The Harvard Business Review has posted an article titled, “Identify Your Value Proposition with This Mathematical Concept,” and I’d like to share some of the tips from the article that are applicable to operating a home inspection business.
In this post, you’ll learn how inspection companies can calculate their customers’ decision factors in order to gain a competitive advantage.
Let’s assume BigBenInspections.com is struggling to survive. It’s been in business for many years, but now it’s barely profitable. If Big Ben Inspections is going to be successful, it has to consider combinatorics, the branch of mathematics that studies the combination of elements and their mathematical results.
InterNACHI® Founder Nick Gromicko wrote about combinatorics from the perspective of the home inspector in his book titled, “STACKS: A Home Inspector’s Guide to Increasing Gross Revenue.” It’s a free PDF download. In this post, we will look at several reasons why a particular home inspection company could be chosen over another company from the perspective of the home inspector’s client.
Why Do People Choose One Inspector Over Another?
Consumers base their purchasing decisions on a combination of factors that provide the most value to them. There are various reasons why a person would choose one home inspection company over another. When a company does well in all of the strategic factors that influence a consumer’s decision, it enjoys a competitive advantage in its market. Competitive advantage is achieved when a home inspection company does better than its competitors on a combination of strategic decision factors. And when the perceived value is overwhelmingly greater than the cost, it’s a good consumer decision.
Competitive advantage is achieved when a home inspection company does better than its competitors on a combination of strategic decision factors.
Strategic Decision Factors
Let’s assume that the decision factors people use when choosing to hire BigBenInspections.com in comparison to other companies are price, services, reviews, agent referrals, qualifications, and risk. Let’s rank each factor based upon a customer’s perspective from 1 to 10. The following graph illustrates the customers’ ranking for each strategic decision factor.
In this example, the qualifications of the inspector are perceived to be poor (4 out of 10). Reviews are ranked 1 because the company gets a ton of negative Google reviews. Risk is inversely proportional, meaning that if there are zero risks in hiring the home inspector, the ranking is at 10.
This information could be illustrated also by a music soundboard (or a mixing board or mixer), which takes multiple inputs and merges them together as one output signal. Think of each consumer decision factor as an input on the board, and the job as a business owner is to push each one has high as possible. Watch a short video on how success is based upon doing a little work on many things every day.
Which Factor to Push?
Let’s take a look at why Big Ben Inspections is struggling and identify which factor should be pushed higher. If the customer’s perceived value, derived from the combination of price and other strategic decision factors, is low then there is a business problem that needs immediate correction.
- Price (the customer’s cost of receiving what’s valuable to them): 6
- Services (the range of quality inspection services performed competently for the customer): 7
- Reviews (other customers’ good, positive feedback about the company): 1
- Agent Referrals (how well the company maintaining cooperative business relationships with real estate agents): 8
- Qualifications (knowledge, skills, abilities of the home inspector): 4
- Risk (the inverse chance that the customer’s expectations are not met): 10 (meaning very little risk in hiring the company)
In this example, the risk factor is amazingly good (10). But the company’s reviews and the qualifications of the inspectors are terrible (1 and 4 respectively). Focusing on the lowest two numbers, the company should work on obtaining more positive reviews from their clients and training their home inspectors to be more qualified.
In the free, online InterNACHI® Master Class for Home Inspectors, we teach about:
- pricing and value,
- getting certified in numerous services,
- receiving Google reviews,
- convincing agents to refer their clients to you,
- becoming a highly-trained, qualified inspector, and
- reducing risks of hiring your company.
The Zero Factor
Here’s a quick lesson on the number zero. If you multiply several counting numbers together, you get a much bigger number. For example, if you multiply 6 x 7 x 1, that equals 42. But if any of those previously mentioned decision factors equal 0, then the output result is 0. Zero! In business, if any of the strategic factors is 0, then that could be disastrous. Watch out for the zero factor.
How To Be Successful
To run a successful home inspection business, you could research the strategic decision factors relevant to the needs of your potential clients. You can find out what those decision factors are by:
- using post-inspection customer surveys,
- asking clients directly, and
- interviewing real estate agents.
Then build and implement a home inspection business and marketing plan to provide clients exactly what they need and value most and gain a competitive advantage.
Free, Online InterNACHI® Master Class for Home Inspectors
We recommend taking the free, online InterNACHI® Master Class for Home Inspectors. The class provides everything the home inspector needs to run a successful business, including advanced inspection training, business essentials, and marketing strategies. The class includes live, online private coaching sessions with the instructor.