The Myth of Risk Aversion
While assisting contractors for as many years as I have, I’ve found the personalities of the decision makers usually place them into one of three groups:
- The Go-Getter: Here are your top 2%: the hard-charging, risk taking, midnight oil burners. These guys are rare but aren’t hard to spot because they usually show themselves as the more dominant forces in any given service area. Even if they’re a small upstart, with enough financial backing they’re soon making the established brands sweat and are stealing massive market share. However, the shoot-ready-aim mentality can also get a business in trouble quickly, and not every risk is a good one. These guys tend to go all in… with some hitting it big and others flaming out spectacularly.
- The Tentative: This category encompasses a lot more people than the Go-Getters. Here you find those who want to grow and are willing to invest but are hesitant about what steps to take to get to the next level. Some might have once been in the category above but got burned by a bad gamble or a predatory sales pitch for a program that offered them immediate success and didn’t deliver. I have a lot of sympathy for this group because these owners’ dreams are still big, but they need assurance and good, trusted advisors to help them realize their full potential.
- The Complacent: And finally, you have the last group - those who are completely satisfied with where their business is, the size of their customer base, their yearly take home, and their flat-lined trajectory. Their ambition is not for the next level, it’s set squarely on keeping the status quo.
Now, each group has their pros and cons, and to be honest, grouping people into generalizations is always a little dangerous. Chances are each business owner has a touch of all three categories, just in different amounts. But I want to take a second to speak directly to this last group, and I want to tell you something very important: There is no such thing as maintaining if you continue to use the same methods you used to get there. Likely, you think you’re being wise, holding on to what you’ve got, and riding monotony all the way to retirement. But the sand is slowly slipping from under your foundation every day.
Often, we think of any type of change as risky, so the tentative and complacent groups push back on even the smallest changes. It’s human nature to be averse to change and maybe even be a little pessimistic. We think that if ANYTHING changes, with our luck, it’ll likely change for the worse. So we’d rather things just stay the same. Well, life has a different response to that… Everything around us is in a constant state of change. No matter how hard we fight to keep things the same, if we keep doing the same things to keep things the same, we can be assured they’ll never stay the same. Follow?
The Law of Diminishing Everything
I was taught a simple saying early in my sales career, “If you keep doing what you’ve been doing, you’ll keep getting what you’ve been getting.” Here’s a mantra the Go-Getters live by as they want to continually shake the boat for a chance at something better. The Tentative, unhappy with what they’re getting, know something needs to change in order to get there. But for the Complacent, this sounds like a beautiful promise, right? All I have to do is hold steady and I’ll “keep getting what I’ve been getting.” Right? Not so fast. That quote was meant for motivation, not comfort. And to be truthful, it’s actually just a common language iteration of Einstein’s definition of insanity.
The Law of Diminishing Returns is a time-tested economic principle that states any investment will return less and less over time if all other factors remain the same. I’ve spoken with many contractors who send out the same mailers every year and wonder why they don’t do as well as they did the year before. Or the year before that.
Law of Diminishing Returns.
“We haven’t changed anything on our website… why doesn’t it bring in as many leads as it used to?”
Law of Diminishing Returns.
Heck, even money in the bank drawing a fixed interest rate is going up against inflation and cost of living increases.
Law of Diminishing Returns.
Attrition Is Inevitable, But It Can Be Managed
Your market is changing rapidly, so the harder you tread water fighting to stay the same, the more you’re likely to lose. And the most impactful place will be your very own database. It’s scary how many contractors believe that if they show up to a home, do a good job, and hear no complaints, then they’ve earned that customer’s business for life. But statistically that’s simply not the case. The average contractor loses 11% of their database (110 households for every 1,000 on your books) each year to normal attrition. Some of that loss is unavoidable - people pass away and move out of your service area. Also, a good chunk of a Complacent contractor’s customers are always up for grabs to an aggressive Go-Getter in the area, but 7% (70 for every 1,000) fade away just because they don’t feel an ongoing connection and relationship with the contractor. There are too many competitive options, many of which are marketing aggressively, for you to think your homeowners will always stay loyal without work on your end. Sadly, the contractors who are trying to simply hold tightly to what they have are the ones most susceptible to quiet and consistent losses.
It turns out the greatest risk you can take in business is trying to avoid it altogether, and whether you’re trying to DOMINATE your competition, grow at a steady and healthy pace, or just make enough to pay the bills and earn a decent living, we all need help deciding the appropriate level of investment we need to make and where. Hudson,Ink is here to help you manage healthy and sustained growth through new customer acquisition and retention, at a pace that fits your personality and vision. I’d love to speak with you about forming a marketing plan that fits your needs.
Marketing Coach
Hudson,Ink