Question for the PROS on our forum...

Rob Keeble

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GTA Ontario Canada
There is a question that i want to ask all the guys who are self employed or have their own business. I dont what type of business that is if its snowplowing, landscaping or woodworking or construction or manufacturing.

My Question to you is "What is a customers worth or value to you?"

How do you look at a customer from a value point of view in real hard dollars terms?

I would like to ask you to share your views and get a taste for your outlook on this subject. Thanks.:):thumb:
 
"What is a customers worth or value to you?"

The customer is the employer that signs the cheques. The job is what is important to me not saying that the employer is any less though. If they could do the work themselves they would't hire me. I have based my work on a good reputation of Quality work, trust, honesty and getting the job done on time or ahead of time. Acting proffesional at all times.

How do you look at a customer from a value point of view in real hard dollars terms?

The best advertising is my customers I get most of my jobs from word of mouth. One bad job or bad situation with an employer can hurt that reputation pretty bad I always tell them if you like my work tell all your friends if you don't like it tell me I will make it right.

Not sure if that is the answer you are looking for Rob.

Now saying all that there are customers that want everything for nothing and some that just will never be happy as what you have done is not what they envisioned or they just don't like it so I have no problem making things right for them but after the inital contract it is all extras after that or a different contract.
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I'm no business pro but............My grandfather was and said that "the customer is always right" I'm sure you've heard this old saw. I think the value of the customer is somewhat subjective based on their % value to your business. If you have 1000's of customers then the likelihood is that they have a small value per head and it is certain that you can't satisfy all of them. I bet there is always a percent of your customer base that will always be a bit of a pain to deal with. You do your best but some will be told to move on.

On the other hand if your client base is small then you might have to bend over backwards and mollycoddle some of your clients to keep their loyalty. I suppose it all depends on what you offer as your goods or service. If you have lots of competition then you have to be competitive . On the other hand if you offer a unique service or have a monopoly then you can afford to be selective with your customers.

I am working on an invention that should give us somewhat of a monopoly in a certain business. It will maybe be an innovation that could give us an edge in a common thankless task related to farming. Even with the success of this invention there will be a lot of marketing to penetrate the market. So we hope to offer potential customers a value previously unrealized for them. We will always try to put the customer first and I think the results will sell most farmers on our service. The potential is that some large corporate farms will be very lucrative for us and we will probably offer discounts based on the size of the client. While we would always try to give good service to all customers the reality is that some will be worth extra effort because their value is higher.

I don't know if this is what you are thinking about but this is my take on your questions.
 
Don my customers are my bread and butter. Each customer has the potential of bringing me Thousands. I've had a customer who I've made 500K from not the norm but it has lead to other very good just just from the experience with her different finishes I had to use. I look at them more then customers, their friends who need an honest friend to evaluate there work and preform the work to the highest degree of professionalism. When I get the job they will have put their faith in my by then and when I deliver the job they are more then pleased to pay me for my work. I want the money transaction to be as painless as possible. Kind of like me giving up my farm money for Jacob to go to school. I know he will reward me with the best he can do. So I will give him what ever he needs in my abilities to do so.
So what value do I put on my customer head? 1st of all trust in me.
 
Interesting; but difficult question Rob. As a recovering small business owner, here’s my take:

Seems to me a customer’s hard net dollar worth could be best measured by taking the profit you earn from them over a given time period, then subtracting your cost to secure and carry out their business.

But to evaluate a customer’s real worth, you would also need to factor in the positives and negatives that exist among various customers. Positives would include loyalty, how well they pay, future potential volume of business, any advertising value associated with having them using you services or products, and how easy they are to deal with, etc. Negatives would include poor payment habits, constantly grinding you on price, being difficult to deal with, and the possibility of being a one-time only customer, as well as possible negative goodwill in having them using your stuff.

In my day, I had more than one customer whom I didn’t really earn a direct profit from, but doing business with them did benefit my business. So definitely not an exact science because one customer could have a hard dollar value in the millions and another could (literally) have a negative dollar value.

Cheers
 
So i am hearing what some pros have said but i would like to throw in a further question.

Do you ever find you have no work?

If so why do you think this is?

I am thinking i gotta start a blog for you guys to participate in so we dont upset the woodworking guys here with business issues.:eek:

BTW my reason for posting this is i hate constant news of unemployment but no one is providing any kind of direction of how to fix it. We gotta go back to basics people need to think of what it was like being a pioneer again and how things have changed since.
 
well i am not a pro and basically am not in business even although i used to be for bit..i opted for the easy road.. which looked rosey but i have since seen the error of my ways..to get back to robs point, i can relate to you a situation in my day job.. we had the chance to get this customer that had reputation for dropping the work off and wanting it now and then nit picking it always,, and would switch to another supplier because they didnt put up with there demands.. this customer had one major good point,, they didnt complain on price and paid on time always!!! and when yu are a small business that is looking at getting paid to survive you put a dollar amount on the customer.. this one pays and is valuable,, and in the long run has made us as company better.. we have had to do things differently than our normal procedure,, but once that is done and it comes out right the first time,, we can settle down and run there work..also on a different note, although i am not good at it at all.. you need to make the customer feel wanted and part of the group and that means a golf outing or a free supper or lunch somewhere to make them feel special and this relates to a cost per customer..looking back at my experience,,i had to put out flyers to get started and when i stopped and relied on word of mouth, well the word was just getting to the same folk in the same area and they already knew who to get.. i needed to make more flyers and put them in new areas to spread the word and then i would get a up surge in work again rather than being stagnate and relying on the phone to ring for the next customer.. those flyers paid for themselves many times, and there for i feel that things like flyers and suppers and golf outings need to figured into the cost per head of a customer.. like anything else in this world ,,medicine for example,, you need to keep track of the cases to see what works and what doesnt and change accordingly and those things all cost something..its money in one form or another..
 
So i am hearing what some pros have said but i would like to throw in a further question.

Do you ever find you have no work?

If so why do you think this is?

I am thinking i gotta start a blog for you guys to participate in so we dont upset the woodworking guys here with business issues.:eek:

BTW my reason for posting this is i hate constant news of unemployment but no one is providing any kind of direction of how to fix it. We gotta go back to basics people need to think of what it was like being a pioneer again and how things have changed since.

Do you ever find you have no work? Rob work needs to be done to full the order of the customer. There is the work of getting work. It sometimes becomes laborious holding the hand of a perspective customer. Coddling them as they ask questions and seek out what they think is the best avenue to getting their work performed. These customers are a big pain in the ... but having been in business for 30 years I've learned that many of these customers are the pick payers and give me more work over the years. As I said you need to instill trust in them and that only comes with being an honest person doing what you say you will or they will not come back.

If so why do you think this is? I found that knowing what works and what dose not work in the advertising world for me. To stay 3 steps ahead of my competition.
 
Well folks Larry is the warmest in my answer. Dave is getting there with this last post but here is the thing.

If you aint put a dollar on the head of a customer you might want to reconsider after what i tell you.

See just about every business has a "average value per transaction".

For a company like Lockheed Martin that might be 100 million. And for the small landscape guy with 3 workers that might be $4000.

But if you aint tracking it you have no idea what the mix is in your business. Mix i am refering to is the number of low value jobs and the number of average value and the number of high value.

See Larry is dead right about the flyers and the entertainment. But how do you decide where the line is.

What amount should you spend to secure a new client or a new order.

or

What amount and where do you spend the money to keep a customer.

Not every customer wants entertaining. Some want the job done properly to their spec, just like Larry mentioned. So sometimes the money needs to be put into processes and quality checks or new tools to ensure quality is improved or process maintained.

So how do you decide what this line is?

Comes back to what the value is to you.

Yeah dont give me the story you want to be loved and liked and make the customer happy and he will give me another order or they precious.

Guys there aint a person out there that dont want these things.

But you in business taking the risk to either pay rent at your shop and employee people to make money. Not be a celebrity at some fashion show.

So yeah word of mouth works but what if the people who know you dont have work.

This is one of the reasons small business battle. Its the main reason you go from feast to famine.

I dont doubt for one second that anyone of you are the best at doing what you do. If you were not you would not even survive for a few days unless you spent your life scamming people and i dont for one minute believe you guys would even be close to that. More likely you scamming yourself.

So tell me whats the dollar value of client worth to you?

I aint gonna give you the answers that easy.;):)

You dont have to give it to me in exact dollars more a case of tell me how you think you work it out.

Then while you at it, answer this question. Are you self employed or temporarily employing yourself?
 
I'll be the first to admit I am not a very good businessman. I have never advertised, unless business cards count, I don't play golf, don't take people I don't like out to dinner, and avoid just about every notion of self promotion.

I have always looked at the people that are promoting their construction businesses relentlessly, and decided I would rather be broke than be like them. This is the first time I have been slow in 20 years, but these are some ugly times, and I am doing better than most, even the self promoters.

So..... What is your point?
 
Defiantly only temporarily employing myself. I do plan on changing that but the nature of a start up is that it is a process. I don't think you can set a dollar value per head until you have a steady and considerable client base.

Another thing is the ability to diversify your business to the point where you have several sources of income. I retail some manufactured goods and also wholesale some of the same. I also sell a commodity. I may get into selling a service as well if I can engineer and build the afore mentioned machine. The dollar per head will vary from mere dollars to 1000's of dollars so it will be some time before an average could be figured out.

Given the current economy figuring out a viable business is defiantly more challenging.

Then there is the whole question of what business philosophy you chose to follow. I have worked for large corporations and I do not ever want to do that again. I don't like the dehumanization I experienced there. So I have thought on this a lot and if I ever get to the point of being able to hire employees I plan on paying a living wage to them. I would like to think of employees as "family" and there would defiantly be profit sharing and some system of remitting some ownership to all involved. I would consider it a privilege to provide a person or family with their livelihood. This necessitates providing health care of some kind.

I think the current ideas prevalent in society to be short sighted. I know a lot of people that work their whole life to acquire "things" . They might have a cottage somewhere where they spend a few weeks or even months out of the year. They have boats, and motor homes, and all kinds of stuff that gets used little. Some families do share their "stuff" among themselves. This is good.
I have a network of friends where we share our tools and talents and "things" and help each other out frequently. We keep no record of who "owes" what. We just help each other out as is needed, knowing that we just have to make a phone call to get help when needed. This has been very rewarding and I find it satisfying to see a friend get ahead and their family enriched from my efforts. This sense of community carries over into what I would think is the best model for a business. There have been societies in history that had some form this as their operating model. The Shakers and the Aboriginal people of Australia are 2 diverse examples of this. (from my meager understanding)

Rob you mentioned a concern about the unemployment rate we currently suffer. I hope no one thinks this a political statement and I certainly don't mean it that way. I think we as a society need to get back to running business for the good of society rather than for the good of the profit margin and "whats in it for me" mentality. We call ourselves "family woodworking" and this is my point. Everything we do should be for the good of a sense of family because family is the most basic building block of society.

I don't know if this is where some of your question is coming from or if I am "out there" :D It's certainly an important issue and worth discussing. Also, very hard to define in a short space. Be a good discussion over some barley pops and a bonfire.
 
Sorry Rob, I went back and re-read your post and see that I have been thinking rather obliquely to the subject at hand. I see that your post is an objective question. :eek: It seems that your question is somewhat pragmatic in regards to the business value of a customer. I think you cannot underestimate the value of relationship when it comes to customers. People like to feel the relationship is personal, that you care about them and what they value. I hate to think that business will get to the point, with competition being fierce, a cut throat affair. We all suffer when this happens. On the other hand if you are not making money then the point is moot.

I would like to see business get back to a "guild" type society with the emphasis on building the local economy rather than the so-called "world economy" I haven't seen any real good come from the so-called Global economy business seems in love with currently.
 
Sorry guys i did not mean to leave ya all hanging been a tad busy. Thanks for all the responses to this post.

I have given this thread further thought and the fact that in reality we actually want to preserve our little place of peace in this world so i have decided not to post any more business posts on the board or further this thread here.

Instead i am in the throws of setting up a place especially for you from here that would be interested in getting more information to help with your business. This place will be a private site not open to the public where my friends from here that wish to get some insight into these issues can participate privately as a small group and hopefully make some differences in their business. You will need to register and have a password to access it but i dont want to have every man in the world coming a long to cross swords because something has gone wrong in his life.

So those of you pros/small busines owners that are interested pm me. I am not going to open the site to anyone outside of here certainly not all and sundry.

I would like to help a few of the guys here if they interested.

This subject of the value of a customer is key. There is much to be associated with it and when you understand it fully, then you might deside to change some of your ways.

Like i say to my son, i can provide the advice its up to you to implement it. I aint about to get into a contest over what i know to be fact.

And just for the record i have not been pressurized into doing this by a single sole.

I value our place of peace here and would like it to stay that way. This is work for me so i rather put it some place else where it dont pollute my enjoyment but still get to hopefully give back and make a difference. :D:D:thumb:
 
Rob, personally I think this is a great thread. Many of our members are doing our best to make a living as self employed. It is great to talk about what we have experienced and what we might know about "doing business" Seeing as how there are many livelihoods being eked out, I think this a very worthy topic of discussion. I have learned many things from FW members and even when I don't see eye-to-eye with an opinion I still value other points of view. I have even changed my mind about a few things over the years.:D Given the seriousness of the topic it is hard to keep it completely "peaceful" as you have pointed out. If you pursue the blog idea I would like to participate.

Thanks for bring the topic up.
 
Rob I took it for granite that you would have figured that small businesses have to set a price to survive or to make it into the Black. Calculating the over head the shop needs a X amount. For me it's an hourly rate the shop works at. I found this to be a better way to stay competitive.
Now if I ever get the antique auto wood working going then the job will be done by the job not hourly because of the status of the work.
I found that with gilding giving an hourly estimate and usually I'm with in 1 or 2 hours of my mark the customer likes that approach. I'm at the point that my customer base sells my work and reputation once they have seen what I do.
 
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