Service Trumps Price: Elite Entrepreneur Trait #8 – EP 313

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Over the course of my 25 years in business, building my nine-figure portfolio, and growing my net worth, I’ve learned that the companies I loved creating the most were the ones that charged the most. But most importantly, elite entrepreneurs know that service trumps price. 

When you deliver incredible service, you can charge an incredible price. The service we provide, the communication, transparency, and how we make ourselves available, all that stuff gives our clients confidence and peace of mind, which allows us to charge more.

In today’s episode, you’ll learn how the Apples and Ubers of the world set themselves apart from the pack. Why the best companies treat clients better than their competition, and why so many people are happy to pay a premium for world-class products and services.

Key Takeaways with Josh Cantwell

  • Why one of my apartment complexes is attracting tenants from across the street despite being $400 a month more expensive.
  • How to use personal communication to keep investors happy.
  • Why I’m always willing to give out my phone number–and the surprising number of calls or texts I actually get in any given week.
  • How employee engagement, empowerment and recognition is the foundation of an excellent customer experience.

Josh Cantwell Tweetables

“One of the easiest ways to succeed in business is to find out what people want and give it to them.” – Josh Cantwell

"Customer service isn't or shouldn't just be a department. It should be the entire company.” – Tony Hsieh

“We don't want to push our ideas onto customers. We simply want to make what our customers want.” – Laura Ashley

“I believe in the power of recognition and empowerment leading to great employee engagement. And employee engagement is critical to guest engagement. Employee empowerment and recognition is the core of our culture and how we achieve outstanding customer service.” – Herve Humler

“People today are so busy putting out fires, the last thing that they want is another fire. So, if your service is so good that they can sleep well at night engaging with you and your company, that's one less fire that they have to put out. They're going to be willing to pay for that.” – Josh Cantwell

"A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” – Jeff Bezos

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Josh Cantwell: So, there, guys. Welcome back to another episode of Accelerated Investor. This is your host, Josh Cantwell. And today I want to continue my conversation with you around the nine traits of elite entrepreneurs and eight-figure investors. Over the last month or so, we’ve released because this is number nine. This is number eight out of the elite entrepreneur case studies and different traits. And there are seven that we’ve already covered. And I want to basically jump into the next one right now. And if you’ve been following along, you’ve remembered that trait number one of an elite entrepreneur is that they invest for cash flow now. Trait number two is they’re 100% responsible for their own life. Trait number three is they have super time management skills, not just for them, but for their entire team in studying meeting rhythms and their cadence for their company. Number four, reviews or avoid the screen-sucking OCD loop. Number five, they use technology as a weapon. Number six, they set goals using the ACER exercise. Then you have they scale the one-to-many concept.

 

And then we get to number eight, which is today, service trumps price. And one of the things that I’ve learned as being an entrepreneur now for 25 years and building a nine-figure portfolio and significant eight-figure net worth is that all the companies that I’ve enjoyed the most, the companies that I’ve built are companies that charged the most. And so, remember that. When you have a company that provides incredible service, you have the opportunity to charge an incredible price. So, whether it’s a coaching company that I had where we charge $40,000 for consulting and coaching, and we provided amazing service and support to those people. The support, the service is the most important thing which allowed us to charge a high price. Okay. When we renovate an apartment building and we take a 1970s or 1980s vintage apartment complex like Stuart House or Valet Park & Plaza or 407 Albany or Nottingham Woods or the 204 property that we own, all of those various properties, we did an amazing job of renovating the units and having a higher quality unit in a B-class suburb that allowed us to then raise the rent significantly and charge a higher price. So, service trumped price. Service was more important.

 

If you look at any experience that you have with Apple Computer, the service with Apple Computer is incredible, right? And they even make you charge for AppleCare, AppleCare service, and in exchange for that service, that product, that amazing experience when you open up a new iPhone or open up a new iMac or a new iPad or an iWatch or whatever, you charge, you’re paying way more for that than you could buy if you bought a Dell computer or you bought some other type of computer. But the service, the experience of opening an Apple product and using an Apple product is far superior than all their competitors. And so, they charge usually 60% more than their competitors. The competitor might charge $800 for a computer. You buy a laptop from Apple, it’s $2,000. Okay. In my certain circumstances, with my particular portfolio, there’s a lot of other people in my market. They’re charging $1,000 for rent. Well, we’re charging $1,300, $1,400 for the same product. Why? Because of the service meaning better unit, better amenities, nicer cabinets, nicer flooring, nicer bathroom, better management, better amenities like dog parks or dog washing stations, or amenities like playgrounds, grilling stations, pergolas, patios, those kind of things all allows me to charge significantly more, sometimes 20%, 30%, 40% more for my apartment complex than all of my competitors.

 

Matter of fact, we have an apartment complex that we own called Brookside Oval and Brookside Way. It’s 170 units near the Cleveland Zoo. And across the street, a friend of mine owns an apartment complex across the street. Well, we’ve been getting residents to come over from their complex to ours even though it’s my friend’s apartment complex. I’m not trying to steal his residents, but they come over to our complex because our commons are new, the carpet’s new, the paint is fresh, the signage is new, the unit is new, the cabinets are new, the flooring is new, the bathroom is new. And then we charge almost $400 a month more in rent than they’re getting. Okay. Because the service trumps the price. Okay.

 

If you look at, for example, Uber. The service of Uber of being able to open up your phone, tap on an app, call a car, and have that car show up, that service trumps the price. Like, the cost of a cab in some places it’s more and in some places, it’s less. But people don’t care what the price is of an Uber. They don’t compare the cost of an Uber versus the cost of a cab. They care about the service and the convenience that it makes in their life. When I look at my investors, my investors in some cases are earning a much higher return than other apartment syndications. In some cases, they’re getting much lower equity than other apartment syndications. The reason why they continue to reinvest with me and many of our investors are going to hear this, I’m not afraid to say this out loud that our investors are going to hear it, but they may be willing to accept less equity or a lower return because of our personal communication with them.

 

Our service trumps the price. The service that we provide, the updates that we give them, the transparency that we give them, the balance sheet, the P&L, the quarterly updates, the videos, the gifts that we send them, the fact that when they call us, we answer the phone, they send us an email, we return it, and we return it quickly usually within an hour or less, that service they’ve become accustomed to and they’re willing to possibly take a lower overall return and be in our syndications versus somebody else’s because they know the service is going to be there. They have confidence they can sleep well at night. And so, when you look at building your business, sure, at the beginning, people may not be totally comfortable investing with you. Maybe you’re new at it. Maybe you’ve never raised private money, never bought an apartment complex. So, in that case, yeah, you have to pay a higher return. But over time, as you focus on service, service, service, getting back to people, making yourself available then you can back down the return in an exchange for higher service to keep people’s confidence and trust. Okay.

 

When I think about my investments, when I think about our apartments, when I think about our investors, I always think about how am I and my investors going to sleep well at night. And when I haven’t slept well at night, there’s been times in my investing career that we’ve made mistakes and trusted the wrong partner, guys that screwed us, and we lost money, the guys didn’t follow through and didn’t do what they said they were going to do, those are the times that I lost sleep. Those are the times I wasn’t having any fun because when you lose trust in someone, there is no service, okay? And when you have no trust, you don’t care what the price is. You don’t care what the ROI is. You just want your money back. You just want your liquidity. You want your money back right away. Okay. And so, it’s very, very important that over time that this concept of service that you’re giving back to people, you’re taking care of them, that you’re available, that you’re giving them something that they otherwise can’t get some from someone else, that is one of the traits of an elite entrepreneur.

 

I once heard Kevin O’Leary talk and actually spoke at one of my events all the way back in 2016. And Kevin O’Leary said that essentially the same thing is that service in a business allows you to charge more because you’re going to serve your client, you’re going to take care of your client. The client, think about it, people today are so busy putting out fires, the last thing that they want is another fire. Okay. So, if your service is so good that they can sleep well at night engaging with you and your company, that’s one less fire that they have to put out. They’re going to be willing to pay for that. So, this white glove service of property management, investor management, is one of the elite traits that I think that we possess and I think that you have to possess if you want to be an elite entrepreneur, if you want to be an eight-figure investor, nine-figure investor, this concept of service. The other thing I would add to that, when you think of service, what I think about is access. Okay. Think about that. The perception of access is very important.

 

All my investors have my cell phone number. Every time I would do a podcast with a podcast guest, I give them my cell phone number. Every time that I am out in the field, I meet with a realtor, I meet with an investor, a lender, a potential JV partner, somebody that a network with, I just give them all my cell phone number. There are thousands of people that have Josh Cantwell’s cell phone number. Do you know how many calls I get per day of people that actually use that cell phone number? You’d be baffled. It’s less than ten. It’s less than ten. Sometimes not even ten a week. Most of the time I’m on the phone with my internal team optimizing our business. But the concept or the perception of access, this perceived access where my family, my friends, my investors, our property managers, our regional property managers, all of the CEOs of the companies we do business with, those are thousands of people that have access to my cell phone and I barely get ten calls a day or ten calls a week. But that’s a form of service is making sure that there’s the perception of access. Now, do they really need access to me? If they did, I’d be available.

 

But what I tell them is if I get a call or a text message from one of my students or one of my investors or just one of our partners is that I will then forward them to Jen or to Sheila. Jen is our director of Investor Management, Investor Relations, and Sheila is our Director of Customer Service. Then Jen or Sheila will vet out the problem. Jen and Sheila will try to solve the problem first. And then, if it absolutely needs my attention, then I’ll jump in. Okay. So, service, right, taking care of other people is one of the ultimate areas where service allows you to be different. It allows you to be elite. Okay? And it’s something that I think that most people think like I want to charge a lot of money but the service really sucks. Okay. There are some different customer service companies out there that I think really stand out. One is Amazon, right? Jeff Bezos once said, “A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.”

 

Tony Hsieh, the founder of Zappos that was ultimately sold to Amazon said, “Customer service isn’t or shouldn’t just be a department. It should be the entire company.” Okay. There are so many examples of service that people really, really take for granted. Like, people charge a lot of money for real estate coaching and they don’t provide any service to their client. That’s one of the ones that makes me the most sick, right? Laura Ashley, who was the co-founder of the company called Laura Ashley once said, “We don’t want to push our ideas onto customers. We simply want to make what our customers want.” I’ve always said, “Look, one of the easiest ways to succeed in business is to find out what people want and give it to them.” Okay. Find out what people want and give it to them. There’s so much about service, service, service. Herve Humler, who is the COO of Ritz-Carlton, recently said in a Forbes article, a Forbes survey, he said, “I believe in the power of recognition and empowerment leading to great employee engagement. And employee engagement is critical to guest engagement. Employee empowerment and recognition is the core of our culture and how we achieve outstanding customer service.”

 

So, how do we serve our clients? One of the traits of an elite entrepreneur, right, is how do we treat our staff who in turn treats the customer. Right? So, we talk about service, right, service trumps price. It’s not just about serving the client, the customer, but how do you serve your staff so that your staff member feels recognition, feels empowerment, and so when they’re dealing with the customer, they know what to say and do to make the customer feel well, feel good. Okay. So, to me, over the last really 11 or 12 years since my surgery for pancreatic cancer back in 2011, I’ve been building my portfolio, $350 million real estate portfolio, 19 apartment syndications. We’re just about to buy another apartment complex, actually, next Friday for $6 million. This is trait number eight, service trumps price.

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