"Give them what they want" is still a good way to win and keep clients.
This may be one of the most stressful years of your
life." That is what many of our friends told us when we informed them
that we had purchased a lot and were going to have a home built.
Builders, they warned us were notorious for delays, hidden charges,
shoddy workmanship, nonresponsiveness and other ills. Soon, they
assured us, we either would be reconsidering our decision to build or
visiting a therapist to get an understanding of the underlying cause of
our propensity for self-punishment.
They were wrong. Please meet Ralph Busco, World
Class Builder. In order to understand the success of this builder,
there are two things you should know: First, unbelievably, his number
is unlisted because 100% of his business comes from referrals from
satisfied customers, which brings us to the second item. Each year he
rents a country club in the area and invites everyone he has ever built
a home for to a gala dinner. Most builders wouldn't dare do that for
fear that a lynching may develop. These affairs, however, are
"love-fests" for Ralph. I have never met anyone who ever said anything
negative about Ralph and their home-building experience. Certainly an
enviable position for anyone who owns a business, or wants to attract
new business. So, what is it that makes Ralph so special, and what can
we learn from him and his successful marketing plan?
Our favorable experience began when we were choosing
a builder and interviewed Ralph. Of course, we were pre-sold by the
people who referred him, but we still thought it prudent to screen
several builders before making a selection. We noticed a difference
almost immediately. When we asked the other builders what we would need
to do next if we decided to go ahead, they spoke of contracts,
deposits, etc. Ralph said a handshake would be appropriate. The other
builders told us that they would begin their process after the
architect's plans were completed. Ralph told us that he would like to
be at every meeting with our architect. Wouldn't that require a
contract and a deposit, we asked. Not necessary, he said. We do have a
handshake, after all. In any event, there was no way he could price the
project until the plans were finalized, but he assured us that he would
point out features that would put us over budget. That is why he wanted
to accompany us to the meetings with our architect.
When the plans were completed, he visited us with an
agreement. The cost of the entire project was itemized and his total
profit was disclosed, as well as which work he was and was not marking
up. The bottom line for him, he said, was set, and he would make no
further profit on any upgrades. For example, he did not think it was
appropriate for builders to make money on the cost of appliances. He
would recommend venders to us and instruct them to pass any builder's
cost savings to us.
For advisors who have told me that they neither want
nor need to disclose all of their compensation, I would like to have
them talk to me about the power of full disclosure. They need to meet
Ralph Busco.
When we signed the agreement, we began to write a
check as stated in the contract. "What are you doing?" he asked. "I
won't need any of your money until I need to pay my subcontractors."
This was months and many meetings with the architect since that
original handshake, and no money had yet been paid. He said he believed
that he had no right to hold our money before it was needed to begin
the project.
I could recount the process of watching our home
develop into what we dreamed it could be, but it is enough to simply
say that the journey was absolutely delightful. How many people do you
know who have had homes built who would use that word to describe their
experience? The story, of course, does not end here. He personally saw
to it that any items that required tweaking after we took possession
were promptly taken care of. The people who referred us were having
problems with their maple floors expanding and contracting. He tried to
solve the problem, but could not. In spite of the fact that he had
cautioned them about using maple, three years after the home was
completed he refunded the cost of the floor!
When our home was done, we decided to take Ralph and
his wife to dinner as a way of thanking him for the splendid job he
did. He knew the owner of the restaurant and had not seen him for
several years, and they reminisced about the "old days." It became
apparent to me that they once were blackjack dealers at one of the
casinos in Atlantic City. How, I wondered, do you go from dealer to
world-class builder?
Later that week, I called Ralph to find out. His
story is a marketing lesson for all of us. Several years ago, he told
us, his parents hired a builder to do major renovations on their home.
They asked Ralph to help with the negotiations, follow-up, etc. The
experience was horrendous. The builder would promise to be there on a
certain day and would neither come nor call. When Ralph would call and
leave messages, his calls were not returned.
The project was completed months after the promised
date at a cost of thousands more than estimated. Moreover, much of the
work wasn't done properly and it took almost a year for it to be
corrected. Ralph couldn't understand how someone could stay in business
with such poor service. He discovered, after relating his story to his
friends, that this builder was not atypical. Ralph's conclusion after
this experience was that "the world needed a better builder," and he
decided that he could be the one, in spite of the fact that he had no
home-building experience.
Ralph interviewed people who had recently built homes and asked them four questions:
1.What did your builder do that you wish he had not?
2.What didn't your builder do that you wish he had?
3.What did you like best about the experience?
4.What did you like least?
The answers to these questions led to the
development of his marketing plan. Some of the things they said they
didn't like, for instance, were the cost overruns, marking up
appliances, subcontractors who did not show up when promised, failure
to return phone calls, lack of follow-up after the job, and seeming
more interested in new business than in serving existing customers. His
plan was to do all of the things customers wanted their builders to do
and not do any of the things that they didn't want them to do. Seems
simple enough, but not many businesses devise their marketing
strategies around such a basic tenet: "Give them what they want!"
If they did, there would not be the cry they we hear so often today:
"Whatever happened to customer service?"
Ralph did one other thing. He asked people who the
best subcontractors were, because he knew his success would be
predicated on not only excellent service, but quality construction. He
approached these contractors and asked one question: "What do I need to
do to have you make me your number one priority?"
Of course, remaining consistent in his thinking,
Ralph did what they asked, such as paying them promptly, and he soon
became their favorite builder. While our home was being built, we often
wondered why subcontractors would leave other projects they were
working on for other builders to correct something at our house.
It was later that we discovered Ralph's strategy.
There is a wonderful lesson that we can learn from
Ralph Busco. Make a list yourself of what it is you believe clients
want their financial planner to do that most do not. Then make another
list of what financial planners do that clients don't want them to do.
You may also want to survey clients and nonclients with the same
questions. You can build a very strong marketing plan by listening to
what they have to say. Most people think of marketing as doing
something overt such as advertising or conducting seminars, but what is
more powerful than providing top-notch unusual service?
We have learned what is important to our clients by
observing, asking questions and periodically surveying them (See
sidebar on page 80). Your list may be quite different, but if it works
for a builder there is no reason it will not work for all of us. Ralph
would be very delighted to know that he has helped not only those who
build houses, but financial advisors who build businesses.
Roy Diliberto is chairman and founder of RTD Financial Advisors Inc. in Philadelphia.