« Movers & Shakers
Wednesday
Feb082012

Meeting Low-Price Competition

John H. Allen Co., Inc., a full service remodeling contractor in Jackson, TN, faced three challenges- low-price competition, home remodeling’s generally bad reputation, and maintaining a qualified work force year-round in a seasonal industry.

Owner-President John Allen and his management team decided these problems, which threatened the company’s profitability and growth, had to be addressed collectively.

To counteract the industry’s poor image, Allen required key staffers to get involved in community affairs.  He also made a point of compliance with building codes, setting up closer communication with government officials in charge of their enforcement.

The firm introduced a “customer satisfaction” policy: no payment until the project is completed and the customer is satisfied with the results.

Implementation of this policy did much to counteract the low-price competition from private individuals, operating out of pickup trucks. Who don’t have overhead expenses comparable to those of a firm like Allen’s.  They also usually don’t have the financial resources to carry a job to completion without installment payments.

On the other hand, the company could highlight customer peace of mind, emphasizing that its workers are licensed, insured, and bonded- and that all are its employees; it uses no subcontractors.  It found customers willing to pay more for these extras.

The solution to the problem of maintaining a high quality workforce was to enter a market that can provide year-round work.  The company introduced its services to insurance companies, agents, and adjusters.  The reason: Insurance claims for fire and water losses peak during the winter; and a full-service contractor is needed.  The company got enough insurance-loss projects to keep a work force busy during an otherwise slack building season.

With increased sales and profitability, the firm has been able to give its 30 employees additional benefits, further tying them to it.

Allen’s business has grown, and its reputation has spread to a wider area.  When the city established a code advisory and appeals board, John Allen was elected its first chairman.  Last year he was also appointed a city councilman, and his company was chosen the Jackson area’s small business of the year.

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