backgrounds and ethnicities--but we all think the same way. We want to work with homeowners who see value in our products and services, who want something done the right way, on time, on budget, and treat us with respect. If you do, welcome. If you don't, sorry: We're not for everyone.
In the spirit of Pink Goldfish, this campaign has attracted more customers to the company because they want to be part of the group. They want to belong, and they want education about the service they've asked for. That's how a simple "ah-ha!" moment transformed my business.