How Working in a Bar Helped my Approach to Change Orders.
Every day, the president of our company sends a company-wide email with inspiring, motivational, and thought-provoking quotes.
One day, the subject line caught my eye. “Customer Service is not Based on Money.” On the surface, this is an obvious statement. If you visit a business or utilize a service and the first transaction is terrible, the offer of 20% off the next visit is probably rejected. But what about return customers? Many businesses know those return customers are valuable to their bottom line and have loyalty programs that reward them for coming back. Buy 7 sandwiches and get the 8th free. Spend $100 and get $5 free on the next visit, etc. In the world of contracting, there’s no option for a loyalty program. Companies submit a bid based on their understanding of the scope and the job is awarded, usually to the lowest bidder or the incumbent with a similar price. So, how could a company show loyalty to a return customer? The change order.
This next statement may make some people, especially executives cringe. I don’t like change orders. There, I said it. There’s nothing worse to me than starting a project, gaining efficiencies, and then getting a change request that adds work and causes re-work on things already complete. Sure, this change order has a higher margin than your bid, but unless the schedule changes, you must do more work at the same time. Not only does this slow down new work in the field, but you must increase manpower to cover the re-work. This also complicates tracking your budget and key performance indicators. Why? Because now you may have people billing to the base job and the change order on the same day. If you have a crew of 20 people, what could go wrong with that? Since verbal requests and approvals are not accepted, change orders also create more paperwork for you and your customer. Nonetheless, these changes must be captured and all processes followed. But how can processing change orders impact customer loyalty? Before I go further, let’s look at a real-world example at a place farthest from the world of project management. A bar.
It was 2002, I had more hair and worked in a bar in Ocean City, Maryland. In this environment, customer service was based on money. (It wasn’t the only thing, you still had to make a good drink and tell a funny joke, but I digress) There were dozens of nearby bars and for the most part, all sold the same products and had similar music. Why did some succeed, and others had small crowds? When someone came in who was a regular and spent a decent amount of money, the bartender would always buy them a drink or two. They would make sure the customer knew they got something for free. This was important because you could never assume they realized it after looking at the receipt. The result of this was more tips and happier customers that felt they were getting a deal. These customers returned and told their friends, who spent more money. You couldn’t do this for every customer or you’d be out of business. We knew the regulars would come back, while the tourists may never come back again. Some of the other nearby bars had policies to not give away any drinks, no matter how loyal a customer was or how much they spent. This left them feeling nickeled and dimed and not appreciated. One customer, who was new to our establishment and enjoyed his experiences later rented out the bar for a private party. When the bill came, he didn’t even look at it, he just handed us his card and said he knew it was fair.
So how does giving away beer have anything to do with project management and change orders? As you now know, I don’t like change orders and I also know that due to paperwork, my customers may not like them either. Sometimes a change is a result of a mistake the customer made. Something was supposed to go here or work like this but needs to be moved there or work like that. A change order may require them to visit their boss and get approval for the mix-up. So, I have an equation in my head. X= the time will I spend creating, tracking, and invoicing this change order? If the change request is easy and less than x, I don’t charge them for it. But, just as in the bar, I make sure they know that we are doing this at no cost. This is usually met with the same appreciation as in the bar. Who does not like getting free stuff? More importantly, who doesn’t like less paperwork? If the next bid does not go out to bid, it’s a win-win. The customer gets a trusted partner who offers value and then you do not necessarily have to bid very low to win the work.
I was once told I am not in the project management business, but the customer service business. As the famous quote says, “We don’t do business with companies, we do business with people”. Project managers are the face of the company and making new customers lifelong customers should be the goal of any good company, whether a bar or a fortune 500 company. Just as a bartender knows their customer, a project manager should know just as much about their customer. This may mean having lunch and talking more about family and sports than projects and timelines. So, is customer service based on money? Meet me at a bar and we can discuss it.