On today’s podcast, you’ll learn from a B2B entrepreneur who sells his services through Shopify.
Jeff Graham built Civil Estimator, a B2B company that's become one of the most well-known and respected freelance civil estimating services. And he's doing it through digital downloads.
In this episode, you'll learn:
How to use Shopify to collect payments as a service provider.
Why cash is king over profits and revenue.
Where you should look to improve your business’ cash flow.
Listen to Shopify Masters below…
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Show notes:
Store: Civil Estimator
Social Profiles: Facebook, Twitter, Instagram
Recommended: Digital Downloads (Shopify App)
Transcription
Felix: Today I’m joined by Jeff Graham from CivilEstimator.com, Civil Estimator is a B2B business and is one of the most well-known and respected freelance civil estimating services and was started in 2008 in BASF Abbotsford British Colombia. Welcome Jeff.
Jeff: Thanks for having me Felix.
Felix: Tell us a little bit more about your story because you’re the first guest I think is exclusively selling directly to businesses and your entire web presence is focused on selling to other businesses. Tell us a little bit more about your store/service and what exactly do you guys do?
Jeff: Our company offers freelance estimating services primarily to excavating companies. The way that works is when a job goes out to tender they’ll need to know very specific information about that job before they bid it. They’ll need to know how much top soil needs to be taken off, how much gravel needs to go back on site and even things like areas of concrete and asphalt and pipe and that sort of thing.
It’s a very niche service that we provide but also a very necessary one. We started in 2008 and it was a kind of novel thing to do this on a freelance basis in the first place. Normally an excavating company will just have somebody internally that will do this kind of work. It was a bit of a novel thing to do this for more than one company and my dad was the primary operator of this business for about the first six years. I came on fulltime about two years ago and when I joined the company I was kind of thinking in the back of my mind that there might be some implication for ecommerce.
Prior to working with him I had operated a book store, a Shopify store I should say that sold books that did pretty well. I thought it would be so cool to apply some of the learning from that over to this deal. It took a while, it was funny we actually set up a Shopify store and didn’t do anything with it for about six months. We just used it as our website and we’re kind of going, “There’s got to be something that we could do.”
What we came up with eventually was that we delivered these files to our client and what had been happening is we would deliver a file and then it would typically take around thirty days to get paid. We were like, “If we can just deliver the file and just get paid immediately we actually get to move up thirty days on cash flow.” We started putting the files behind a pick like the digital download app on Shopify and it was essentially like you have to pay before you get the product from us. Instead of us delivering that product and sending an invoice we’re saying, “Here’s the digital download link,” and they took to it no problem.
It solved a huge issue for us internally in terms of collecting payment and again you get essentially an extra months’ worth of cash in the bank because instead of waiting another thirty days you move right up and you’re getting it, it gets remitted from stripe within a week. It was awesome and it took a ton of stress out of that invoicing process.
Felix: That’s awesome. You said a few different things that I want to dive a little bit. Just so we have a better understanding of the customers that you guys serve, I guess I’ll try to walk through this based on what you said and you can correct me where I might be mistaken. There’s a job that’s put out that someone needs to take up as a project like an excavation project but the companies that are going to bid on it need to get a better understanding of the costs that are involved and that’s where you guys step in?
Jeff: Yes, that’s right, we would do like volume calculations. They would send us a survey of the existing site and then the plans that the civil engineer has drawn up and there would be a differential. It’s called to fill volumes so we would take what’s there and we would take what’s going in, so if it’s like we’re excavating for a Parkade or a school or whatever and we would figure out the differential between those two things.
Sometimes you need to put fill onto the site, sometimes you need to cut out of the site. These projects are typically multimillion dollar projects where if you get those calculations wrong you can put your company out of business. It’s very important to get these calculations right so once you have those calculations you say, “Okay I know what costs X and Z to do, a thousand cubic yards of cut or a thousand cubic yards of fill.” Our clients are able to submit a very accurate bid on that project because of the calculations that we do for them.
Felix: This sounds like to me as an outsider like a lot of hands on work though between you and the client. Is it as hands on as I’m imagining or is there a … Because you’re selling now basically not necessarily a product but it’s definitely more productized. Is there an issue there with a very custom experience, at least that’s what it sounds like versus a productized version of it online?
Jeff: There are certain aspects of it that are and certain that aren’t. There’s a certain amount of objectivity to it in that you’ve either done the calculations right or wrong. There’s not really any subjectivity with that. There are certain elements in terms of there are things called labor and equipment rates where they might go, “I know that my guys can do this job a little bit faster,” or “I’ve got a dumpsite that’s a little bit closer,” or “I have an end with a certain supplier.”
Yes, there’d be a certain amount of subjectivity there but in our experience of it a lot of that client interaction typically happens in the first couple months of a new relationship. Then they develop some confidence in us and it’s sort of like off to the races after that. It would be more like demonstrating that we know what we’re doing, then once they go they do not know what they’re doing then that interaction diminishes rapidly as we go.
Felix: I see, so are they buying the service from you where they purchase it and then they continue to work with you afterwards to get what they need or are they buying a digital product from you and then they take off on their own and use it and that’s all they need from you?
Jeff: Every time they have a new job come up they’d essentially approach us about doing the calculations specific to that job. I don’t know if that answers that.
Felix: They go to your Shopify site, they purchase one of the services which is listed as a Shopify product and then from there, you are like going to call them up or email them to get more information from them like what is the kind of experience?
Jeff: Yes, what are the mechanics of it, not quite like that actually. I guess maybe a typical arrangement would be one of our existing clients would either call us or phone us and say, “Hey, I want to bid this school.” They would send us the plans we would do all the calculations then we would put it into a zip file and put it into the digital download app on Shopify. Then we would set the price based on the hours that we put into that job and then we would just send them the link and it would just be a quantity to one. Then they just download the filed, boom we’ve got our money they’ve got their files and we don’t have to worry about invoicing.
Felix: You’re really using Shopify as a legit … Just like a shopping cart alone. Here’s the items that you wanted to buy from us, we already practically put it together for you all you have to do is use Shopify now to make payment on it and then we’ll deliver the product.
Jeff: Exactly and the problem that it solves is you don’t have to chase somebody down after you’ve delivered the files. I was thinking about it before this interview and it almost feels a little bit like a hostage negotiation. It’s like, “I’ve got your files you have my money how can we do this exchange in a way that’s kind of …” Where it’s like, “When I give you the files you’re going to pay me,” do you know what I mean?
That’s a big issue in B2B, in every profession. What this solves is like a few things. You don’t have to chase people down. You move up thirty days on cash flow and then it’s like, “Just pay me and you’ll get the file instantly.” It’s a very elegant solution to what I think is a pretty big problem and this is for so many professions, accountants lawyers. It’s essentially the issue that Upwork solves as well but they take a much larger percent than Shopify does off of your bills.
Felix: I’m not sure there’s many other businesses that use Shopify this way but it makes a lot of sense. It probably feels this hostage situation that you’re talking about is awkward only comes about because it’s not a typical experience or it’s a new way of doing it because when I go online Amazon I don’t expect to get my items for free and then they invoice me thirty days later for it so that experience is so natural already that it doesn’t feel like a hostage situation.
Jeff: Sorry, in saying that I was saying it’s more like that way without using Shopify right?
Felix: No
Jeff: It’s like you’ve already submitted the work and then it’s sort of like, “Hey well I’ve given you my work is this invoice okay?” Whereas if you’ve got it set up on that payment gateway you’re saying, “Okay here’s what you owe me, the files are ready,” and that’s like when you have the discussion immediately. I think it establishes an expectation where it’s like, “You’re going to pay me and as soon as you pay me like that those files will be delivered.” I think it’s a very fair process for both sides. When I was saying it’s like a hostage situation I mean it from the standpoint Shopify’s sort of like the negotiating tool.
Felix: Definitely see what you’re saying. Let’s talk about the business itself and how you guys as a family got into it because like you’re saying it’s a very niche business. Are there a lot of competitors in the space? Do you guys bump into other competition? What’s the landscape like?
Jeff: Yeah, there’s actually quite a few companies in the US. In Canada we’d be the only one that honestly we know of. That’s not to say they aren’t there but we don’t run into any competition in our own markets. In terms of how we got started my dad has been estimating for thirty five eight years and about eight years ago had this idea to go out on his own. It was in part because he’d heard of a few companies down in the US and there were some in Australia and the UK that do this way but he’d heard of basically this happening in other markets where excavating companies would essentially hire estimators on a freelance basis.
He liked the idea and found one client that was willing to give him some work and it was like he got out there and word of mouth sort of took over. It was an immediate hit, it solved a huge need in our own market and that need was essentially that there’s a really big company can afford to hire somebody full time to do this. A really small company doesn’t bid particularly complicated jobs but where we found our niche was that there were these companies that were bidding complicated jobs but weren’t big enough to hire … To pay somebody $150,000 to bid all the work.
There’s like this great niche that immediately flocked to us when they found out about the service. I guess since then it’s been about managing demand and trying to make the admin process as seamless as possible so that we can maximize our billable hours as we go.
Felix: Is there anyone else out there that’s selling, any competitors that are doing what you’re doing online where you are basically using Shopify or any other platform as a payment processor for their … Or even to just have a presence online, is your competition doing that as well?
Jeff: We’ve looked and haven’t been able to find any so if it is I would say yes it could be out there but not that I know of.
Felix: Makes sense. You’re saying before that the typical arrangement is you would deliver the end product the estimation and then thirty days later or whatever terms you have that’s when the clients will pay you. Now you kind of flipped it around and said that here, the estimation is complete just make the payment then through the Shopify digital download app you’ll automatically get your estimation. Because customers were used to doing it the other way was that an issue where now they have to pay immediately rather than some Net 30 or whatever other payment structure is possible?
Jeff: Yes, it took a bit of explanation so it was sort of like what am I doing? It wasn’t so much that there was resistance to the idea but it was like not really understanding what we were trying to do. It took a little bit of customer education with a couple of them, there were a few that got it right away a few that took a little bit and a few it was like, “I should grab a coffee so I can look through this kind of thing.
Once they understood what we were doing it was like just a general recognition that it was fair to everybody. There was no kind of surprise on their end too about what we were going to charge because I think one thing that happens from time to time is that you do the work and then within a few days you submit an invoice and they’re looking at this invoice going, “Wow seriously that’s what you’re charging me?”
With this kind of situation, it’s like when you’re about to do that transaction you get another chance to talk about what the cost of something is going to be. I think they recognized that there was a certain amount of benefit to them as well and then also once they learned how the thing worked I think they found it to be like a very system too. It’s like, “All I need to do is put in my information and hit buy and then I immediately get my files. There was after that initial customer education it was beautiful.
Felix: Awesome. Can you give us an idea of how successful the business is like how much volume are you doing through the Shopify site?
Jeff: Yes online we would typically do $13,000 - $15,000 a month and that would be pretty consistent throughout the year. We typically have a bit of a spike in spring where we might go over twenty five thousand then obviously like any business you have an ebb where you’re down to five or ten. At the end of the year our revenues would normally be in the range of two hundred grand give or take.
Felix: Awesome. Given any specifics about this but I’d imagine especially since you’re selling digital content that fifteen thousand a month or two hundred thousand a year a good chunk of that is going to be profit because it’s a digital product.
Jeff: Yes.
Felix: It’s not like you guys are reselling something that’s $12,000 and you’re making just $3,000 profit or something.
Jeff: Absolutely, yes. Obviously there’s the striped fee, like I said. That was one thing that kind of hurt a little bit. It’s like you’re going from getting paid by check where you don’t have that percentage come off. Yes, in a way it ate into our profits, depends how you look at it. In a way that we had to pay that 2.9% that we didn’t have to before. Now the flipside to it is when we looked at it and went, “Well we can move up thirty days on cash flow though.”
That’s an extra $15,000 that’s in your bank and then we looked at the invoices that didn’t get paid from previous years and compare that against the processing fee it was like, “Okay.” We know that there’s a certain amount of breakage that we’re going to have like a certain amount of these things that aren’t going to get paid for if we do this and always get paid. That’s easily going to offset that transaction cost.
Felix: Yes, and there are some things psychological about this for the buyer too right because when you get something or when you have to pay money to get something the benefit is like sitting on the other side of that payment. Once you pay you get it, when it comes the other way where you get something or you have it already in possession and then thirty days later you’re expected to pay for it there’s a psychological friction where you don’t feel the benefits anymore because you already have it in your possession.
I think that that has a big I guess benefit on things like you’re saying. I guess they could not pay for it and get it anyway in this situation but I think that there’s also that psychological benefit for the buyer that they are getting an immediate benefit for something that they are paying for. I think that that’s a kind of, I guess a qualitative thing that you can’t really measure but I think it does mean something to the customer.
Jeff: I completely agree and I think in addition to it Shopify is such a slick system. I think it makes us come across as looking like we know what we’re doing in addition to just generally trying to be professional but it’s sort of like it definitely does not make you look like a fly by night organization when you have something like this set up and you’re saying, “Here’s a really slick system you just pay us immediately and we’re off to the races.” Yes, I agree. I hadn’t thought of what you just said but yes I’m sure that plays into it but then also you look more professional and deliver a very pleasant in addition to it.
Felix: Makes sense, I want to talk a little bit about cash flow because this wasn’t exactly something that would come up in our interview but I think it’s a topic that maybe isn’t brought up enough because in the early days when you’re just starting out your store your number one focus is revenue, I want revenue. Then once you get revenue you start realizing, “I need to be profitable so I want to focus on profits and profits.”
Once you get to a bigger scale to where you guys are at cash flow, cash is the king. It’s no longer about revenue no longer about profits cash becomes the most important piece of it. It taught us a little bit about how cash flow impacts your business whether it means that what it was like when you had to wait thirty days before you got paid compared to now where you get paid immediately. What does it mean to have good cash flows?
Jeff: I guess the background on that is I was first exposed to this concept in the Steve Jobs biography by Walter Isaacson. For anyone who’s listening, it’s just a super great book to read I think for anyone that’s entrepreneurial. One of the things that he said when Steve Jobs took over Apple was that Apple was taking almost a year to turn over their entire inventory.
The way he described it in the book was like having computers and components and all that kind of stuff sitting in warehouses was sort of like having a huge bin of rotting fruit. That stuff just degrades over time and it is hugely harmful because you’re paying for warehousing you’ve got all this money tied up in this stuff and it’s just kind of crazy.
Jack Welch the former CEO of GE was big on this sort of thing too. The whole idea being that instead of having your money tied up in stuff you would essentially bring that all in and have your stuff sold. It’s a simple concept but it’s extremely powerful. Jobs when he took it over it went from taking over a year to turn in their entire inventory to six days and that was actually… The interesting thing about that too is Tim Cook was the supply chain lead that kind of masterminded that process and obviously he was moved up to be CEO.
I think it speaks to the importance of how much it matters to turn over your product whether it’s a product or service. That stuff needs to be turned over immediately just because the implications for freeing up, basically keeping your business liquid are huge. You just think instead of having ten million, a hundred million, a hundred and fifty million dollars, tied up in stuff that’s essentially rotting you’ve got $150 M, that’s backing your business that you can start investing in other proactive stuff.
For us, to free up an extra $15,000 that’s like getting a $15,000 interest free loan. It’s like a great source of money. Then you go, “Okay so do we want to look at using that for advertising, are there infrastructure upgrades that we want to do?” Other examples would be are there debts that you can pay off? Those are things that you can look at when you have such a great cash flow when you move up thirty days on cash flow in any business.
Felix: Maybe to drive this point home what are the dangers if you are not doing this where maybe to your suppliers you’re paying them on Net 30 and then your customers are paying you on Net 60 so now you have thirty days where you basically already made payment all yourself but are still waiting for payments. What does that mean for a … How is that dangerous for a business?
Jeff: Yes, so then in theory you just run out of money and when you run out of money it’s game over. If you’ve got all this money that’s owed to you or all this money that’s tied up in product and then all of a sudden you can’t pay the bills you can’t pay yourself then that … It’s an extremely dangerous place to be. Eric Reese wrote this really great book called The Lean Startup. He talks about this quite a bit too.
He’s really big on in terms of managing cash flow really big on testing an idea. Let’s say hypothetically you’re starting a t-shirt business start by buying five and test the design. See if that works and then start iterating from there but really being diligent about not ever having access inventory and then obviously if you’re in the service business like us you’ve got to make sure that you get paid.
I think negotiating the terms of how you get paid, is really important but to circle back to how we are doing it. This is the best solution that we found in terms of getting paid immediately. There is almost no way of getting paid Net 30, other than doing something like this, in my opinion when you are in the service business. I guess Upwork might be the other option but the percentage that they rake off. I believe they rake off up to 10% off of your billing. It’s not optimal.
Felix: This idea of focusing on cash flow and optimizing it, should this be a concern for store owners, stores and companies and businesses of all sizes or is it something you should be focused on more like later on when you are up running at a bigger scale?
Jeff: I think right from the beginning, absolutely. I think for so many reasons, I think it’s like, it benefits you regardless of the size but it’s … It’s almost like a discipline thing. It’s sort of like, “I’ll quit smoking later.” It’s like, “You should quit smoking now.” I think it’s sort of like a danger when you are big. I think the danger when you are big is that you might actually have a lot of revenue coming in and not realize how much of your money is actually tied up in an inventory.
You can kind of get caught like apple did. Realizing, “We’ve got all this junk sitting around basically and now we are in trouble. When Jobs took over, that company was headed for bankruptcy and this was one of the reasons that they identified as why they were in such deep trouble.
At that point that was a multi hundred million dollar business that was struggling with this. When you are bootstrapping an operation too it’s like, you don’t want to start out with $10,000 and then all of a sudden have five grand tied up in mugs that people aren’t buying. That’s a huge issue too. I think taking that disciplined approach of going like, “No matter what I do, I just, I’m consistently going to monetize the product or service that I have and get that money back in the bank and just kind of keep that process going.
Felix: Makes sense. Even if you have a product or a company that everybody wants a piece for even as profitable and you are generating a lot of revenue. Maybe you don’t have cash and you can’t pay the people that are keeping your lights on. Then like you are saying, it is game over because that’s the only that’s really keeping you afloat, even if you have a legitimate product that people want. Do you think that there is anything, maybe from your experience as selling B2C or definitely your experience now with B2B that a company out there can do to improve their cash flow? Because obviously you guys made huge strides by going from Net 30 down to an immediate, practically immediate payment. Is there anything that a store owner can look at to see where they can improve their cash flows?
Jeff: Yeah, I guess it really depends what line of business that you are in. From a B2C point of view. I guess if we are talking about like some typical examples like t shirts and that sort of thing. I think it would just be super helpful to do, to look at your inventory and kind of like go, “What is my current inventory worth?” You can count in two different ways. One is what did pay for it and the other is, what am I selling it for? Essentially do a tallying, go, “Okay, I’ve got like $10,000 sitting in my home office. How do I turn that into money immediately?” I think when you are in the service industry, when you are, when it really is more of an established process to be paid Net 30. They are kind of two different issues.
I think B2C, a common issue would be having, the cash flow it should be stuff being tied up in a product. The B2B issue would be something tied up in a service, sorry, tied up in an invoice that gets paid later. With a B2B company it would be like really negotiating the terms favorably for yourself. Obviously, a company could do something like we do, which is doing it digital download and getting that payment right away.
Another would be saying like, “I want to be paid in two weeks, another would be imposing financial penalties for going over thirty days. If the company you provided the service for is late on their invoice, then you charge them cumulative interest rates so that at least when you do get paid, if you’ve had to incur that to keep yourself going, you can pay off that debt. That concept kind of makes sense. I think on the B2B level it’s negotiating terms on the B2C level it’s just inventory controls are majorly important.
Felix: Makes sense. Let’s talk about B2B sales. I think that you probably have the best perspective on this, of any guest I’ve had so far. What is your sales like? Like describe it us. What’s involved in getting somebody from the first point of contact with you all the way to making payment? I guess can you give us ideas because I’m looking on your site right now and we’ll talk a little bit about the products that you have for sale that are right off the shelf. These are not cheap products so at least one, there’s not a cheap product but for an estimation like this can you give us an idea of how much something like this would cost?
Jeff: You means in terms of delivering an estimate for somebody?
Felix: Yeah.
Jeff: Yeah, we would typically like, it would be typically be between $1,000 and $2,000 per estimate I mean that’s a bit of a bulk arc number. In terms of the sales cycle it’s probably the easiest thing that I’ve ever marketed in that it’s sort of like as soon as you identify, as we identify a company that kind of fits our profile which is that sweet spot between not being big enough to have a full time estimator but they’re big enough that they’re doing sort of like complicated projects it’s sort of like, it’s like a phone call and saying, “Hey we’re here.”
It’s like, “Oh great, okay I’ll start sending you work.” We get sent the files, we do the calculations, we put it on our site as a digital download as I first described and then we’re kind of to the races. It’s really about kind of identifying companies out there that fit this profile more than anything. That would be I guess where the sales work happens. We use LinkedIn as a research tool. Another thing we found effective is going on indeed.com and looking for companies that are advertising for civil estimators.
It’s sort of like just reaching out to them saying, “Hey you don’t necessarily have to hire somebody, we’re here as a freelance option.” It’s sort of like just generating awareness among that key demographic and once they’re aware that we’re here it’s really easy after the fact because the need to them is so obvious.
Felix: I’d imagine that you also get a lot of repeat business then because these are people that constantly need estimations right?
Jeff: Yeah, like our top two to three customers result in about 75% of our earnings. It’s all about repeat for us, big time.
Felix: That’s awesome. I mean you’ve mentioned Upwork a couple of times on this episode already I’m wondering if it makes a lot of, if you can think of other free-lance types of businesses that it might make sense to start selling your services or start advertising or listing your services on Shopify.
Jeff: Totally, lawyers, accountants, bookkeepers, gosh you could do this with landscaping, plumbing, virtually I would say it applies to virtually any service. I would say where it’s the most elegant is when you have like a digital product that you’re delivering on the other end. Let’s just use a hypothetical example like say you’re a lawyer that specializes in wills, you do up the custom will for somebody and then you just put it behind your pay role and say, “Okay you’ll get your will lie your custom will when you pay me.”
Same with, you could be, you could specialize in doing business plans or, I think anything kind of service related, graphic designer would be another good example too. You’ve done up a nice visual identity for a company, you’ve got all these files you could just say, “Okay, it’s on my website go ahead and, once you pay me you’ll get those vector files delivered to you instantly.” I think it has incredibly broad applications. I almost say the question is like, what industries does this not apply to? I think there’re very few. Maybe in my opinion.
Felix: Can you think of any or do you just, you can barely think of any?
Jeff: It would be like when the scale is so large and the relationship is so longstanding that it just doesn’t make sense. Just for instance, my mother in law works for Irving Ship building in Halifax, and they’re building these massive arctic patrol vessels and one of their subcontractors is Lockheed Martin. The money going back and forth would be hundreds of millions of dollars and that just makes no sense. The process, just the credit card processing fee on that alone would be gastronomical and of course they have contracts involved and that sort of thing, it makes no sense.
Felix: I feel like those scales too it almost might turn the client off that you are setting them somewhere not personalized at that scale.
Jeff: But I would say on the other hand though where it’s sort of like more of like a small business it’s like if you’re in the service industry and you’re delivering a digital product I just think that this is like a really good option that kind of surprise me that I’m sure that other people have thought of this but I hadn’t really seen it all. The kind of Shopify just seems to be so extensively used for B2C which is great. It’s really what it’s meant for but money, a lot of money changes hands B2B. I think it’s a great option.
Felix: I know my friend Jonathan over at ihatecursor.com they also do this thing, he’s like they’re basically like an agency for a shop with five stores and he sells like theme twigs or even monthly plans or like a call, where you want to call and talk to an expert or something. He sells that through Shopify as well. It’s all services basically. There’s something great some of them are, there’s no delivery end of it even but it seems to work for him.
I know other people that are selling, I interviewed a guy previously he runs a site that basically sells his drum loops for musicians and he sells exclusively through Shopify too because like you’re saying there’s a digital download at the end of it. There’s a deliverable end of it. I think that definitely kind of makes the most sense for a business that wants to sell, for a service that wants to sell online or through Shopify.
Let’s talk a little bit about the two main products that you have listed as I guess of the shelf or things that they can buy that doesn’t require much customization. One that I think is hilarious, one’s priced at $34.99 and the other one is priced at $2,199. Do people actually buy something that expensive online?
Jeff: No, that’s an experiment. I’m actually feeling very self-conscious about it. With that, one is a spreadsheet. The spreadsheet that you’re talking about is like thirty five bucks. We’ve actually, we’ve probably sold about $1,000 worth of those. It’s sort of like a nice little side bar. We emailed out our contacts in British Colombia and just said, “Hey, here are like some numbers you can use for a budget estimate.” We’ve seriously spent maybe half an hour putting that thing together. You think that it’s kind of made a thousand bucks in half an hour.
It was pretty nice. We were a little bit emboldened by that because it wasn’t really what we were using Shopify for it was as I described more of like an invoicing billing kind of solution. We thought okay well why don’t we try something else? We put another database, it’s called an HCSS database and essentially that database is something that would take about six months to setup on your won.
We were like we can’t just sell this for like fifty bucks or something. We put half the price tag on it and have had no bites on it. I can’t say I’m super surprised but it’s sort of like along the way we’ve tested a lot of different ideas about how we can kind of further monetize the store.
Felix: I feel like when you are a freelancer or a service provider you will be able to over time identify the kind of commonalties between all your clients like things that they need specifically and that’s when you can start releasing more and more products rather in. Obviously you still keep up the service end of your business but the more products you have the more kind of less trading time for dollars you’re doing. I think that we had a whole conversation earlier about free up cash flow but you can also free up you time which is just maybe more valuable that having cash.
I think that you’re on the right path by trying out these different kind of products. If someone did want to come along and was talking to you through the phone or email and say they needed something like this, you can go through that same exercise or just sending them a link, “Hey, you can just buy this through here.” I think it’s setting up for something at least in the future, makes sense?
I want to talk a little bit about the kind of key to sales for service providers and freelancers which is referrals. You mentioned to me before the call that asking customers for referrals is a great way of dropping a business for yourself. Tell us a little about that. What is your process like for asking for referrals from past customers and clients?
Jeff: Yeah, really simple actually. Obviously when, in almost any industry, well in every industry I’ll say, I’ll generalize like that, the relationship is just so key. We’ve got a handful of companies that over the years we’ve just become very tight with and they respect us. It’s sort of like having that conversation of, it’s great over a coffee or a meal, there’s something with that by just saying, “Hey do you know anybody that you think might be interested in our service?”
It’s kind of a hard question to ask because you’re essentially in some ways asking them to refer us onto their competitor. The flip side to that though is that every time we’ve asked it’s been like extremely effective. It’s sort of like getting over having that slightly difficult conversation and just going like do you know anybody else who might be interested in what we’re doing?
The in person thing I think there’s just no substitute for it when you have a high impact opportunity I would say, always try and have a face to face conversation. The other way that we’ve done this that has worked really well is actually sending out an email. A couple of times we’ve sent out an email, we have about, between nine hundred and a thousand contacts on our email list.
We just emailed everybody and kind of said, “Do you know anybody that’d be interested in our service?” that was an awesome regeneration. Again just super simple, very blatant to the point. Do you know other people or who do you think would need what we’re doing? That worked great
Felix: I think that’s a great idea. Did you also get people on that were on list who remember who you were and said, “Wait a second I need the services as well,” has that happened too?
Jeff: Yes. It totally did. I think it’s sort of like, I think it builds this mentality of you’re, the people that you’re talking to think of themselves as like an advocate for you. I think that’s really important psychologically where they go, they’re kind of putting themselves in our shoes and saying like, “Yeah, who do I know from my network that would benefit from what these guys are doing?”
I think that sort of like has a dual benefit of A getting referrals but then also there’s thinking of about you in a very kind of positive proactive way and they might just go, “Yeah, I’m actually somebody I should refer onto them.” It absolutely works that way where you start hearing from customers that maybe you haven’t heard from in a few months. I think everybody should, referrals are just so great, referrals and loyalty.
Felix: I think it’s one of those tenants in the Dale Carnegie’s how to influence people book where he says that if you want someone to like you ask them to do you a favor. What seems little backwards like why would someone want to like me more if I’d asked them to do something for me. But there’s a whole psychology about why when you do, when someone comes to you and says, “Hey I need your help,” they feel like this person trusts me or trusts my opinion or trusts me to help them and that automatically builds more of a bond between you and that person.
I’m not sure if that’s the reason that they’re assuming you’re getting it but I do think that you should be asking your, not necessarily asking them for help but depending on your past customers past clients to help you grow your business.
Jeff: I think there’re a couple of things that happened there. When you ask somebody for a favor, I completely agree with what you’ve said and kind of your quote with Dale Carnegie and I think the other side to it that it shows a level of trust in the person that matters a lot because you’re being very vulnerable. You’re kind of saying like I’m asking for your help and that does put you in a situation where they can really kind of smack you upside the head if they want.
Like it really hurts when you ask for help and somebody turns you down and most people realize that. It’s like, “Wow, this person is being vulnerable with me, they obviously trust me, I feel good about that too.”
Felix: Yeah, I’m always a big advocator of store owners, business owners to be as real as possible meaning don’t sit on top of the throne and say hey this is my kingdom and enter my kingdom by myself. You really want to be on the ground and being at the same kind of level with your customers and your clients. I think you’re on the right track.
To make this applicable to the B2C folks out there what is the call to action I guess when you send those email out to, no before I go down that way I just want to know, when is the right time to ask for a referral. Is it right after you delivered the goods they need or weeks after? When is the right time to ask somebody for a referral?
Jeff: I would actually say that that really kind of, it’s a great opportunity to think about segmentation because I think the question is who do I see as potential advocates because I’m just reading between the lines on your comment there. It’s sort of like I just bought something from you and now you’re already asking me to refer you onto my friends. It’s sort of like I think you can’t do that a little too soon.
I think, I would say it probably boils down to instincts. My suspicion though is that most people would probably be a little bit too conservative about who they ask. They go, “I’ll ask my mum and dad and cousin for a referral but I’m too afraid to ask everybody else.” I would say it’s probably good to push the boundaries of who you think might be willing to help you. Maybe kind of look through your list and go I think these people would, they look like they could be advocates for me maybe taking a step further.
But then you obviously think about maybe those handful of people where it might too jarring to do it yet. Maybe wait a little while to, wait a little bit for them. I would say urgency and being bold is probably the thing that you’re going to want to do.
Felix: I want to probably say you want to wait at least until they’ve gotten the value out of the thing that they’ve bought from you. If they just bought and they’ve never yet used it, they haven’t even gotten it yet and you’re asking for a referral. I don’t think they would, for the B2C product that’s not as expensive as the stuff that you’re selling.
I don’t think anybody would react negatively to it but it might not be as effective because when I’ve bought something and I’ve got it and I’ve loved it and then a day later someone emailed me and asked me, “How do you like your shoes that you’ve bought. Do you think any of your other friends would be interested?” I’d be like, “Yeah man.” Because I’m really on this high I love this product, that’s the best time for you to ask me to refer other people to you.
Jeff: That’s just a great point actually.
Felix: Definitely, cool maybe it’s this last thing. I’m not sure that this is something you’ve been doing for a while but I saw in your site that you have an online community tab or a link as well which is using Slack. Tell us a little about this. What is the purpose behind this idea of creating an online community for your store?
Jeff: I’m really happy you asked me about that actually. Essentially it’s about kind of nurturing relationships with existing people so there’re all these really weird things that come up when you’re estimating stuff. One example that I like to use. This is from a colleague of mine but he was telling me that he was doing an estimate for a prison and he was looking at the plans and in the plans there was this thing called a muffin muncher and he was like, “What the heck is a muffin muncher?”
He’s looking around and finally found out that it was actually this thing that connects to a sanitary which is like poop and pee. It essentially is like this crazy gnashing thing that grinds up whatever comes through it. The reason you put this sort of thing in a prison is that you actually have stuff going through your sanitary that you wouldn’t want to kind of get out into the sewerage treatment plant.
It could be things like essentially contraband. You can infer what that means but it was sort of like this super obscure thing that it took him forever to figure out. It turned out that there was somebody deep in his network that had known about this and certainly what I was thinking of was Slack because I’m going well there’re all these people that kind of have these I guess obscure issues that come up wouldn’t it be great to put together an online community where it’s like hey I need a bit of help because it’s such a niche thing.
“Hey I need a bit of help. I’ve run into this issue has anybody seen it before?” To me it’s about kind of like being a central part of that conversation so that when you help somebody else out they might think of you down the road of like hey I think I can refer them some business or I think maybe there’s a way that I can help them out. They did a favor for me I’d like to do a favor for them. It’s all about kind of like nurturing that community which I think is just a great long term way of thinking about a business.
Felix: This is something that I’ve just come to realization too and just for anybody out there that doesn’t know about Slack, it’s just basically a chat program where you can, guess anybody can join and be part of like the same chat room I guess you can kind of think of it that way.
You can definitely check it out I think it has some cool feature in it. But I’ve just started thinking about it this way too about creating a community and I’ve just started my own community too because if you really want people to lash on or be really absorbed or immersed into your brand’s universe there’s no better way in my opinion than to have a community around it.
Because now a lot of times we, me and you and anyone else that has an email list we’re talking one direction, not necessarily once direction but we’ve talked to one person and they might talk back to us. But all these people you’re talking to have one major thing in common which is the problem that you’re solving or the price that you’re selling or the lifestyle that you’re putting out there.
If you have something in common like why not be bring value into their lives or bringing them all together. When you bring them all together there’s a ton of value with that being the person that bring them together because they appreciate that which I think what you’re getting at. They appreciate the connections but then you get everybody talking about the thing that they’re all tied together about and your product, your brand company all becomes much more top of mind and it becomes like a natural extension of the community.
I’m just saying all this because I think community is definitely one of the keys I think to having a sustainable business with repeat buyers because they’re going to stick around for much longer than somebody that doesn’t belong to a community.
Jeff: I completely agree and just to add to that too I actually find that it makes things so much more lively and enriching as well where it’s like you can kind of sit behind your screen and get a little lonely and then that’s sort of okay you feel a little bit more sense of purpose and you’re putting a little bit of like good and light into the world.
Even if there’re relationships over Slack it just kind of like, it is, if you’re a relational person I think it’s a great way to kind of grow your business but then also just doing it for altruism and doing it because it makes your day nicer, I think that that matters a lot too.
Felix: I’ve been emailing my email list for a couple of years now but I just started my own group, my own community and I’ve probably learned just as much as one of the last couple of weeks just by being in that community because other people in the community are going to help discussions it’s not just you. When the discussions start happening you get to hear more about the pains and problems that your customers have and that kind of information is golden when you want to go back and decide what kind of product they’re selling nice.
What kind of services they’re selling nice, how to talk to them on your website, these are all kind of great things that come organically out of having a community. Tell us what’s in store for the remainder of this year, whether, and I think you are testing a bunch of different things? What are the kind of big goals that you want to achieve for 2016?
Jeff: Honestly for us it’s sort of continuing to refine the process. Basically maximizing the amount of available hours that we get in a day. That for us it’s keeping the admin side of it extremely lean. Over the course of this year in terms of the goal related to the site I’m hoping to build up a little bit more organic traffic. Done a little bit with search engine optimization and we’ve had some, we’ve gotten some leads through search which is kind of like a new thing. Historically we’ve had to go out and find them.
I think how powerful Shopify is with SCL we’ve noticed that our ranking in Google has continually improved over the years. I’ve done a bit of blogging that seems to have improved it as well. I guess the simultaneous thing of maximizing the time that we spend, basically building out our time and then hopefully having a product or a site that indexes well and we kind of get those leads of people that we would never think to find.
Felix: Awesome. Again, simpleestimator.com is the website. Thanks for coming on Jeff. I bet no one out there is listening that actually needs your services but if they want to follow along and see what you’ve been doing, if anyone out there is thinking about selling services online, I think Jeff is probably one of the, definitely check out his site. I think it’s set up in a great way to demonstrate that. Anywhere else that you think the listeners should check out if they want to follow along with what you’re up to?
Jeff: Look I was actually just going to say is if you do have a service business and want to contact me through the contact form like I’m the one who get those emails, I’d be more than happy to give you my opinion on certain things. It doesn’t matter to me obviously if you don’t have an excavating company I’m sure you’re right. If you’re on the service industry and listening to this and would like to pick my brain a bit, go hop on this site and shoot me an email.
Felix: Awesome, thanks so much Jeff.
Jeff: Thank Felix
Felix: Thank you for listening to Shopify master the ecommerce marketing podcast for ambitious entrepreneurs. Just start your story today, visit Shopify.com for free fourteen day trial.
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About The Author
Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs, and founder of TrafficAndSales.com where you can get actionable tips to grow your store’s traffic and sales.