What works?

If successful marketing is all about obtaining more, higher margin sales, and achieving these sales is all about your brand, and great branding is all about trust, what is your most effective marketing strategy?

The answer is you want to find the lowest cost methods, with the highest leverage, which results in the greatest amount of trust among potential clients.

Here, things get interesting.

• Conventional advertising in mass media may reach many people, but can you build a campaign that creates trust (brand) at reasonable cost -- especially if you haven't advertised much before?

• Word-of-mouth referrals of course are inexpensive and loaded with trust, but how do you leverage this asset? If you do nothing, often nothing happens.

• Great media publicity, in electronic and print media read and viewed by your potential clients -- especially in a community where you have great word-of-mouth reputation, offers truly high leverage opportunities, little cost, and great trust-building advantages. (That is where our publicity and media services come in handy.)

• Community service, through active, engaged participation in organizations and groups related to your clients, has less dramatic leverage opportunities, as many of your relationships are one-on-one and in small groups, but the intensity of the relationships and their quality (especially if you are connecting with community referral leaders), can be dramatic.

If you put everything together into an effective package, you can leverage all the resources to maximum effect: Consider the impact of taking the lead on a community activity, relevant to your business, worthy of great positive publicity.

Would your results be greater value for money than conventional advertising?

I think so, by far, but I also acknowledge this type of activity requires work, specialized skills and knowledge you are unlikely to have, and is rarely if ever conveniently packaged for you by friendly and co-operative sales representatives.

That of course brings you back to our own organization's philosophy. We'll do our best to help you with the bigger picture. But we can't do it for you. You need to put these pieces together in your own mind, understand your market, and then take the lead to make things work.

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Some thoughts about CRM systems

I've always been wary of formalized CRM (Client Relations Management) systems, especially for smaller businesses or larger companies who serve a modest number of important clients (like most non-residential architects, engineers or contractors). Sure, you need good client relationships, but formalizing it within software packages which require data entry and maintenance seems to be putting your energy in the mechanism rather than the actual client relationships, not a great idea in my opinion.

But this weekend, facing a new sales lead management and co-ordination challenge (my sales team dumped the problem right back on me), I decided to reinvestigate the situation, and see if I could find a solution. And I recalled an interesting recommendation by Toronto painting contractor George Zarogiannis of Ecopainting Inc. recommending zohocrm.com.

By Friday evening, I had turned Zohocrm.com on for a test run. (It is totally free for up to three users, and if you wish to add a fourth, you pay only for that person, meaning your cost would be $12.00 per month). It is early going, but appears to solve the immediate lead-handling problem. Inbound inquiries from my website go into a holding file, where they can be reviewed for suitability before they are assigned to sales reps; and then can be tracked through their life-cycle: Exactly what I need in the circumstances.

I posted my findings on remodelcrazy.com and received some interesting responses, the most useful from Rory Swan at Servicez Unlimited in Washington, D.C. He wrote:

I think for most of us. The CRM function will be more simplistic.

• My software ranks the customer from the day the lead is first entered and changes based on factors
• We capture the types of projects that come our way.
• We also look at what jobs are more profitable than others.
• We use the data collection as a way to market to lost bids and follow up with potential clients.
• We enter the data in so that template letters can go out, that have enough customer info for them to seem personalized to that person, but not be difficult to produce.
• Good CRM can tell you
• What jobs are profitable,
• How did a customer find you
• What marketing avenues are working and what is the cost of acquisition
• Did a past client send you any referrals, what was the result of the referral
• A data base for marketing and promotions.
• I keep a 5 year log most homes here are sold and renovated every 5 years
• Maintenance data base to follow up on warranties and new sales opportunities

Good thoughts, and ideas. Not sure what software he is using to handle this stuff, but I'll ask.

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Your clients: Cash cows or friends?

Are your clients "cash cows"? (Copyright image purchased from istockphoto.com)

Justin Sullivan provoked some comments and commendations when he suggested to contractortalk.com readers that they should treat their cows, er, customers, well.

Initially, his analogy went a little over my head -- I'm not sure how many of my clients would appreciate being called "cows". But his intent at humor underlies one of the most fundamental principals of marketing.

If you spend just a little more effort in (a) doing your work well and (b) treating your customers, or clients, with respect and even at a higher level, as true colleagues or friends, you will gain far more business success than you can through any other form of marketing.

Justin writes:

What are you doing to build bulletproof relationships with clients?

The biggest mistake I know of in business is to just see the sale. How much money am I going to make this time?

DO NO DO THAT!!!

Sure, this couple might be worth a 40k job right now, but what is the lifetime value of them worth? How much business can they bring in for me? How many referrals are they going to give me? How am I rewarding them for those referrals?

A Customer Database is the tool in your arsenal. Use it to its maximum potential.

Do not think about your cows as hamburger. Don't even think about them as business partners.

Think of them as friends and treat them as such. My cows know how valuable they are to me. Some of my cows are my most trusted business associates, and some really good friends.

The Wrap Up

Do not use your database to just shoot of marketing crap. Give value. Use it to keep in touch. Build bulletproof relationships. Let me make this promise to you right now: If you build real relationships with your customers, you won't ever be beaten on price again. Ever. In the history of Ever.

On the surface, this is common sense stuff. Virtually everyone in this business earns most of our revenue from repeat and referred clients and you won't far if your work and client relations are shoddy. But how much do you really think about the quality of your client experience and how you can improve it? Would spending just a little of the resources you allocate to advertising and marketing go much further if you spent it on rewarding, recognizing and connecting with your current and recent clients?

• Can you improve your procedures and processes to make your clients' lives easier?

• Simplify forms, offer additional means of communication (with rapid response), structure meetings and project planning sessions to satisfy client wishes, and so on;

• Can you keep your job site clean or maybe go beyond, with something "extra" for your clients to enjoy at the end of the work day?

• Can you suggest alternatives which improve your client's interests even though on the surface they may 'harm' yours. (Your short term loss offset by longer-term loyalty?)

So, yes, your current clients are perhaps "cash cows" -- if you treat them with respect and friendship.

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The Marketing funnel

Conventional sales practice requires you to process many "leads" before you find the gem of real business.

Not-very-good salespeople (or not terribly effective businesses) then instruct their sales representatives to "make the numbers" by calling and calling, emailing and emailing, and knocking and knocking on doors. A few thrive within this cold approach to business development -- but most either become drones or burn out and move on to something better, quickly.

Undoubtedly, this approach to finding business actually is effective, to a point. Since it is so distasteful and frustrating to encounter rejection, few bother to go through all the steps necessary to succeed; and since a few people may actually wish your service, if you are lucky, a few of your spam emails or nuisance phone calls may actually respond (and, in the case of spam, because it is "cheap" to send it, you can theoretically just turn up the volume.

Of course, these practices are exactly why most people build up huge defensive walls when they encounter any selling initiative; especially the clients you most want to reach -- the ones with more money than time to waste fending off unwanted solicitations.

You may find the "numbers" this way, but can you find the trust to win the commitment and business you need; and what about the negative fall-out from all the people you bother, who are not at all interested in your service (and won't have a favorable first, second or third impression of your business.)

Effective marketers seek to turn these problems on their heads; winning trust in your business to the point that (a) people will call you to initiate the relationship or (b) you are so well respected that when you call (for good reason), your call is accepted with anticipation.

Here, the numbers game is modified, because you don't want to waste marketing dollars and energies on people and organization with no capacity to pay for your architectural, engineering or construction services. You need to focus your marketing energies and resources carefully to build the trust and relationships of the people you really wish to meet. In the next few blogs I'll look at some ways you can achieve that focus.

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Calling lost clients: Why you should

This video from Jeffrey Gitomer reminds us that, if we are trying to rebuild our business, the best people to call are the clients who you lost. I found the reference in this Contractortalk.com thread.

You can gain some additional insights in this earlier posting (with a rather gross image) when Gitomer visited Ottawa.

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Why does construction marketing (seem) to need to be difficult?

In several postings, I've observed the frustrating reality about construction industry marketing.

If you feel you have to market to find new business, you find it hard to do (and often frustratingly expensive).

Conversely, when you seem not to need to market, simply because your order book is full from repeat, referral and inbound inquiries, you are on the top of the world.

The problem is in part that no form of marketing success is easier to achieve than the natural success of your reputation bringing in inbound and repeat business. In fact, it gets even better if you are in this position, and so overwhelmed with business that you need to turn clients away or demand a long wait time to serve them. Because of your "scarcity" you are even more alluring -- and potential clients want to do business with you even more. (Marketers often fake scarcity to create this effect, but it really works, all the time, when the scarcity is real!)

This is fine enough in good times, but in a recession, when business drops off, you have two choices. You can shrink your business down to nothing, or you can start learning how to market.

The former choice isn't entirely irrational, especially if you have some control over your overhead and costs. If you can lay off most of your employees, and focus on maintenance and service for existing clients, you might just make it through. I know of some contractors who took long, enjoyable vacations in warm and sunny places during the last recession. Of course, this solution simply won't work if you can't curtail your overhead or you are burdened by debt obligations.

So, then, if you decide suddenly you need to "market" you are in trouble, because you now have to complete a rapid learning curve and you run into the problem that paid marketing and advertising is an incremental rather than magic, instant, solution.

This is why successful larger contractors, especially contractors serving consumers, never stop advertising, even in good times. They have enough experience and metrics to manage their advertising costs, media, and budgets, and can shift gears during hard times, perhaps altering their media mix or increasing their marketing budget even though they know it will produce less satisfactory results.

In previous posts, I've advocated that you get to know your current clients really well, to understand which media they read and what interests them, and then build out your marketing strategies from this information (while of course enhancing your referral and repeat business processes).

Long term, I believe the best way to market your business is to combine your passions and interests with those of your clients and potential clients, and build relationships through the process. For example, I am always most successful at marketing when I practice journalism, like writing this blog, but you may be better by sponsoring association golf tournaments -- if you enjoy playing the game, and your potential clients are there, as well.

The important caveat with this passion-centered approach is to remember that you must not focus on your passions at the expense of direct relationships with current and potential clients.

If you really enjoy doing stuff that has no relevance to your business, go ahead. You may be able to cross fertilize some ideas you can apply in your own enterprise. But don't get lost in the side-track. I've done that in the past, at great cost!

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Reader's Question: High-end residential construction: How to even out the troughs and increase potential deal flow

Although David Markham, president of C.A. Peletz Co. in San Fransisco, said his company focuses on high-end residential work, the contractor also handles commercial projects such as the conversion of an old automotive garage into the Sierra Club headquarters. This information led me to one of my suggestions below.

Readers questions are invited. You can email me at buckshon@cnrgp.com.

Hi Mark, I am enjoying the blog as a new reader. I own a construction company that focuses on the very high end residential market in the San Francisco Bay Area of California. We are an older company founded in the 50’s when the principal built schools and bridges. Over the decades we have built commercial, medical office and always luxury multi-family and single family.

Since I took over in 2002, most of our success has come from the boom in extremely high-end single family ($800 - $1,200 per square foot) due to the dot.com and housing booms. Things have obviously slowed, but not stopped. We have quite a few repeat clients that are constantly upgrading, maintaining and adding to what they have.

I would like to even out the troughs and increase potential deal flow. We generally market to high-end architecture firms and maintain good contact with existing and past clients. Do you have any further suggestions?

Best - David A. Markham, President C.M. Peletz Co.

David:

First, obviously you should take the thoughts of someone at a distance who does not know your specific business or market conditions with a good degree of caution. But here are my initial thoughts.

1. The main frame of business of course is repeat and referral. You probably already encourage this but you may wish to extend your outreach and programs to thank existing clients and encourage referrals. Consider the story of Peter Danis in Toronto as an example.
2. Media publicity can be very helpful, especially in the publications and websites read by your clients. If you don't (yet) know what publications/broadcast outlets and websites your current clients read/use, you can ask a few of them. With permission stories of successful building projects are always helpful. Specialist PR services and agencies may be helpful. Community service may be helpful.
   
3. If most of your current referrals are coming from architects, you have two choices. You can build relationships with them by (a) referring clients to them and (b) offering cost savings/technical/practical seminars and lunch and learn-type programs/ The former is obviously the most effective but the latter is probably the most controllable
4. You may wish to explore an enhanced web presence through the new tools like twitter, online networking, blogging and the like. This stuff can be time consuming and results are often mixed but your market area may be a leading force in the area.
5. Affinity arrangements can be powerful. I noticed you did work for the Sierra Club. Can you connect with relevant community associations, clubs, and associations -- the ones which your current clients are most connected with?

Thank you very much Mark. This is extremely helpful in addressing my blank spots. Let me know if I can be of any help to you in the future. Best - Dave

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The FW&D marketing and business model: Intelligent building from a local base

Ned Overton of FW&D LLC in Arlington, Virginia near Washington D.C. His trailer is less for equipment and material storage than marketing -- it has a 'take one' box with flyers for people walking or driving by.

Yesterday, Karen Buckley and I met Ned Overton of FW&D LLC in Arlington, Virginia and I discovered how to build a successful contracting business from scratch.

Overton's two keys to success have been his ability to connect to immediate community needs, and really thoughtful (and inexpensive) marketing.

Overton had been a career employee with the Prince William County Fire Department in suburban Washing on, D.C. for 25 years when he retired in 2002 after 25 years of service. His responsibilities before retirement involved the staffing and scheduling of hundreds of firefighters in various stations. This challenge required him to be acutely sensitive to individual personalities to ensure working harmony and safe operations.

As retirement approached, a cycling friend who works at a local building supply dealership suggested he could start a second career by installing replacement windows and doors in his neighbourhood. Overton had been a carpenter before joining the fire department, and his neighbourhood, Fairlington (the "F") in the company abbreviation) has plenty of windows and doors needing replacing.

The neighbourhood's solidly-built townhouses, originally built during World War II to accommodate military families, had last been refurbished in the 1970s, when the neighborhood's residences had been converted to condominiums. Now, more than 30 years later, these windows and doors needed to be replaced.

Overton recalls his first order, from an free online Yellow Pages listing. Then others arrived, from the local community newsletter (where print ads cost less than $100 a month). Soon, referral business started, as Overton gathered all the information he could on various aspects of the business.

He found people needing windows and doors also wanted other services, including roofs, deck, new kitchens and bathrooms, and complete remodeling projects. Rather than turning this business away, he discovered he could do the work effectively and with client satisfaction.

Overton serves communities throughout the Northern Virginia suburbs of Washington D.C. He generally stays clear of the Maryland suburbs unless he receives a referral call -- he is acutely aware of the cost in time and effort to serve communities outside his area. Of course, just the Virginia suburbs give him a large enough market area.

Current business volume is about $1 million a year -- he is hoping to double that to $2 million within the next year. Window and door jobs generally generate about $5,000 in revenue, kitchen and bath renovations of course can be in the tens of thousands of dollars.

Fair enough, but how does he achieve marketing success.

Overton, at 57 years old, indicates he is like a sponge for information, especially from sources like contractortalk.com. He has learned simple techniques, like answering all inbound calls with an initial remark "Thank you for calling", to more thoughtful uses of online resources in explaining his company's services.

"When we receive a call, office co-ordinator Meaghan Hudson often refers the potential client to relevant pages on my blog, website, or our youtube.com videos," Overton says. This allows the potential client to see first-hand the quality of the company's work -- and of course the potential client can also view the FW&D's lengthy list of testimonials.

Other marketing techniques include:

• Company wine. Overton says he has high quality bottled wine with the company label. "The wine has to be really good, because the people around here know good wine," he says. He gives the wine as a 'thank you' for referrals or to clients when a job is completed.

• Use of effective and simple local resources. He ensures his flier in a local "door hanger" service stands out from the crowd by using a thicker stock paper Similarly, he is happy to pay a local leads service whose operator charges a 10 per cent commission when the lead pans out. "We just build the cost into our price, and if a client doesn't respond after we provide an estimate, we pass the information on to the leads service provider -- who often helps to close the sale." Because clients are satisfied with the work, and the leads service operator can make thousands of dollars for a lead, Overton receives many leads.

• The trailer. Overton says his job trailer is too small to be really useful for equipment and work -- but is a great advertising vehicle as it is in front of the home on residential streets. The trailer has a "take one" box for flyers -- and it draws business.

• Rational service extensions. You may call FW&D for a simple window replacement project, a relatively small job for about $5,000 for 10 windows. Then, seeing the work quality, clients order more services -- Overton says he will often do uneconomically small projects to either serve former clients or build relationships for larger work. His wife Alica provides design and co-ordination service for the larger interior renovation projects.

Perhaps the most impressive element of Overton's service, and the reason it is successful, is his ability to connect with the people in his community; his home office reflects his clients' environment and employees and former employees 'connect' as if part of his family.

Can you follow Ned Overton's example? I think so -- and, like other contractors I've met in my journeys around the U.S. and Canada, he will be happy to share his insights and observations with you, just as he acknowledges the ideas and advice he has received from others on contractortalk.com and elsewhere within the online community.

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