Can Customer Service Recession-Proof Your Business?
There are an awful lot of empty offices in oil capital Calgary these days, but a company that does tenant improvements has managed to grow anyway, thanks in part to an increased focus on customer service.
Of course, it helps that offices also need to be fixed up after tenants vacate them so there’s a hope of finding new tenants, so Maxim Constructors‘ success can’t all be credited to customer service.
But, as today’s interview guest, Craig Nadeau, managing director of the company, points out, the recession also means that there are a lot of unemployed trades workers flooding in to compete with them for those office fix-up dollars.
Customer Experience Starts Before the Sale
Customer experience is part of a good brand, and sometimes customer experience includes more than just how well you treat customers. It can also be about how you get them to feel comfortable with you, right from the very first meeting.
Craig Nadeau says he was always “a suit and tie guy,” so in an industry where most contractors show up at bid meetings in work wear, he fits right in with the downtown office executives. He’s discovered that this gives him instant credibility and rapport with prospective clients, who also tend to wear suits.
“When you show up in dirty jeans people know that you know how to swing a hammer, but when you show up in a suit and tie people know you are about business.” – Craig Nadeau
He also shows up on site dressed in a suit, and expects his workers to keep their workplace tidy.
“When I walk onto a site I want it to look like my clients expect it to look.” – Craig Nadeau
Looking like his clients has helped him develop the solid relationships (and keep growing more) that have seen him through recessionary times.
When Money’s Tight Customer Focus is More Important Than Ever
Too many companies just cut back in a panic when times are tight.
Sometimes you do have to lay off staff. But you’ve got to make sure that doesn’t hurt your customer service. If it does, you’ll enter a downward spiral. Instead, says Nadeau, “always be looking at where we can make a difference to the client.”
Here’s the Full Transcript of This Interview
Episode 92 – How Upping Their Customer Service Led to Growth in a Recession
TEMA (INTRO): There was lots of interest in last week’s podcast episode on accessibility in Web and mobile app design. We’ve all got to recognize that not only are there lots of people who have acknowledged disabilities, there are an awful lot of us in our 40s and older who are pretty heavy Web users, but we’re starting to deal with issues like less than perfect eyesight or hearing challenges or hand tremors that make it harder to get the cursor in the exact right spot needed to click on something, to say nothing of broken and sprained limbs.
00:00:51 Although it’s not specifically about accessibility, many of the user experience tips that I give in my report on 85 Tips for a Usable Website fare something that you may find useful if you’re responsible for a website or have any input into what goes into one or how it’s designed. You can download that free by going to http://bit.ly/85uxtips. Of course, to hear that episode on accessibility if you missed it, just go to FrankReactions.com/91.
00:01:40 Now to today’s episode. Today’s interview is with Craig Nadeau, who is the managing director of Maxim Contractors, who do tenant improvements in office buildings. And the conversation actually started when I was chatting with a former business student of mine when I was teaching at the University of Alberta who now works at the company. He mentioned that the company had gone from $1 million in revenues to $5 million in the past year and a half.
00:02:08 When I asked them how they’d done that at a time when most businesses in Calgary were really suffering because of the low oil prices, he said that a big part of it was improving their customer service and working more closely with customers to develop cost effective solutions for them. So I decided I wanted to find out more from the head of the organization, Craig Nadeau. This interview is really about business strategy overall as well as how customer service has figured into that. Enjoy the interview, and I’ll chat with you briefly at the end of it.
[Interview starts at 00:02:44]
CRAIG: I am Craig Nadeau with Maxim Constructors, and we do primarily tenant improvement work and construction in nonresidential areas in Calgary.
TEMA: Okay. Now I would have assumed that given that Calgary is going through a tough time with oil prices being so low that companies like yours would be struggling. You’re not?
CRAIG: We’re quite busy. That’s partly because of the niche that we’re in and also because we very intentionally operate a little bit differently than a lot of our competitors.
TEMA: Can you tell me more about that?
CRAIG: Yeah. Our niche is essentially a commercial construction portfolio that involves work that landlords need to do or property managers need to do regardless of whether or not the economy is strong or weak. So when a tenant either moves because they’re downsizing or moves because they’re upsizing, or if they abandon a suite completely, then they involve us.
TEMA: What happens, like if they’re leaving and nobody is taking the place? What’s your role then?
CRAIG: Yeah, so our role essentially, you know, if a tenant has been in a suite for even a couple of years, they’ve done damage to walls, carpet, and really they’ve made a suite that was essentially just for them. When landlords look at that suite, they say that is going to be hard to lease to a new tenant because it doesn’t fit everybody.
CRAIG: And so they most typically tear out everything that was in the suite, and then they bring it back to zero, essentially.
TEMA: Oh, interesting. Okay. And when you’re doing work on suites where tenants have just moved in, is it then the tenant that would be paying you or the landlord?
CRAIG: It’s a combination. It’s not always the tenant. Oftentimes the landlord controls the entire construction process, and they can deliver to the tenant a completely finished product. Other times the landlord will give the tenant a cash inducement to do whatever they want to do. If they use the money, great. If they don’t use the money, then it gets applied to rent or something else.
TEMA: Right. Okay. There certainly, I would imagine, has been a fair bit. I mean I know there’s been a lot of downsizing of staff, so I’d imagine there’s been a lot of downsizing of offices. So that’s interesting then your model works whether things are going down or up.
TEMA: How competitive is that niche within the industry?
CRAIG: It’s very competitive. You can imagine, of course, there’s going to be a mass of range of projects. They’re going to be from a landlord or a tenant simply will want to re-carpet a suite or paint a door, you know, as a very small project. That’s going to range way up to where a landlord needs to completely demolish a completely finished suite and then will need to rebuild it for the next tenant. That could be several million dollars for that type of–
CRAIG: What happens at the competitive level is that, at the lower end, everyone who is unemployed who owns a hammer suddenly became a contractor, so we deal a lot with that crowd. And so they’re always there. Essentially, the guy that does the quote is also the same guy that does the painting, tile work, and everything.
CRAIG: At the other end of the spectrum, the crowd stays out quite a great deal, and we’re dealing with the largest companies that deal with multimillion dollar projects that would never consider a small project.
CRAIG: We sit in the middle. We don’t really like super small projects. We’ll do them if it is in the best interest of our relationship with a client.
CRAIG: The really big projects, we have a limit. We’ll go to about $5 million on a build.
TEMA: Okay. How long has your company existed?
CRAIG: Well, I guess there’s the legalities and then there’s the practicalities of that.
TEMA: Yeah. Right.
CRAIG: But essentially we’ve been doing construction since 2000. There was an earlier iteration of the company that probably dates back another 15 years earlier than that that was doing some residential work that included renovations up through a handful of new home builds.
TEMA: Okay. Were you involved with the company all through this?
TEMA: Why did you decide to move out of residential and into business?
CRAIG: Residential is a very — it’s a very, very specific crowd that’s good at residential, and we’re just not good at it.
CRAIG: You have to be the type of contractor that can really — I don’t want to sound like we’re not hands-on because we’re very hands-on, and we were super involved in projects. It’s a different kind of involvement with residential, and residential projects can last for a year, two years. Like when we would build houses and we’d be still — we’re be 18 months in a house if they were big, custom projects. Whereas commercial projects, we can go through a project that’s, you know, a million dollar project might only last four months.
TEMA: Why is that? Why such a difference?
CRAIG: Residential projects are more confined. I guess there’s a physical component, so they’re more confined. There’s more — you’ve got to stick more people into a smaller space. They certainly have a component where you have to layer everything, so you have, you know, firstly your excavator comes in, and he’s got to spend a long time. Then your trimmer and then your cement guy. They’re all, you know, one is dispatched or the other. Whereas for us, really we’re typically looking at a suite that already exists, and we can come in with 30 people and demolish the suite in 2 days.
CRAIG: Then we can be building it. Then we’re just — we’re right into plumbing. We’re right into drywall. And it can all happen almost at the same time, so it’s a really different scope, residential to commercial. There are some people that are mainly only good at residential, others that are really good at commercial.
TEMA: I would imagine, too, that residential involves a lot more handholding.
CRAIG: Oh, yeah. You’ve got to. You don’t like shade of color. It has to be a different shape of tile, or everything is at a wrong angle. Yeah, there’s a lot of that.
TEMA: Let’s talk a little bit about how your company has managed to grow at a time when many others are struggling. What do you think has been leading to that growth?
CRAIG: well, I think one of the big things is that while I’m probably one of the handymen that people would rather — I don’t touch the tools because I’ll break something and then someone who is good at it is going to come in and have to do it again. But I’m comfortable around the tools is what I’m saying.
CRAIG: But after that, I’m a suit and tie guy and, when I go to quotes, when I meet with clients, I’m in a suit and tie. And when I go to job sites, I approach it from that perspective, so I want to approach it from the client’s perspective. They’re a suit and tie company. I’m a suit and tie guy. And when I walk onto a jobsite, I’m expected to look like my clients expect it to look, and I want them to feel like we’re supporting them at that level where we’re giving them good suggestions on what makes sense, how to save money, where’s the right areas to spend money, where should you spend more, perhaps.
CRAIG: But we really approach it differently. It would be really rare if you went to a quotation and there was 15 contractors to see one guy other than me in a suit.
CRAIG: Typically I’m the only guy in a suit.
TEMA: That’s interesting. And did you do that intentionally as a marketing thing?
CRAIG: I think a little bit. I think ever since I was a kid I’ve always thought it was important to look the part.
CRAIG: I’ve always wanted to kind of be that guy that if you show up in dirty jeans, people know that you know how to swing a hammer. But when you show up in a suit and tie, people know that you’re about business. You might not be able to hammer a nail, but you certainly know something else that’s really valuable.
TEMA: You understand presentation.
TEMA: And I mean if you’re doing the look of what they’re going to be living in, presentation is important.
CRAIG: Yeah, and I guess the other piece of commercial construction is that we’re building movie sets for the most part. We’re not building estate homes that are going to be around in 100 years.
CRAIG: Our projects have a ten-year lifespan, if that long. Sometimes five.
CRAIG: Then they will be torn out. You don’t build it to an estate home set of standard.
TEMA: That’s really interesting, but that’s a good point. Now what about, as you say, the amount of competition would have increased with the layoffs in the oil industry and stuff. So your business growth, to what extent has that been just you had already reached a critical mass, so you continue to grow in that way? How are you being affected by this flood of other competitors?
CRAIG: Yeah. I think where we’re seeing the competition isn’t in our heart. It’s more on our extremities. We see the guy who is desperate and now he’s painting. The other guy is a cleaner now. We do see that crowd. For the most part, we can use those guys in sub-trades. That in some ways is valuable because it can drive our price down a little bit. They’re competing more with each other.
00:12:20 As soon as we get into a million dollar project level, there’s a defined crowd. Frankly, a handful of the crowd that would do a million dollar project has dried up.
CRAIG: It may have been crushed a little bit, and they’ve lost projects. Alberta, it’s an interesting environment where typically if you can do something, the market will find you, and you don’t even have to promote yourself well.
CRAIG: Basically, if you do something well, they’re going to find you. But that’s changed now, and so if you’re not a bit of a marketing machine and out there getting new clients and developing relationships, then you’ll die along with the client side. I think what we’ve done well is we’ve always seen ourselves as a marketing machine and always been out there presenting ourselves as an option to what other people have been doing.
TEMA: How do you do that?
CRAIG: I guess we make a lot of phone calls, go to a lot of client events. We try to figure out who is the individual or individuals that make a difference and have impact, and we spend a lot of time with them and, yeah, we just throw ourselves out there a lot – typical marketing.
TEMA: Yeah and I guess, though, given that you are comfortable in the suit and tie, you’re able to go to business networking events and be effective.
TEMA: You also touched on an interesting point, though, that because there are all these unemployed contractors all of a sudden, or workers, rather, you’re able to actually get tradespeople at a better price than you might have previously, so you can actually lower your costs a little bit.
CRAIG: Yep, absolutely. I think one of the components to Alberta, and you’re bang on. One of the additional components to Alberta today is just that costs worldwide are not going down. We’re seeing kind of a micro economic event happening in Alberta.
CRAIG: But the price of drywall, for instance, is a massive change to the industry, and it’s just happened, and prices have gone up by roughly 15%.
CRAIG: That, you know, we can’t go to our clients and say, “Well, listen. I know the economy is horrible, but guess what? Your price is going up.” That’s the reality of it. We’re just in a microcosm, and we just need to just always be looking where we can make a different to the client. Sometimes it’s looking at different materials, different methodologies, and then just being a better partner for a lot of clients.
TEMA: And have you also had to shave your margins a little bit?
CRAIG: Some of our bigger clientele have been out spending a lot of money, and so I think the perception is that, hey, the market is down. This is the time, if we were every going to spend $500 million or something on a whole pile of projects, now is the time to do it. And so they’ve certainly gone out and made an effort to look for more contractors, which has, in essence, dropped the price down. There’s always the repercussions of that, though, I’ve seen where there’s kind of a fair market value for what we do. We can’t just go broke doing what we do.
CRAIG: There are some people, some contractors that will — because they’re essentially doing all the work themselves, they can skinny out their margins at a huge amount, but I haven’t really seen the repercussions of that. We haven’t heard back from clients who say, “Oh, while the price was lower, the change orders were unbelievable, and we didn’t get the products we expected.” I suspect there has to be some of that.
TEMA: Right. Okay. What about how you organize things internally in terms of systems and processes? How formalized do you have your approach?
CRAIG: I would say it’s quite formal, but quite thin. We don’t operate like a large company. We don’t have layers and layers of people. That’s part of the reason why the large companies don’t compete well in the marketplace that we’re in.
CRAIG: We have a very small accounting department, small sales team, and a small project management team. I think some people are surprised that we take on the project size that we do because they’re expecting that we have a big office building and there’s 100 people behind the scenes. But really it’s just a handful of people.
TEMA: Right. Okay. The people who do the work, the tradespeople, they’re contracted to you?
CRAIG: Yeah, like probably 95% of the work that we do is contracted, and we do have site individuals that are always on site or at least they’re part-time on site as much as required.
CRAIG: And they will occasionally do some of the work that will reduce the cost of what we would have paid a subcontractor to have them do it.
TEMA: Sure. What are the biggest challenges that you’re facing these days then with the business?
CRAIG: Yeah, that’s a really good question because I think normal course of business would be when everyone is busy and they’re focused on doing their business, then they don’t so much care about the construction project. Suddenly everyone is now really focused on the construction project and they want to be involved, and they want to know what’s happening. What’s happened is that the customer has gotten way more involved over the last year than we would normally see.
CRAIG: And so when that happens, typically we have what’s called scope creep where the scope of work tends to expand as you’re working.
CRAIG: Which typically doesn’t happen that much normally, but now it’s happening a lot right now. That’s probably the biggest thing for us is just managing that creep and the scope of work.
TEMA: That’s interesting. So are you changing then how you define contracts to prepare for that, or you’re just playing it by ear?
CRAIG: Yeah. Normally we wouldn’t have paid it a whole lot of attention because someone said, “Oh, could you possibly put a door there?” It wouldn’t be that big of a deal. But suddenly we’re seeing, well, now we all need all new doors and we want glass in the doors, and we need electrical outlets everywhere.
00:18:28 What we’ve had to do now is just double back and say we need to really look at the work that we said we were going to do and communicate to the client that what they’re requesting is outside of what we said we were going to do originally. That’s pretty new, and we’ve had to do a lot of work to manage that.
TEMA: How do you handle that without getting the client upset?
CRAIG: Well, through a process of learning and upsetting a few people. I guess what we do is we’re a little bit tighter on our definition of the scope of work initially.
CRAIG: When a client comes to us, we’ve essentially told them now that we don’t start work on this new thing until they’ve signed documentation stating that they understand firstly that it’s a change to the original scope of work and that there’s an additional cost and that it actually will change the date for the finale.
TEMA: Right. That’s really interesting. I wouldn’t have thought of that, but that makes total sense. They’ve got more time to be more interventionist. Yeah.
CRAIG: Yep. Yeah.
TEMA: Okay. Well, thank you very much for your time, Craig. I wish you continued success.
TEMA: Obviously listening closely to your customers becomes even more important in tough times. One thing that I found really interesting in this interview was the impact of branding in growing the business by, as he put it, being a suit and tie guy in an industry where most weren’t. It’s a good reminder, I think that how you brand your company sets up expectations in the minds of your customers. Always, always be sure that you’re being consistent with that branding and with those expectations.