Customer Satisfaction For Contractors

I saw this short story on Seth Godin's blog this morning and it got me thinking about a formula I heard a long time ago regarding customer satisfaction.

Customer Satisfaction equals

the Perceived Value the customer receives from the product or service minus

the Cost to the customer for that product or service

This is so simple and so true - it has been part of my philosophy for negotiating projects and change orders ever since.

Why is this so hard to grasp for contractors? First of all it is because there is a serious lack of financial training at all levels in the construction industry. What little training there is centers around estimating where you figure out YOUR costs and then mark them up to create a "sell price."

The formula for customer satisfaction has NOTHING to do with what your costs are - it has to do with the cost to the customer.

If you want to make more money AND have happier customers then figure out how to raise "Perceived Value" at a greater rate than your costs.


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