get clients to sign contracts

How Do You Get Clients to Sign Contracts?

The Hartford

When it comes to sustaining your business, long-term contracts are one of the most effective ways to ensure a steady source of revenue in an unpredictable market. However, for many new businesses, convincing potential customers to sign one of these contracts can pose a real challenge. With so many competitors, how do you convince someone to take such a big risk? In this episode, Gene Marks and Elizabeth Larkin share several strategies that will entice customers to sign a contract with your business.

Executive Summary

2:10—Today’s Topic: How Do I Entice Customers to Sign a Contract With My Small Business?

3:12—Before you even approach your potential clients, research your competitors so that you understand how your business compares.

3:49—If you would like to propose a long-term contract with a particular client, try to do so as soon as possible, because it will be more difficult to adjust the terms of your services later on.

4:43—With regard to incentives, small businesses should consider offering either a free product or service for a limited time. Not only does this trial period give the customer a chance to get to know you better, but it also gives you a clearer sense of how they behave as a client.

6:01—Another option to consider would be to provide increased discounts for customers who commit to a longer contract.

7:29—You also can attempt the “puppy dog close,” where you offer them a free trial for a limited time and then give them the option of terminating your services if they aren’t satisfied.

10:14—Gene discusses how lack of competition can lead to stagnation for small businesses.

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Transcript

Elizabeth: Welcome back to the Small Biz Ahead podcast. I’m Elizabeth Larkin from The Hartford and I’m here with Gene Marks from The Marks Group.

Gene: Hi, Elizabeth.

Elizabeth: Hi. How are you?

Gene: I’m doing good. How are you?

Elizabeth: I’m good.

Gene: Good. Glad to hear that. Are we going to talk about TV shows after this episode?

Elizabeth: Yes, after we answer this important question about enticing new clients, we are going to talk about your TV show recommendations.

Gene: We’ll have a word of the day, and then the TV shows, because last time we talked about El Camino, but I’ve got plenty more.

Elizabeth: Okay. You’re going to have to wait for the end.

Gene: I’m going to have to wait. You know what? Forget about these small business questions. Let’s go right to the TV shows.

Elizabeth: Great. Okay, so after a word from our sponsor, we’re going to come back and talk about enticing new clients to the very niche business.

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QUESTION: How Do You Get Clients to Sign Contracts?

Elizabeth: And
we’re back. Our question is from Gabrielle in, is this Hawaii?

Gene: It’s Hawaii.

Elizabeth: Awesome.

Gene: Yeah. By the way, it’s Lihue, Hawaii.

Elizabeth: I wasn’t even going to go there.

Gene: Yeah, I’ve never been there. Have you ever been to Hawaii?

Elizabeth: No. Have you?

Gene: It is… We were talking over lunch about places that you got to go and visit. Hawaii is absolutely beautiful. See, my take on Hawaii is, if you live on the West coast, it’s kind of like going to the Caribbean, if you live on the East coast, but it’s way more beautiful than the Caribbean. It’s really, and it’s a long way from California.

Elizabeth: Yeah, it is.

Gene: I mean, a four or five hour flight to get there, but it is highly recommended, and it’s one that combines, I mean, great beaches, but there’s a ton of cool, adventurous stuff you can do. And I know you, you like adventurous stuff.

Elizabeth: I do.

Gene: So you will love Hawaii.

Elizabeth: Great. Okay, so Gabrielle’s question is, “My husband and I recently started a commercial home repair and cleaning business. We cater to property managers that have hundreds of vacation rentals.” That’s a great business. “How do we get our clients to want to sign a contract with us? What incentives can we offer, and how do we approach or broach the subject with them?”

Gene: Right. So, just to make this clear, Gabrielle, she’s got this business, she’s going to… her customers are like property managers.

Elizabeth: She just started.

Gene: Right. And her customers are property managers, and the property managers manage multiple vacation properties. So she’s like, “Okay, we want to sign these people on for a longer term contract for cleaning.” So for starters, the good news is that she’s in an industry where that’s kind of a normal thing to do. It’s not like when she does propose this idea, it’s not like it’s going to come out of left field or be something, an unusual thing. I think most property managers would be familiar with companies that provide cleaning services, and on a contract basis.

So I have a few thoughts on that. Number one is, first of all is, before you offer anything, I think you should be doing some market research and checking out what your competitors are offering, because clearly you’re not the only cleaning service in town. I’m sure there are others, and they have websites, and they have customers that they’re using, and it might be worth doing-

Elizabeth: Do they have websites?

Gene: Yeah, cleaning services have websites. Everybody has websites nowadays. I mean, this is so you can find out like what they offer. Some people might share their costs, you might call up customers or other people that might be using other cleaning services and find out what kind of services they’re getting. In other words, do your homework first before you make any kind of a pitch.

Secondly, it is really, really important that if you’re going to pitch a long-term contract, you do it as early as possible. And I’ve made that mistake with clients. Like, I’ll go and do a project, because we’re a service business, and we’re charging by the hour, and I’m like, “Oh geez, this would really be better if we had like a long-term contract, or whatever.” But it’s almost like too late because the client is used to paying by the hour. So it’s a tough topic to introduce.

The other piece of advice that I have is, and I have others besides this, but you should… you need to introduce this like straight on. And so when you bring on a new client or a prospective new client and they want to hire you to do cleaning, you should be saying right from the very beginning, “Yes, we do this service and we have long-term contracts, and this is what they’re like, or this is what they cost, and this is what they are,” and whatever. So that’s also a very important thing. As far as the incentives to offer. To me, I think the biggest incentive that any business can offer is to give something away for free, because-

Elizabeth: Yeah, we’ve talked about this before.

Gene: In the end, people want to, you know, they want to trust you. They don’t know you; particularly, as Gabrielle’s company is, she’s just starting up and she doesn’t have any kind of a track record. You’re going to have to sort of pony up a little bit, right, and say like, “Listen, we would like you to
sign up for the long-term contract. If you sign up with us, we’ll give you your first month for free. And after the first month, for example, if you don’t want to move forward, we understand.” You have to put the onus on yourself to deliver.

You know what I mean? And show that you can do a good job, and any prospective customer will appreciate a good free offer. Plus, it not only gives the customer a chance to get to know you, but it does give you a chance to get to know the customer. And if you give each other a 30-day window, you give yourself the ability to pull out, because you’re like, “This guy’s kind of a jerk,” or, “I don’t like this place,” or whatever. You’ve got
an exit door that you can go through, as well.

So there’s no better incentive than doing that. That’s, you know, it’s just to get locked on. The other big incentive is we all want people to commit for a long time. So if you want to ask your customer to commit, the longer the commitment, the more of a break you may want to consider for doing it. So, we charge $100 a month for this service, but if you sign up for two years, we’ll do it for $95 a month. Or, if you do it for three years, it’s $90 a month. And then that way you’ve got it committed, and they’re in, and they’re getting the discount, and all that kind of stuff.

Elizabeth: How do you feel about the… This is kind of related, but kind of not. I like to hijack conversations.

Gene: This is a conversation that you’re perfectly suitable to hijack.

Elizabeth: Okay. Great.

Gene: Yeah, ask away.

Elizabeth: How do you feel about the tactic of, “We’re about to raise our rates, but we’d like to lock you in-

Gene: Hate it. I hate it. I think, I mean, it’s just so gimmicky and-

Elizabeth: I get those kinds of emails all the time.

Gene: Yeah. And I just said, I get those kinds of emails, or whatever. And I always feel like washing my hands after I get it. You know what I mean?

Elizabeth: Yeah.

Gene: It’s just kind of whatever. Like, don’t threaten me.

Elizabeth: Yeah.

Gene: Do you know what I’m saying? I think that it should be the other way around. Instead of pointing a gun to somebody and say, “We’re going to raise our rates if you don’t… You want to sign up now.” It’s so much nicer a pitch to say, “We’d like you to see how great we are. So, let us do some work for you for a couple of weeks or a month or whatever and we’re not even going to charge you. And then after that, if you like us, we’ll give you the opportunity to sign on.” The other thing to keep in mind is, particularly for a service like these guys, a cleaning service, do you know what the puppy dog close is? You love dogs.

Elizabeth: I do love dogs. I can’t believe we haven’t talked about our dogs in a long time.

Gene: We haven’t. And that’s a whole other conversation. But we have TV shows to talk about, Elizabeth, so we gotta prioritize.

Elizabeth: The puppy what?

Gene: The puppy dog close is this. If I run a pet store-

Elizabeth: Oh, the close.

Gene: Yeah, the close. I don’t even know. Do they let pet stores operate still in Connecticut? I know sometimes pet stores are, you know, people have-

Elizabeth: I haven’t seen one that actually sells puppies in a long time because, you know, puppy mill puppies.

Gene: Say I’m a breeder, okay, and you come here itching for a puppy, If I could give you a puppy and say, take the puppy home for a weekend and if you don’t like the puppy, bring it back on Monday, right?

Elizabeth: Yeah.

Gene: Who’s going to do that?

Elizabeth: No. No.

Gene: People are going to keep the puppy, of course. It’s the puppy dog close. You have the people live with the product for a bit and then the likelihood of them returning it is less. It’s the same thing when you’ve got a service like Gabrielle’s cleaning service. You give them a month and say, “Look, let us get in there and start doing stuff for a month.” They get used to… Remember there’s a little bit of commitment on the customer’s side, too.

Elizabeth: Then you’re operating at a big loss, for a new-

Gene: It’s not… It depends. I mean, the numbers have to work, I’m not saying you should do this if it’s going to put you out of business, by any means, but I think it’s a risk worth taking, and you’ve got to be the judge as to how much of that risk that you’re willing to take. And, by the way, as you get better, and you have more of a reputation, and you’ve got more references to give, and more volume, then you’ve got an ability to go and say, “No, we’re not doing any three-month thing. You want us, sign up with us.” But she said specifically, you know what I mean? Then, what incentives can we offer? And she just started this business. So, you know, she’s got to sort of put some skin in the game, and that’s what I recommend that she does.

Elizabeth: Great.

Gene: I hope I’ve answered Gabrielle’s question.

Elizabeth: I believe you have.

Gene: I hope I’ve answered that question so well that she invites me to stay in her home in Lihue, Hawaii, and then-

Elizabeth: And gives you a puppy.

Gene: Yeah, and gives me…no puppies. I’d like to go and stay in Hawaii. Hawaii is really nice.

Elizabeth: Okay, well, email us back if that’s open to Gene.

Gene: Yes, Gabrielle, let us know if that helps.

Elizabeth: Okay, so we will be right back with Gene’s word of brilliance. After we hear from our
sponsor.

WORD OF BRILLIANCE: 146 BC

Elizabeth: Okay, and we’re back with Gene’s word of brilliance, followed by his TV recommendations.

Gene: Yes. Okay, but this time it’s not a word of brilliance. It’s a date of brilliance.

Elizabeth: Okay, great.

Gene: The date, Elizabeth, is the year 146 BC.

Elizabeth: 146 BC.

Gene: BC, yes.

Elizabeth: Okay. So I’m currently reading a book about Cleopatra right now. I feel like she lived around that time.

Gene: Okay, you’re getting there. It was a little bit before her time. And you’re getting closer.

Elizabeth: The Crusades?

Gene: Nope, it’s not. The Crusades happened way, way before.

Elizabeth: The Roman Empire?

Gene: Yeah, so it was before the Roman Empire. So let me just paint this. 146 BC is a very, very important year if you run a small business. And here’s the reason why. In 146 BC, Rome had not started their empire yet. They were still a republic. That one year, they defeated the Carthaginians, which was the end of the Third Punic War.

They had been fighting with the Carthaginians for like hundreds of years, and that same year they also defeated the Achaean League, which was the league of Greek States, as well. Both big, huge victories that year. And that was the last year for like 600 years that Rome had an external force that was like an external-

Elizabeth: Army?

Gene: Yeah, army or competitor that really threatened their existence. And it was that year that Rome actually started to decline. And the reason why it started to decline is because-

Elizabeth: You need competition.

Gene: Yeah, you hit it right on the head.

Elizabeth: Sorry, I grabbed it right away from you.

Gene: No, good for you. For the next like 500 years, Rome was beset by…it was stagnation rather than growth. It was emperor fighting dictator fighting internal battles because there was no external enemy to fight anymore, and it was a great disparity between the wealthy and the poor, and the empire itself really actually began its decline.

I mean, it was powerful for awhile, but because it had no technological progress the way it was going, it was no longer a democracy soon after that. The lesson is this, and you hit it right on the head. Competitors are good, right? When you have a competitor, it keeps you on your toes. It keeps you hungry. It keeps you lean, it helps you grow, it helps you expand as a business. Competition is really what fuels your future, and when you don’t have competition, you stagnate just like Rome did. And when Rome did that after 146 BC there was stagnation, obviously. It caused the deaths of a lot of people, and starvation, and poverty in a lot of places, and a lot of bad things. Obviously those repercussions, hopefully, would not happen with a small business. But the idea is still the same.

Elizabeth: Yeah, we hope that no small businesses out there would-

Gene: Would cause widespread famine and killings. But, at the same time, not having competition is a very big thing. And if you want a really good example of that, look at Rome in 146 BC.

Elizabeth: So, you have competition.

Gene: I do. And so when I look at them, quite often, as to what they’re doing, I notice-

Elizabeth: Does it just give you a stomach ache to look at the…? You’re like, “Aww.”

Gene: Yeah. Frankly, yeah. When I see people beating me at something, or if I lose a client to a competitor-

Elizabeth: Or they’re just doing something better and you’re like, “I wish I had thought of that first.”

Gene: I hate them. And whenever anybody says that they’re, you know, we’re friendly competitors, or we…I hate all of my competitors. I just don’t like them. And I always look at them like they’re taking food out of my children’s mouths because they’ve won some piece of business away from me that I should have had. But I’ve got issues. It’s the competition that has kept me on my toes.

Elizabeth: Yeah, definitely.

Gene: Competition is important.

Elizabeth: All right. Give us another TV recommendation.

Gene: We’re talking about Rome. I think you’re going to laugh, but I just watched a 40-year-old show because I got into this whole Rome thing and I listened to this whole great podcast on Rome, as well.

Elizabeth: Well, what’s the podcast?

Gene: Well, the podcast is called History of Rome, which is a 190-episode podcast.

Elizabeth: Wow. How long are the episodes?

Gene: Each one of them is like 15 to 20 minutes long, tracks the history of Rome from like 500 BC to 500 AD, and it is awesome. And the guy, his name is Mike Duncan, he’s like a professor of history… It’s a very, very great podcast, very easy to follow, whatever. He recommended, and this guy’s an ancient history professor, watching the BBC’s I, Claudius, from the 1970s, and it was awesome.

Elizabeth: Really.

Gene: And it was just…I mean, it was a little dated in the way it started and ended the titles, or the credits, whatever. But the acting, the writing, if you want an amazing history of Roman history from the time of Augustus Caesar all the way through Claudius. So that’s like three or four emperors that came and went during that period, it was Augustus, it was Tiberius, it was Nero, it was Caligula, and it was Claudius. You learn so much and some really famous stars are on it as young people, like John Hurt and the guy from the X-Men, I forget…the bald guy from the X-Men. He’s like a big… He has a full head of hair in this show, because it’s the ’70s, but it was a fantastic show. So I, Claudius is a show that I recommend. It is on Amazon Prime. That’s my recommendation. Learn a little history.

Elizabeth: Awesome. All right. And then I will recommend, I’m reading this book called Cleopatra: A Life by Stacy Schiff.

Gene: Look at us. We’re all history, and the whole… Really.

Elizabeth: I know. We happen to be into that same time frame at the same time.

Gene: Right? Her and Mark Antony, and Julius Caesar, and wow, Augustus.

Elizabeth: Yeah, very. It’s really interesting. It’s very dramatic but not in the way that you usually think of Cleopatra. It’s like she actually went back and like did the research instead of relying on a Hollywood version. So it’s really interesting.

Gene: Right. She was a very powerful woman.

Elizabeth: Very smart.

Gene: She cost Mark Antony the emperorship, because he, you know… Anyway. So yeah, that’s a cool book. I’ll check it out.

Elizabeth: Yeah. All right, so we will be back in a couple of weeks with our next episode. Thank you so much for tuning in. Please leave us a review on Apple Podcasts. That really helps get the word out, if you’re enjoying this, and also make sure to submit a question on our website, smallbizahead.com, look for podcasts, and you will see the submit a question button there.

 

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