Nobody like to have to lower their price, but if you want the job and the customer says “Sharpen Your Pencil” if you want the job that’s what you do. I’ve always figured it’s better to be on the inside looking out, than to be on the outside looking in. When you’re the one with the contract, at least there is some money coming in and there is hope that income can be increased through extra projects and that over time, things will improve and previous service levels can be restored.
The Good News
Looking at it from a positive point of view, at least the customer didn’t cancel the account or simply award the work to someone else. You were given an opportunity to take a second shot at the account. Both of which are good news. Count your blessings, get over it and move on.
The Hard Part
Where this approach gets difficult is when the customer wants you to cut the price or do additional work, but still wants the same or a higher level of service.
Considering that labor costs generally account for 50% – 80% of your costs, you only have one option. Reduce the labor and time it takes to do the work. This leaves you with two options:
- Find ways to get the work done in less time.
- Reduce the level of service provided.
If it’s an existing account, you can re arrange workloads/assignments and give each person my area to clean or possibly you can automate the process by changing out less productive equipment for equipment that covers more space in less time. Another option is to spread out the service frequency for period tasks, such as dusting, window cleaning, hard floor care and carpet cleaning.
With existing employees, it’s generally more difficult to expand work areas as most people thing they are already over worked and unless you can show them how to cut time and be more efficient, and even then, most will resist change, because there view of the work and how long it takes to do it is based on their previous experience in the account.
In a new account, there is no previous experience with the work, so you’ll find it much easier to assign larger work areas from that start. Training and close supervision during the transition will ease the process and reduce the pain.
Where to Cut:
We know it labor that has to be reduced, now you need to figure out in what tasks is most of your labor used and to reduce those areas first. One of the first places people look is at extending the frequencies of service for floor, carpet and window cleaning. Instead of burnishing daily, weekly or monthly, it now slides back a time period. What was done daily, now becomes weekly or monthly and what was done weekly now becomes monthly or quarterly.
How to Cut:
It all depends on how much you need to cut. One approach is to reduce the number of hours each person work, if everyone works an 8-hour day, can you get to the number you need to be at by reducing the work day to 7 hours vs 8 hours. Doing this won’t generally have much impact on the quality of service, but some people may quit or have to find other part time work to make up for the lost income or you can switch over to part time staff instead of full time workers.
Another approach is to discuss the issue with the customer and see where they’d suggest making a cut in service. The last place you want to reduce service are restrooms, food service areas and entrances.
Rebidding or lowering quality is not something anyone likes to do, but it means keeping an account and peoples jobs (at least some) I say “Do it”.
Best of luck with it.