If you’re unsure how to continue growing your service business, you probably haven’t found your niche or “sweet spot,” says Christeen Era, founder of Core Growth Strategies.
As an accounting and consulting professional who’s helped hundreds of contractors find their “sweet spot,” target ideal customers, and systemize their processes to springboard growth, Era walks through how to do all three in a recent ServiceTitan webinar.
Here’s what you’ll learn:
Who your ideal customers are and how to identify them
Why you shouldn’t be afraid to fire bad customers, and a strategy to do it
How to avoid “The Survival Trap”
How to identify your company’s profit centers, and generate more profit with less work
How to implement “The Pumpkin Plan” to find your business’s “sweet spot”
Let’s dig in.
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Who your ideal customers are and how to identify them
Ideal customers are those who are most likely to:
Buy your product or service
Engage with your brand
Become longtime customers
Why is identifying your ideal customers so important? It’s crucial because it allows you to design your products, brand messaging, and marketing strategies around their needs and preferences.
“You’re really speaking their language about what you do and how it provides what they need,” Era explains.
How can I identify my real customers?
The process of identifying your ideal customers requires sorting through the following five buckets:
Demographic data: age, gender, income, education, job titles, geographic location, marital status, and family size.
Psychographic data: personality traits, values, lifestyles, attitudes, interests, and hobbies.
Behavioral data: purchase history, frequency of purchases, buying behaviors, and buying patterns.
Pain points and challenges: understanding their challenges and pain points, then tailoring your marketing message and product offering to address these specific needs.
Communication channels: analyzing the communication channels your ideal customer uses, then using those channels to develop targeted marketing and campaigns.
“Using customer data analytics and tools and conducting market research can help you identify exactly who your ideal customer is,” Era says. “Once you determine who they are, you can create targeted marketing campaigns and personalize the experience to not only engage with them, but gain them as customers, then retain them for the long run.”
Don’t be afraid to fire bad customers (and a strategy to do it)
When considering which customers are not ideal, you may want to ask yourself, “What are my non-negotiables?” Era says.
Bad customers may include those who:
Consume too much of your resources — Era refers to these customers as “chirpers,” or those who take up too much time for your service team, office staff, and even managers. “They come in, they complain about too much stuff, and you’re constantly having to address their needs,” she says.
Require too much hand-holding — how much time are you having to spend with them on a day-to-day basis throughout a project or a job?
Give too little return on investment — you set your pricing models, then your customers use so much of your resources that they produce little return.
How to fire bad customers
Era says many business owners are afraid to fire customers because they worry about lost income or bad reviews, but there are ways to get out of a bad relationship. Some questions to consider include:
What is it that’s causing friction or using too much time?
What kind of service calls or callbacks are you getting?
Are they leaving negative reviews on social media channels?
Do you feel most frustrated during busy seasons?
“You may not show up or communicate the best. Just keep this in mind, you can take a pause,” Era advises. “Instead of reacting, go ahead and respond to them. Communicate with the customer and find out what the challenge or issue is. We don’t want to go down the assumption junction.”
Is it the person or the process? Educate your customers on your company’s service expectations. Do you have a process in place as they start working with you? What does the beginning, middle, and end look like?
“By really taking the time to design these expectations into their customer experience and their journey, this is going to eliminate a lot of the bad customers,” Era says.
If clear communication fails to resolve a bad relationship, create an exit plan that minimizes the impact on your business, helps you avoid bad reviews or bad referrals, and offers a fair end-of-service date.
“If possible, address concerns that will create a win-win,” Era says. “It’s great to do this in advance, because when we are in the heat of the moment, we’re not always thinking from our best selves. We’re being more reactive versus responsive.”
How to avoid “The Survival Trap”
What distracts us from generating profit in our business? Era says “The Survival Trap” is a coping strategy that takes entrepreneurs away from their ultimate vision of where they want their business to be and how they want it to look and operate.
“Entrepreneurs fall in ‘The Survival Trap’ when they move away from focusing on achieving their ultimate vision. Instead, they’ll do whatever it takes in the moment to stay afloat financially, meet demands, or even resolve employee or client issues,” she explains.
Those caught in “The Survival Trap” believe that solving a crisis or urgent issue in
any way they can is a good thing because it’s saving their business.
“But in reality, it’s having the opposite effect,” Era says. “Many of the things businesses do, they do out of desperation. It doesn’t move the business toward the ultimate vision. Instead, the business owner wastes valuable time, resources, and energy.”
For instance, you might take on a project to cover this month's payroll, create a new product for immediate revenue, run a last-minute promotion to generate quick cash, or even make collection calls to speed up your cash flow.
“All of these things move you away from your vision and from generating profit in your business,” Era says. “You definitely want to stay focused on your vision and your business, so you can maximize profit as you grow your company.”
What is a profit center?
The “profit center” of your business is the segment, department, or branch that generates revenue and incurs costs. The purpose of a profit center is to make a profit or generate positive cash flow for a company. Profit centers typically follow a budget and are responsible for managing their own expenses and revenue.
“You might have different departments that do different things, and it's ideal if you're tracking these separately,” Era says, since this allows you to really identify which service generates the most money in your business.
“By measuring the profit for each center, management can make informed decisions about where to invest resources and allocate funds,” she explains. “It also helps you identify outliers, or things that may be pulling away from the profit a department can generate.”
How to identify your company’s profit center
Analyze financial statements: Take time to review income statements or balance sheets, or talk to your accountant, to identify some areas of the business that produce higher revenue and higher profit margins than others.
Determine revenue streams: Identify income sources for your business. Profit centers are the areas of the business that generate the most revenue.
Assess cost structure: Determine costs associated with each area of the business. Profit centers are typically the areas with the lowest costs as they generate the most profit margins in a company.
Check sales data: Analyze sales data for each product or service offered by the business. If you don’t have a system to analyze your business, it may be time to do it. What is your sales data telling you? How is your company performing financially?
Evaluate customer behavior: Understanding customer behavior and preferences can help identify the areas of the business that generate the most revenue and profits. What are customers buying? Why are they buying it? When are they buying it? What’s inspiring them to buy a different product or service you offer?
“Identifying the profit centers can help the business focus its resources and energy on those areas to maximize profitability,” Era says.
How do you leverage opportunities to generate more profit with less work? Here are 8 tips.
“This ties back to the old saying, ‘Work smarter, not harder.’ And I know ServiceTitan can be a great help with introducing several of these automation processes,” Era says.
For example, ServiceTitan customers can:
Use tools and software to automate repetitive tasks such as invoicing, order tracking, email marketing, and more to save time and increase efficiency.
“I know hiring is a huge challenge these days,” Era says. “Finding the right people to do the right things for the right amount of time in your business can be really hard, so the more automated and streamlined your business is, the less you're asking of your people and the less demand you have on employee hours.”
2. Outsource nonessential tasks to third-party service providers, freelancers, or contractors to reduce staffing costs, free up management time, and focus on more important responsibilities.
Reach out to your software provider, such as ServiceTitan, and ask them, “What else can I do to implement the automation side? Who on your team can support my team to make these things happen?” Era suggests.
“Because you may be asking somebody on your team to be the champion, and they may not be the right person or have the right skill sets to accomplish what you want to get done,” she adds.
3. Optimize productivity.
Implement training programs and provide resources to help employees become more productive, efficient, and effective in their job functions.
4. Diversify revenue streams.
Explore new markets or product lines that you could add to the mix to increase your profit centers.
5. Streamline your supply-chain management.
Optimize your supply chain by integrating with suppliers, customers, and distributors to reduce waste, lower costs, and improve delivery times.
6. Improve customer retention.
Offer incentives and rewards programs to encourage customers to stick with your business and also refer others, boosting repeated business and reducing acquisition costs.
7. Raise prices.
Pricing is a huge pain point for small businesses, so adjust your pricing according to market demand and the value of the products or services you offer. Revisit your pricing structure on a regular basis.
8. Explore new technologies.
Stay ahead of the competition by constantly researching and adopting new technologies and innovations that can improve efficiency, reduce costs, and increase profits.
“This could even be fully utilizing the software platforms and technologies that you already have,” Era says. “Even companies that are very successful with this, I have found they only utilize about 80% of what the software offers. Just imagine if you could leverage that other 20%, what it could do for the capacity and overall efficiency in your business.”
How to implement The Pumpkin Plan to find your “sweet spot”
In the book, “The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field,” best-selling author Mike Michalowicz says: “If you want to grow a prize-winning pumpkin, you need to start with a prize-winning seed.”
“The concept is the same for your business,” Era says. “You need an underlying business strategy that has the capacity to grow into an exceptional business. That underlying strategy is your special seed, or the ‘sweet spot’ of your business.”
Symptoms of NOT being in the sweet spot of your business include:
You are doing all the right things, but your marketing is falling on deaf ears
You feel pressure from your customers, prospects, and competitors to lower your prices
You can’t take on any more business because you can’t work any more hours
You are feeling burned out and unsure how to continue to grow
To find your “sweet spot,” there are three key elements that must intersect.
Top customers (ideal customers you want to focus on)
Love what you offer and will buy from you over and over again
Your company loves serving them
What makes your business stand out?
What you sell
How you sell it
How you deliver it
Systems and processes that provide scalability, or the ability to expand and grow
“These three elements must be present and aligned with each other in order to grow your business,” Era says. “If you can find your sweet spot and remain laser-focused on growing it, then you have the seed of a giant pumpkin, or the secret to growing a giant business.”
The Pumpkin Plan technique is a game-changer for most clients, Era says.
“Once they figure out who their best customers are, what they care about the most, and where to find them, they can easily attract them into their business,” she explains.
To determine whether your business is operating in its “sweet spot,” Era and Core Growth Strategies offers a free sweet spot assessment tool.
You’ll answer nine questions in the assessment, and if you rank every question as a “5,” then you’re in it. If your answers are all “1s,” then you have some areas to work on.
“If you're like most businesses, you'll have a mixture of responses and this assessment will show where you are already strong and what areas you will need to focus on improving,” Era says.