BUSINESS DEVELOPMENT SKILLS - LESSON 5
BDS Lesson 5 - Value Delivery
BDS Lesson 5 - Value Delivery
“A satisfied customer is the best business strategy of all”
Michael Leboeuf, author of
“How to Win Customers and Keep Them for Life”
Every business that becomes established actually what it promises its customers. Those who take people's money and do not deliver what they promised are scam artists.
Value delivery is everything involved which ensures that the customer is a happy customer in every sense. This begins with the experience of inquiry, how easy is it to get a hold of us, do we inspire confidence in our ability to deliver, is our message comprehensive, and to the point? Are our proposal terms clear and consistent with the scope of work discussed during the interview, or written inquiry? How well do we manage scheduling, is the project completed on time and does our workmanship exceed expectations? Are our technicians appropriately friendly and professional? Is our price point reasonable? Without all of this, we don't have a business.
The greatest companies in the world deliver value in a way that exceeds their customers' expectations. Customers like to get the value of their purchases quickly, reliably and consistently. The more Happy customers the company creates the more likely those customers will purchase again in the future. Happy customers are more likely to tell their friends and family about their experience with the company which enhances its reputation and brings in even more potential business.
Successful companies satisfy their customers most of the time in the midst of a changing environment. Unsuccessful businesses fail to make their customers happy, lose them and eventually fail.
There is a flow of steps that must occur from the time we get a voicemail, and/or email, and/or answer and/a call or a text message from a window cleaning prospect, until the very end when we record and deposit a check for the paid invoice.
This flow of steps is sometimes called a value stream. Think of it as a set of steps beginning with the value creation and ending with a paid invoice. So we must understand what that value looks like before we can evaluate how effective we have been and can be in the future in continuing to create and deliver the thing we do.
At Happy Window Cleaning, we improve people's views. That should be our primary focus. Which is why we must clean the windows. Cleaning windows is what we do but it is not nearly as important as why we do it. Our clients are not paying us to clean the windows, not really. They are paying for a great experience for themselves, the experience of dealing with professionals can reliably, quickly and consistently provide them with outstanding views of their homes, property, and setting.
When we begin to truly appreciate our clients we become willing to give them the great experience that they desire. When we do that are rewarded richly. We are allowed to literally welcome to stand among kings and great achievers in many realms. That is what being successful at value delivery gets us.
As owners, we must study every detail of our value creation and delivery so that we find ways to improve efficiency, productivity, throughput and ultimately the lifetime value of our clients.
The Toyota Production System (TPS), adapted the early work of Detroit auto manufacturers, to systematically examine every step of their process on a regular basis. What is more, Toyota adopted a culture where every hand and mind became accountable to find and improve the process. Analyzing the production system in great detail paved the way for an ongoing series of small incremental improvements. Toyota (and all of the others have since followed suit) make hundreds of thousands of improvements to the TPS each quarter. As a result, the entire automotive industry has made leaps and bounds in improving speed, consistency, and reliability which has greatly improved the reputation of the brands and customer loyalty driving up sales across the board to new record heights year after year.
Even today, the wealthiest county in Michigan and one of the richest in the entire world in Oakland County (just north of Detroit.)
The best way to understand a value stream is to draw a flowchart. The customer might start at your website, They respond to the call of action and click on: “Get an Estimate” You become involved when you see their inquiry in your email inbox. “You have an interested Prospect”. So you log into customer factor and find the prospect under “Prospects”
You look at the address and lug that into “Bing Maps” to evaluate the size of the house, how many levels there are, what kind of windows (casement, double hung, sliders), are there screens, storms, French or Italian windows? Do the windows have lattice grids, if so what type are they; wood, plastic, pins, snap-in etc.
What is the landscape like, are their shrubs, rocks, air conditioning units, hot tubs, playhouses dog houses, and other obstructions, that make staging ladders and accessing windows more difficult?
What scope of work is involved? Is it an “in and out” cleaning, or exterior only? What notes have the customer added to the proposal?
The template that you use for the proposal has many terms and conditions, some will apply, others will not and need to be highlighted and removed to keep the proposal relevant and as brief as possible. Tracing the steps or transformation that your offer goes from the beginning to the end reveals hidden aspects, strengths, weaknesses opportunities and threats. This will show you just how efficient your process really is. It is very common for processes to contain unnecessary steps or awkward transitions. Creating a complete diagram of your value stream takes effort but it can help you to streamline your process, making the entire system perform better. In a sense, that is what Happy Window Cleaning Franchise really is. Years and years of these sort of efforts, countless iterations making us who and what we are. Nonetheless, we are always looking to improve.
In general, the rule is to make our value stream as short and simple as possible. The more steps and complicated we make things the greater the chances of things going amiss. The more steam lined our value stream is, the easier it is to manage the business.
Remember K.I.S.S. “Keep it simple stupid”.
The Distribution Channel
The distribution channel describes how our value proposition is delivered to consumers. As a service, we have a flagship operation which delivers window cleaning directly to clients in the Grand Rapids metropolitan area. There is no intermediary since the service is provided by the company itself.
Direct to user distribution is simple and effective however it also has limitations. We can only serve as many customers as our time and energy allow. Once the demand for our offer outpaces our ability to deliver it, we risk diminishing our reputation by disappointing new prospects.
By contrast, intermediary distribution works across multiple channels. Like when you purchase a product form a retail store, the business is a re-seller, since it probably didn't manufacture the product itself (although some do), they are purchased from another business.
Franchising is a kind of intermediary distribution network. The Happy Window Cleaning Flagship can sell our value proposition to as many customers as we want by securing distribution through franchise partner shipping. The more distribution a product has the more sales it is likely to make. The more Franchises selling the product, the more opportunities for sales.
Intermediary distribution increases sales, however, it also entails giving up a certain amount of control over your value delivery process. This already transitions when a self-employed window cleaner takes on his first employee and sends that employee out onto an established window cleaning route. Happy Window Cleaning works from the guiding structure of ownership incentive. Those who stand to reap large benefits from taking ownership are more apt to be effective with their value delivery efforts than most employees are. Therefore. Happy window cleaning does not permit absentee franchise ownership. One must literally put skin in the game as a franchise owner. And specifically, a franchise owner must put in a minimum of thirty percent of their total work week (fifty hours or more) on project sites actually cleaning windows. No other franchise has this requirement and it is a hedge against diminishing the good name of Happy Window Cleaning. Also, we believe that effective leaders must lead by example.
Securing distribution is important, however, overseeing the distribution is just as crucial to success. There has to be checks and balances built into the guiding structure, follow-ups, monitoring feedback from customers and repercussions for negative feedback, poor production and damage to reputation as well as incentives for effective and profitable operations.
When it comes to value delivery, how we set expectations matters. As a general rule of thumb, never set expectations higher than you can deliver. It is best to actually lower expectations and then wind up exceeding them.
Happy Window Cleaning strives to meet expectations through a dedication to professional competency. We do not claim to produce perfect outcomes. We acknowledge that the standard that we abide by may see, subjective to those who are unfamiliar with our craft. Window Cleaning is in the rawest sense a measure of cleanliness. Window Cleaners do not sterilize, nor do we disinfect windows, tracks, screens nor window sills. There is no company on God's green planet, that is able nor willing to remove every grain of soil, and every smudge on every surface every time. If we could accomplish that it would come at an effort require time, and expense greater than our clients would be willing to pay. In sum, there is no way to produce a level of cleanliness that one would expect from an infectious disease ward in a hospital while concurrently remaining financially sufficient.
One could literally spend several hours on a single window sash attempting to remove solid trapped within, which becomes dislodged bit by bit with every tap, every opening and closing. So clean in the sense of window cleaning does have ordinary and reasonable limitations which are unique to the trade. Window cleaning is part science and part art. We use TACT, we monitor our dilutions, we calibrate and attend to our tools. We train our technicians effective and efficient techniques. But in the end, it just might be the art of understanding what is enough that enables Happy Window Cleaning to deliver a technical service that exceeds industry practice and that is professionally competent. In sum do not fall into the trap of seeking perfection at the cost of financial sufficiency. Performance should exceed expectations. Striking the right balance is all in the details.
Quality = Performance – Expectations
When performance is lower than expectations a customer's perception of quality will be low, even if the quality is actually high in concrete terms. This is why one can literally spend a few hours toiling up high in the direct sun on a ladder working on a window, but if a single streak or drip remains visible a customer might feel that they did not get their money's worth! Ask someone more experience what to do in this circumstance. Often times such a troublesome window can be dealt with more efficiently. Soaking it, allowing some dwell times, prescrubbing with a white pad and a doodlebug, allowing some dry time. Using the pole to stand back and see the window from the same angles that the customer will see it and buffing it with the pole can shave hours off of your labor. Working smart. Other times there are imperfections in the glass, a bad seal, silicone or other matter than simply cannot be removed with the available tools.
Delivering quality is how a company thrives, this takes knowledge and experience. It takes both the willingness to perform one's duties with pride and the technical ability to get the job completed.
Think of Apple's first generation iPod. When Steve Jobs promised “A thousand songs in your pocket” the call to action was heard around the world. But the device was so revolutionary that people when people experienced it they were blown away. While they knew they would get something good, the benefits of the iPod were actually much more than they had expected. Yet even so, the next generation iPod while it technically had more storage and other features was not as well received. Why? It was because that the prelaunch expectations had been set so high that there was almost no way that Apple could meet them.
Remember the fourth-generation iPod, the one with antenna glitch? The overall performance of the machine was still better than the previous ones but the fact that people found a problem with the machine turned many people off. The new version was better, it had more memory and it was cheaper, yet it didn't feel better to many people and so sales were not as good.
As of this writing, Apple has announced that they will no longer produce the iPod, They feel that it is obsolete nowadays with the popularity of iPhones/smartphones. Many of us still use our Ipod's because we don't want to run down our batteries on our phones. But they will no longer a thing from Apple. A company that thrives on setting Apple want to remain a company that strives on innovation. The market has changed. The iPod product does not attract the early adopters, so although there is still a potential to deliver value the company has chosen to stop manufacturing a product that many people would still like to buy. Is this a good strategy. Only time will tell.
The best way to consistently surpass our customers' expectations is to give them a little bonus. To go the extra mile. We need to meet our customers' expectations and surpass them whenever possible.
Scott's Janitorial was my first cleaning company. We managed the presentation of over a million square feet of banks, medical offices, Insurance offices, an airport and so on. In addition to the commercial cleaning side, we had specialty divisions in Carpet Cleaning, Window Cleaning and Fire/Water Damage Emergency Response. The recipe for becoming the go-to company in a space is this: Build a reputation that you can get the job done right and on time.
Contractors are often unreliable. They don't return calls, and when you do get them to come they don't do all they say they will do. The secret to Scott's Janitorial success was that we were predictable. It is what makes Happy Window Cleaning a success. We do great work, we are friendly and observe good etiquette, and we show up when we say we will. His is called Predictability. This is what builds a brand, and value delivery is the process by which we achieve that recognition within the market.
When people purchase something, they want to know exactly what they can expect. With Happy Window Cleaning, we communicate this with our written estimates. Going the extra mile gives people an unexpected surprise that pleases them. For instance, knocking down the cobwebs from the window casing, or dusting a ledge that is up high while we are up on the ladder. However, if we are not able to deliver what the customer expects in a predictable manner it won't matter how many extras you provide. People like nice surprises but they hate to be caught off guard!
Predictability is a three-legged stool. The first support is uniformity. This means delivering the same characteristics every time. With happy Window Cleaning, if we leave a single mini-blind up in the bedroom or they are uneven, we diminish the perception that our clients have about us. Think about Pepsi or a latte at Starbucks. No matter where you are in the world, you can expect the beverage to taste exactly the same. This is no small feat for those companies. Those beverages with water that has to be filtered and treated to achieve uniformity and that is just the beginning of each process. Water from a river or a lake is not the same water from an underground aquifer. No two sources are the same and therefore they will not taste the same. Think about it. Yet the beverage must taste exactly the same every time! If just a small fraction of the lattes sold at Starbucks didn't taste right people would stop buying!
Consistency is the second supporting leg of the predictability stool. This means delivering the same value over time. The surest way to failure is to violate the expectations of our loyal customers. In the mid-1980s Coke decided to change their formula. Sales plummeted. Who is the boss? The customer is.
Reliability simply means that you can be found when the customer needs you, that you will show up and get the job done in a timely manner.
Improving predictability will enhance our reputation and build the Happy Window Cleaning brand to new heights. As a franchisor, it is our responsibility to follow up with each of our partners and to be the mirror that we all need to ensure that we are reflecting the predictability that makes us the success that we are and the greater which we strive to become.
A measurement of the desired goal.
The formula for Throughput is Units/Time.
This is how we measure the results of the company's value stream. The more results we create per unit of time the higher the Throughput.
Dollar Throughput tells us how quickly the operation can produce a dollar of profit. This is useful when comparing one franchise operation (a particular value stream) to the others. At Happy Window Cleaning, we require that our franchise owner affiliates achieve a predictable performance within a particular dollar throughput standard for the business cycle.
The best way to increase throughput is to begin to measure it.
With building a Franchise the rate at which we duplicate (also known as multiplication) our processes is an urgent consideration. Starbucks opens a new store someplace every day. That is a lot of moving pieces made to fit into the proper place so that the clock keeps accurate time. Similarly, at each individual store every time a cup of dark roast is poured a process has been successfully duplicated. Being the best in our space requires that we emulate the best in all spaces and innovate to be the leader in our own.
With my book “Cleaning for Profit” there was a time when duplication would have been a tedious process. Where scribes used feather pens and inkwells to copy books and a single copy could take a year or more! Nowadays duplication is instant electronically on Amazon. Times have changed. The opportunities we have today are astounding. Every time a book is duplicated Amazon is delivering value without the author having any direct involvement.
Similarly, we see that retailing has evolved from the days of westward migration along the railroad and the dissemination of the now-defunct Sears/Roebuck Catalog to a labyrinth of coupled global distribution and retailing outlets that makes Walmart so successful. The processes of multiplication by way of franchising is how it is possible for us to work together to likewise scale Happy Window Cleaning to its fullest potential. There is an upper limit on what any single unit can accomplish alone. But with many, there is great amplification of the brand. In the USA alone there over thirty-six thousand organized cities. Think of that scale! Within that framework exists scores of individual franchisee owners who operate more than two locations up to a hundred locations. Restaurants especially have championed the model. This is all made possible by the secret sauce particular to the line which is rooted in interdependent processes of duplication and multiplication.
Scale is the ability to reliably duplicate a process as sales volume increases.
Products can be successfully highly duplicated. Factories can crank a throughput of tens of thousands of mittens in an hour. A large retail chain can sell a million units of mittens in a single day when a cold front moves into the region. Products with the power of multiplication of profit can be a handsome business venture. People on the other end of the spectrum do not scale. We as individuals have an upper limit of how much work we can accomplish in a given time frame.
Let's consider Starbucks. To deliver an espresso there is human involvement sure. But the process is semi-automated in that there are machines that actually do much of the work. This enables an individual to sell a considerable number of beverages within a given shift. That is multiplication by successful duplication through the use of technology.
For us who do service work, our upper limit per individual is considerably constrained. However, our skill set and specialized tools and process do give us an edge. We can accomplish in a few hours what we are often told would take a customer a few days. It is this problem of constraining when comparing service to products that has convinced me that the best way to maintain a performance that exceeds our customers expectations is to extend ownership, via franchising. This is how come unlike may other window cleaning companies we are less interested in building a fleet of employee window cleaners. The happy Window Cleaning way is to facilitate a fleet of invested owners instead.
As an investor, Happy window Cleaning is not an absentee venture. This business requires your daily commitment and effort. We take service seriously. Service businesses are the most difficult kind of companies to scale. This may be why there is no single cleaning company in any of the specialties that truly dominates on a national scale. That said there are of course several leaders in each category.
Are two concepts related to value delivery that perhaps are the most overlooked in management efforts. Amplification is on the sales side and accumulation is usually associated with the expenses side. When we duplicate a service we are said to be amplifying our profit over time. So small changes in Throughput rates tend to amplify hugely over time. On the other side of the coin, we have expenses that accumulate to great sums over time.
Bruce Barton of Betty Crocker speaking at a grocers marketing convention once said:
“Sometimes when I consider what tremendous consequences come from little things, I am tempted to think that there are no little things”.
We seek to tighten up our efficiency because little leaks gone unattended over time will sink great ships. Turning over the squeegee rubber and using the opposite side gives us a hundred percent increase in efficiency. If everyone did that at 200 franchise locations what would that mean for profitability? What would that equal over ten years? Now imagine that we can take all of that savings and invested it in a real estate venture that had a future value greater than what we invested. The tax laws allow us to invest. The savings are compounded and accumulate at an astounding rate.
Similarly, if we increase Throughput cleaning a third story window from twenty minutes to ten minutes, as a single instance that might not seem like a lot. But over a year's time, that increase in productivity can be tens of thousands of dollars in profits. So amplification and accumulation are very useful things to think about going forward.
Investing in the right tools for the job increases our productivity dramatically. With Happy Window Cleaning, we have squeegees from five inches all the way up to thirty inches in width. A large picture window can be cleaned with just a few swipes using a larger squeegee. The few times we have to reset the ladder the more efficient we become. The same amount of effort accomplishes more work.
Similarly, a drywall installer may use a specially modified battery operated drill and a framer uses a pneumatic or gas operated framing gun. These tools multiply the force of mechanical action allowing the skilled technician to move along with the process much more quickly than he could use a manual screwdriver or a framing hammer. One force multiplier that we use in window cleaning is self-adjusting ladder levelers built onto specially designed lightweight stack-able ladders. Investing in the right tools saves professional window cleaners considerable time and effort during the staging process for exterior window cleanings. The more that a tool amplifies or concentrates your effort the better the tool.
Of course, some force multipliers are extremely expensive. A good water pole system can cost as much as five thousand dollars. Compare that with the cost of Computer-aided design plasma tools found in a metal fabrication shop which in some cases can cost millions of dollars. You are going to learn to conduct a cost-benefit analysis which will pay dividends when you are able to invest in the right tools to increase your profitability. As a general rule, the only time it makes sense to use financial leverage i.e. debt is when the investment promises to return an increase in productivity greater than the future value would be without the investment. Always choose the best tools that you can obtain and afford. Quality tools give us greater output with lesser input. Although we will cover efficiency in greater detail when we get into systems studies. Here is the fundamental efficiency formula.
Percent efficiency = In – Out/In (100)
Why do we bother with systems? The primary reason we create a system is that doing so paves the way for improvements to be made. Even if we were to make everything up as we went along when setting to accomplish a task, there would still be a process involved assuming that there are several steps from the beginning to the end. So by formally recording what happened, we open the possibility that we can rethink and retrace our steps to make the next iteration more effective with less effort exerted.