The New Costs Of Doing Business The Old Way
The direct and indirect costs of sales, contracting, billing, and accounting have been long considered inevitable for home services companies. Since everyone has to deal with them, there is a tendency to ignore or underestimate their effect on profit margins.
No more. Early adopters of end-to-end technology systems see many “old” costs decline or disappear when they use technology to streamline business processes. Higher profit margins and increased cash flow provide these companies with the advantage to be selective where and how they automate. Not sure which of your old processes generate new costs? Here are some of the top culprits:
Cost 1: Paper
Paper and paper-based processes are a major source of costs in the home services space. Costs accrue not only from direct purchases of paper, printer ink, printer hardware, etc., but also from the indirect costs of document management like version control, document storage, and retrieval. In fact, reduce.org estimates the total cost of a paper environment to be between 13 and 31 times the direct costs of buying the paper itself. Businesses that reduce or eliminate paper-based communication reap almost immediate savings.
Cost 2: Mistakes
Errors typically arise in the estimating and contracting processes. Calculation errors, missing information, or data entry issues are just a few examples. This is aside from the inevitable miscommunications with the customer. Mistakes happen more frequently and persist longer into the project lifecycle when your systems rely on manual data entry.
In contrast, companies that invest in centralized, digitally-based systems can capture customer and product information in a digital format the first time. This allows for much more transparency with the customer. When corrections or revisions do happen, team leaders can make changes once and have them populate across all relevant systems, which saves time and prevents future mistakes.
Cost 3: Talent Recruitment and Training
As the home improvement space grows, so does the need for top talent. But recruiting and retaining good people is getting more difficult, especially in high-skill sectors.
One of the top predictors of employee engagement and retention is whether the employee feels they have the skills to do their job well. Technology allows companies to increase investments in people without increasing training costs. Technology-enabled onboarding processes for new hires, and online video or presentation-based programs for developing new skills allow home services business owners to burn less resources developing the basics, and more time on higher-value mentorship and hands-on development.
Cost 4: Negative Customer Perception & Satisfaction
Customers who want a paper copy of the contract or who embrace the lengthy in-home visit, are already the exception amongst home services customers. The trend is moving towards more technology-enabled interactions in every aspect of customer engagement. So much so that two-out-of-three home owners already say they will not book a second project with a home services company that isn’t tech savvy. Social media platforms like Yelp, Facebook and Nextdoor allow dissatisfied customers to widely share their side of a disappointing experience.
At their core, these “new” costs caused by the use of old, limited, or siloed technology make you less efficient than your competitors. If you are still using paper, you can’t access information and disseminate it in a timely way to everyone who needs it. If you make mistakes—and you will always make mistakes—you can’t correct them quickly and be confident that everyone got the update. Your talent gets less attention then they need to feel capable and valued, and your customers lack faith in your ability to get the job done. Collectively, these issues compound to negatively affect your bottom line. Either you can’t scale at all because you don’t have the processes that allow it, or every additional project requires heroic investments in time and personnel that eat away at the benefits.
Leap is the leading in-home sales software provider for remodelers and other home services companies. The Leap app digitizes the entire in-home sales process including digital estimates, digital contracts, fast-response financing results, CRM data integration and more.
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