When you select a restaurant for a significant celebration like an anniversary or birthday, do you choose a fast-food restaurant? There’s nothing wrong with fast food when you want a quick and inexpensive meal, but it’s likely you’re more selective on those special occasions. You know what you want and choose based on your needs and appetite.
Fast-food restaurants don’t attempt to serve a gourmet meal…they leave the total dining experience to the white tablecloth restaurants. Both serve a meal, but they are not equal. Different expectations for the two means you’re satisfied at the drive-thru if you get the right food from the warming tray in under three minutes. It’s not a bad thing if that’s what you are expecting.
Your business is similar in that the better you know who you are and what you want your business to be, the easier it is to identify the type of clients you want to serve, learn the appetite they have for service, and provide a better experience in the long run. You should know if you’re running the equivalent of a prime steakhouse or a fast-food restaurant.
Four-piece chicken nuggets
Our current and prospective clients continue to struggle with shrinking budgets, and certain types of clients are prone to asking for more service without wanting to pay for it. I have heard in various forms, “I would really appreciate it if you could...” Typically, the requests were outside of the scope of work and, therefore, not factored into the contract value. They were often small and difficult to refuse because they were innocent enough. A few requests were just large enough, though, that I countered with an offer to complete the additional work for additional money. Amazingly, the requests were often and quickly rescinded since I wasn’t going to work for free.
After sharing my frustrations with my friend Michael Merrill of North Country Snow and Ice Management, he retorted, “If I buy a four-piece chicken nuggets and I’m still hungry, will they give me another four piece for free? No, I have to buy another item from the menu.” At that moment, it clicked.
When I was asked to provide additional services at no cost and found myself getting frustrated, did I really understand my clients’ needs and appetite for service? I had to become diligent in protecting my company from those who want to gorge on my company’s profit margins by expecting steak service at hamburger prices.
Develop your dollar menu
When customers seeking dollar-menu pricing come calling, you don’t have to turn them away. You just need to have an offering that makes sense for your company. Fast-food restaurants size their product to fit the price point - hence the four-, 10- and 20-piece nugget options. When your client buys from the value menu, your service should match what he is purchasing.
It’s important that you have processes in place and train your workers to not overservice the customers. The worker filling the nugget boxes is not helping his employer when he stuffs six nuggets into a box labeled “four-piece.” How do you size your container so that your staff is not stuffing in extra items that you’re not getting paid for?
Your field crews excel at servicing the client, and they may feel good about giving a little extra, but you’re losing money every time they provide more service than what was sold. It also sets an expectation that the client can get more without paying for it, whether or not they ask for it. This doesn’t mean that you can’t fulfill a small, one-time request to help the local manager in order to build a stronger relationship. But where I see signs stating “Extra Sauce 25¢,” I’m guessing the franchisee was tired of being abused. Customers had figured out they could ask for more without paying for it. How many people stopped asking for “extra” sauce once the nominal charge was instituted?
As an industry, we’ve allowed ourselves to become the all-you-can-eat buffet service provider. In what other industry is the service provider required to provide unlimited services 24 hours a day, 7 days a week for an extended period for a fixed rate? Not to mention the added liability we are often asked to assume in a slip and fall, even when the scope of work restricts our abilities.
Many of those seeking service have lowered the amount they are willing to pay, yet still demand high levels of service. They then push one-sided, low-cost contracts on the service providers. They’re gambling that with enough persistence they can find contractors - qualified or not - to accept the priced work. It’s unfortunate that service providers are often left with the perception that there is a lack of partnership and communication between end users, third-party purchasers and those who ultimately provide the service.
Gluttony has a price
One-sided contracts represent one-sided relationships and ways of thinking. Maybe the service broker will find a contractor who doesn’t understand what they’re signing, or one who is desperate for cash flow. They may hire a contractor who, knowingly or not, reverse-engineers the scope by pulling back on the service delivery to fit the money in the contract. A contractor that reverse engineers the scope will most likely fail, which may result in nonpayment and a ruined reputation. But worse yet, the end user suffers because it didn’t receive the service it contracted with the service broker to manage. Maybe the end user is OK with failure - to what extent is for them to determine. But if you establish your service menu and stick to it, you can rest easy knowing that you’ve insulated yourself from a bad deal. It’s not worth feeding a hungry client who won’t pay for the meal that will satisfy his appetite.
Bad contracts can spoil an appetite
A national service broker offering national small box store sites recently contacted me to see if I was interested in providing services. I saw the potential to fill in some of our routes and examined the opportunity to see if it would be a fit.
As I examined the offer, the idealistic, vague and unrealistic scope of work requirement that “sites shall remain uninterrupted and not impacted by a snow event,” popped up several times and raised several red flags. I have paraphrased the scope of work below. Consider offers carefully, and question contradictory and unrealistic contract terms before entering into any agreement.
- Provide snow removal service only after 2-in. accumulation per event and deicing for icy surfaces. Plowing should begin once accumulation reaches 2 inches and then every 2 inches thereafter continuously during business hours.
I work in a market that averages 68 inches of snowfall per season. On a 24-hour site, that means to comply with scope I’m going to be expected to plow 34 times.
- Contractor to be on call and available to perform additional snow & ice management services between snow events and in connection with snowfalls below the 2-in. trigger or icing conditions as necessary.
- Service required when there is less than 2 inches of snow is “out of scope” and requires a work order prior to performing service.
- Owner may request snow & ice management services to begin after 1 inch.
I can be called anytime for additional service, including a change in the scope of work without recourse. This opens up the possibility that I could have to plow a 24-hour site in my market 68 times if the service level shifts to a 1-in. trigger.
- Ice melting services and continuous monitoring are required during all hours of store operation.
- Limit of two deicing applications within a 24-hour period for any non-24-hour facility and no more than three applications within a 24-hour period for any 24-hour facility. Any additional applications beyond established guidelines must be approved in advance.
With no possible remedy or control over excessive and/or out-of-scope service requests, we could find ourselves trying to placate a manager who can’t be satisfied, draining potential profit from an already tight budget. Would the unsatisfied manager sully our reputation or, worse yet, would we be found non-compliant and risk not being paid?
What’s wrong with this picture
On a fixed-fee agreement there are no established limits - and the prospective client explained in our conversation that we would have to provide additional service as requested within the existing contract pricing. When asked about the statements that limited service, I was told per-occurrence service providers had overserviced the sites in the past and limits had been put in place to prevent it from happening again.
Limiting service is fine, assuming that the liability portion of the contract limits the service provider’s risk relative to the defined scope.
In this case, the broker has per-occurrence sites with limitations on service, and fixed-fee seasonal contracts are being managed in such a way that calling for additional work without limitations is OK. This sounds like an all-you-can-eat buffet - eat on the cheap and stuff some rolls in your pocket on the way out the door. Regardless of who dictated the scope, it’s a one-sided contract that is likely to give the service provider who accepts it heartburn.
When I questioned the possibility of excessive requests, the broker didn’t seem willing to stand up to the client and explain that service limits should apply to both contracts. If they won’t stand up to the client to negotiate a fair scope of work, why should I believe they’d have our back in case of a real issue? I want to partner with my clients to provide good service within an agreed-to scope of work - not be their meal ticket for excessive service on my dime.
Saying “no” isn’t easy…or is it?
The scope wasn’t negotiable and pricing wasn’t close enough to make it a fit for our company, so I declined the offer. Over a month later they still continued to call to offer me sites. I guess they couldn’t find enough contractors, qualified or not, to take the work. A bad deal is a tough sell.
Who is your client?
The chain of contact. Do you work directly for the property owner, or are you working through a middleman, such as a service broker? Working directly for the property owner is fairly straightforward, and adjustments in the level of service can often be negotiated to benefit both parties.
The middle men. Working for a service broker adds a layer between the service provider and the end user. A service broker manages defined facilities maintenance (FM) functions for their clients’ properties on a local, regional or national level. The property owner, or end user, attempts to reduce his FM costs by outsourcing the contracting and management process for the services.
Who’s calling the shots? When you contract with a service broker, you provide service to the end user (i.e. box store), but you answer to and work for the service broker. The end user is not your client, despite the fact that it is the direct recipient of your service. You do not know the details of the contract between the service broker and its client. So, while you may think you know what the end user wants or needs, what matters is the terms and conditions provided by the service broker. Not all service brokers are the same, so it’s wise to know with whom you’re dealing, and what their appetite is for service before committing to the relationship.
Training crews to avoid overservicing sites
To avoid overservicing beyond the contracted scope of work, it is important to establish protocols and then communicate them to your field teams. Keep in mind that a client who is providing feedback or making a request is sharing information that may be vital to the overall cli-ent relationship. They’re communicating a need or expectation. It may be a onetime request, or it may impact future work and others that will be servicing the site.
1. Establish a protocol and train your employees to respond to specific requests. What is the verbal response to the client when they make the request? What is the default direction they should take, perform requested work or call a supervisor?
What if the supervisor is unavailable to answer the question?
2. Should your field crews determine if the work should be performed? Do they know the scope of work for the site? A store man-ager that requests that his walks be serviced may not know that sidewalk work is outside of the scope. Telling the manager “No” may be the right information but the wrong answer. How will the manager get the education they need so they’re not disappointed with your service otherwise?
3. Develop a protocol. It is fairly easy to develop a basic system so your crews know how to respond. Your crews should first understand basic service scope (sidewalks are part of the scope, for example) as well as your service expectations (clear the whole width, around parking bumpers, curb lines, etc.)
4. A checklist for each site would provide additional overview information. You may have some clients where interior walks are cleared and deiced, while some clients have city walks to be cleared but not deiced. A checklist saves time and means your crews do not have to rely on memory to know what work should be completed at each site.
5. Consider identifying your clients by type: direct vs. broker relationships. Grade the level of service if you provide varying levels (A, B and C). How should your crews respond to requests from direct clients compared to broker relationships (where approval may be needed for specific service requests), and those that you grade differently either based on the level of service they receive or how restrictive the relationship is? You may not need to share relationship information with your field crews, but you could have on the route checklist a box labeled “Requests for service.” Based on how you choose to populate this box, your crews will know the default for this client - service, will call/check, or no.
Doug Freer, CSP, owns Blue Moose Snow Co. in Cleveland.