Just the other day, my kitchen faucet started leaking. It was a familiar leak. I had seen it happen before, shortly after we built our home. The first time it occurred, the plumber who did the original installation came and fixed it under warranty. Now, almost six years later, that warranty has expired, so I was faced with either A) hiring a plumber at a rate of $125+ per hour to fix it, B) replacing the faucet myself for $250, or C) trying to fix it myself. I initially opted to fix it myself, only to find a bad gasket at the neck of the handle, which I knew I couldn’t source easily.
I reconsidered option B), however, my wife and I really like the faucet, despite its obvious design failure. Wrestling with the prospect of shelling out a couple hundred bucks for a plumber, I remembered Steve — a plumber who had done some remodeling work for us in the past. My wife taught his kids in elementary school, and his family owns a local hardware store. Two text messages later and Steve was in my kitchen pulling the bad gasket out of the faucet while chatting about his twins, the kid’s activities, and the vacation he took last year. A day later, my faucet was fixed and I had a whole bag of gaskets so I can fix it myself the next time it happens. Problem solved for $40 cash, a slice of homemade zucchini bread, and some friendly conversation.
It may seem sacrilegious to you that a small business consultant and advocate for professionalism in the industry is sharing a story about how he paid someone under the table to do work in his home. If this is the case, you are not alone. I almost feel dirty exposing this. The reason for my public admission of guilt is to reinforce how common and compelling these scenarios are — even for the most well-intended folks like me. These service options are real alternatives for customers, they are more common than we think, and they are having a big impact on your business.
You see, guys like Steve are hardworking and skilled at their trades. And they are everywhere — possibly even working in your company and moonlighting their services on the side. These hustlers, as they have been so popularly labeled in recent years, present a real and disruptive opposition for service companies. One which can no longer be ignored, especially when it comes to sales and competition.
Before we can discuss ways to combat these silent opponents, we should really consider what makes them so disruptive. The most obvious reason is price. An individual performing side work is generally charging a fraction of what full service or specialty contractors are for their services. Their main goal is to earn a supplemental wage, often paid in cash, instead of turning a profit or covering hefty overhead expenses which are largely non-existent.
Another disruption is convenience. These soloists are willing to perform services in the evenings or on weekends when most customers are actually at home. This reduces the customer’s burden of having to take time off work to meet contractors during normal business hours. On the surface this might not seem like a big deal, but I can tell you it is; just ask your customers. The inconvenience associated with damage repair services is probably the number one cause of stress for homeowners.
In addition to price and convenience, I would propose that trust also plays a major part in a homeowner’s reasons for wanting to hire an individual over a company when work is needed in their home. The biggest reason for this is because most of them are sourced through a personal connection. Whether it’s a friend or family member, someone has made the introduction in a way that is much more intimate and trustworthy than a general marketing or advertising campaign.
Still not convinced to take these hustlers seriously? Try this: a 2017 study conducted by Bankrate.com indicated that over 44 million Americans make money from a side hustle. Obviously, that number is comprised of a large volume of folks engaged in ride-sharing and house flipping activities. However, those performing housecleaning and repair services rank #11 on the list, reporting average earnings of up to $1,500 per month. This is in addition to their full-time employment!
So, if you have ever wondered why there is such a large discrepancy between the number of actual property losses incurred, insurance claims submitted, and repair opportunities available for restoration contractors, consider the possibility that this work isn’t ALL done by the over-zealous DIYers with graduate degrees from HGTV. I would surmise that the hustlers have a more sizable share of the market than most would give them credit for.
Taking all this into consideration, I believe that planning a careful strategy for dealing with these crafty competitors is a must for any restoration or home improvement contractor. This has to start with the acceptance and acknowledgement that hustlers are a real option for customers. I have even heard contractors lead with the statement, “I recognize you could probably get someone to do this project cheaper or more cost-effectively than we can.” This puts all the chips on the table but provides opportunity for an open and honest negotiation with the customer. What follows that statement can make or break the deal.
In my opinion, there are three key ways you can sell effectively against the hustle. The first is with guarantees and warranties. These are things which no customer can object to unless they simply don’t care. They are also ways you can set your company apart from other significant competition in the marketplace. The standard warranty for most contractors is a one-year workmanship warranty. This means that if anything fails as a result of the workmanship, the contractor will correct the issue for the customer at no cost.
When a customer chooses to have work done by someone on the side, there are no guarantees or warranties for that work. Half the time there probably isn’t even any supporting paperwork or an invoice. This gives the contractor an advantage which can be firmly fixed by offering satisfaction guarantees and warranties that extend beyond the standard one-year workmanship. This can be done by asking leading questions like: “Have you considered what you might do if you are not pleased with the quality of the work or if something goes wrong with the installation of new materials?” This gets the customer considering the value of paying a higher price.
Next would be the issue of scheduling and reliability. While I said earlier that this is one of the reasons why a customer might consider the hustler over the contractor, it can also work the other way. The downside to having someone work in the evenings or the weekends is that they can also be restricted to it. Schedules change and priorities shift for someone working on the side. This can extend the time on projects, making work that should be completed in days take weeks instead.
Setting appropriate scheduling expectations during the sales phase of a project should be a matter of best practice, regardless of the situation. This is when contractors can take the opportunity to display real value by educating the customer about scheduling advantages contractors can have over the alternative. Things like the depth of resources, network of specialty tradesman, priority supply availability, and the efficiencies associated with working a full day are all things to reference when having these conversations with customers.
Last, but not least, is the issue of liability. This is something on every homeowner’s mind; it’s just not as high on the priority list as it should be. I would be shocked if a hustler carried liability insurance for their side business. I would be even more shocked if they carried worker’s compensation insurance, mainly because they are not required to in most states. So where does that leave the customer if something happens while these folks are working in their home? Accidental damages like scratched hardwood flooring, screws and nails through water supply lines, or even falling ladders and spilled paint are common occurrences on job sites. The customer bears the burden of these risks along with accidental injury anytime a professional contractor is not doing the work.
Addressing liabilities is an easy pitch with the customer, simply by letting them know you are properly insured. But don’t stop there. Taking the time to explain what it means for them in terms of the alternative really solidifies its value. You can even take it a step further by providing them with proof of insurance, if requested. Nothing sells like risk and uncertainty. When used appropriately, it can close more deals than any features or benefits you throw on the table.
Just in the past six years since we built our current home, I have used a dozen or more service providers on the hustle. These included housecleaners, electricians, plumbers, drywallers, painters, a carpet installer, concrete finisher, and window washer. The total paid to these folks has been well in excess of $20,000! I have also turned down proposals from reputable contractors because they didn’t properly explain the value they were providing over the alternatives. Actually, most of them never cared enough to ask why they didn’t get my business. Don’t be that contractor. Sell against the hustle just like you would any other competitor in your market. Quality, reliability, and peace of mind have real value in the customer’s eyes. Utilize these powerful selling strategies the next time a customer wants to “cash out” or not submit a claim and see what happens.