Editor's Note: This is the eigth in our 2007 series of The Business Owner Toolbox written by our regular columnist, George Hedley. Each article is written to provide you with practical, immediately applicable business management tools to assist you on your path to building a successful, growing business.
What is the No. 1 business priority you must have every day to guarantee you'll make more money in good times and bad? Is it:
- Schedule your crews
- Bid work
- Purchase materials
- Train your crews
- Collect money
- Provide quality workmanship
- Maximize field efficiency
- Review contracts
- Complete required paperwork
What was your answer? Did you realize I left the most important priority off the list? The No.1 business priority required to make a profit is to find and keep customers. Without customers, everything else is irrelevant. So, is your customer No. 1 in everything you do? Suppose you're stranded on a deserted island for thirty days with your best customer. You only have enough food for one of you. Who is No. 1, you or your customer? Of course, you are! But, your job is to make the customer feel like they are No.1 while you eat all of their food! (Just kidding...or am I?)
What is the common thread for these businesses or ventures?
- Pebble Beach golf course
- Hilton hotels
- Putting on a charity golf tournament
- Owning an electrical supply house
- Being a site concrete contractor
- Roto-Rooter
- Home builders
- Microsoft
- The Anaheim Ducks (Stanley Cup 2007 winner!)
None of these businesses or ventures can exist without customers. Last year, I participated in a major national charity golf tournament. The golf was fine, but the player experience, prizes, food, gifts and quality was not up to par. Several other players and I told the organizers we wouldn't be back without major improvements. There is too much competition even for charity dollars today. Guess what? They listened and upgraded every aspect about the tournament. I attended this year, and it was first-class. Even charities with great causes must put their customers first in order to be successful.
Construction companies, general contractors, subcontractors and suppliers who are the "best in class" continually take care of their customers in everything they do. They proactively market their services, sell what they have to offer, nurture new customer targets, create loyal customer relationships, get involved in industry and community organizations, offer different services to customers and work hard to put their customers first. And guess what? They also make more money than their competitors.
Marketing is:
- Taking care of your customers and showing them you care about them and their results
- Staying in touch with customers
- Seeking new customer targets
- Creating a positive perception of your company to potential customers
- Saying thanks to customers
- Presenting your company image to the public
- Sending customers materials to help their business
- Helping customers make more money
- Giving customers reasons to want to use your services
Marketing is not:
- Waiting for customers to call you to bid a job
- Picking up a set of plans and turning in a bid
- Calling your customer three weeks later to see how you look
- Getting a contract and then arguing about the clauses
- Sending out foremen who are not professional
- Over-billing for work not yet completed
- Asking too much money for change orders
- Leaving trash on the jobsite after your work is finished
- Not doing your own punch list
- Not paying your suppliers on time
- Promising to man the job and show up two days late
- Over-committing to get things finished and then not finishing
- Finishing punch list items four weeks later
- Waiting for the phone to ring again for your next job to bid
Construction general contractors and subcontractors have gotten accustomed to providing mediocre service, using poor business practices and not marketing to their customers. If a restaurant or hotel operated like contractors, they wouldn't stay in business more than a few weeks. Customers just simply wouldn't show up or come back. But for 95 percent of all contractors, not doing proactive marketing has become the norm and standard operating procedure. It seems like everyone's motto is: "No Worse Than Our Competition!" or, "If our competitors don't do it, why should we have to?"
But there is hope. You can make a difference in your bottom line by being just a little bit better than your competition. It won't take much to set your company apart. And you'll make lots of money with little expense or effort. All it takes is your commitment to put customers first, let them eat a little bit of your food, tell them why they ought to use your company and make them feel good about the experience. Answer these twelve questions:
1. What is your customer strategy?
2. What is your marketing strategy?
3. What do you do to attract new customers?
4. What do you do to get customers to call you?
5. What do you do to stand out from the crowd?
6. What do you do to get referrals?
7. What do you do to thank customers?
8. What do you do to help customers?
9. What do you do to show customers you care about them?
10. What do you do to stay in touch with customers?
11. What do you do to schmooze customers?
12. What do you do to convert repeat customers to loyal?
The Marketing Musts
The "marketing musts" that follow are simple to implement. They'll make you lots of money and allow you to build a better business with better customers. But if you don't do some or all of them, your company will stay at the same level and continue fighting for the cheap work and leftovers that most contractors scrape to find.
1. Relationship Marketing
The easiest and most important "marketing must" to do is create trusting relationships with your top customers who make you most of your money and pay your bills. Start by making a list of your top 20 to 100 customers. Look at every job you have completed or bid in the last five years. Who was the customer, architect, engineer, real estate broker, project manager, purchasing manager or any other person who might have influenced the decision to hire your company? Also, list out any potential or customer targets you want to go after in the next few years. List all of these customers, potential customers and referring parties on a spreadsheet ready to sort.
- Loyal customers-Customers who only use your company
- Repeat customers-Customers who use you if you're low bidder
- Potential customers-Customers you want to pursue in your market
- New target customers-Customers in different project types or areas
- Referring parties-People who can or do refer your company work
Next rank, and sort them by these important factors:
- Profit potential
- Ease of doing business with
- Desire to do new business with
- Ease of getting on their bid list
- Competitive factors or competition
- Ease of negotiating work with
- Potential to become a repeat customer
- Ability to convert from repeat to loyal customer
Now you have a customer target list to begin your marketing program. Where should you invest the most time and money? In the construction business, the biggest marketing bang for your buck is creating customer relationships with your top customers, most desired potential customers and quality referring parties who refer your company lots of work. For most small construction companies, focusing on ten to twenty customers is all it takes to make the most money. Pick the top ten to twenty customers you want to create a deep relationship with.
Now, plan your marketing strategy to convert customers from potential to repeat to loyal customers. How often will you need to see them to remain close? Think about your best friends. To maintain close loyal trusting relationships, you must spend quality time with them at least once every two to three months. Quality time includes face-to-face time at dinner, lunch, breakfast, ballgames, community events, golf, hunting, fishing or industry events. It doesn't include job meetings, bids, phone calls, e-mails or negotiating change orders! If you see two customers every week, every ten weeks you'll see all of twenty on your list, and maintain quality customer relationships with them. If you never take them out, you can only hope to stay on their bid list by doing good work for them.
2. Constant Customer Contact
To stay in touch with your entire customer list, you must send everyone on your list something at least every two to three months. This will keep you at the top of their minds when they have a need to call. You can perform this marketing task by assigning someone in your company or bringing in a college student once a month to help you for one day. Have them create the mailing piece, get it printed, stuff it into envelopes and then mail it out. Ongoing customer contacts should accomplish one of the following strategies:
- Make customers aware of "why" to choose your company
- Send expertise brochures or flyers
- Send photos showing your project expertise
- Send flyers of past project accomplishments
- Participate at industry meetings on panels
- Create a perception of your company's value
- Show how you accomplished big tasks
- Speak at industry events
- Send charts and graphs of your value-added services
- Peak customer's interest to remember your company
- Send fun stuff that gets a reaction
- Send postcards, greeting and holiday cards
- Send jokes or cartoons
- Reinforce your relationships
- Take your customer to a meal, event or meeting
- Send personal handwritten notes (one a day!)
- Send jobsite photos of project progress
- Send thank-you cards after customer contacts
- Show customers you care about their success
- Send magazine articles that help them
- Send guides to do things better
- Send books to help customers
3. Referral Program
When visiting your top ten to twenty customers, ask for referrals. Make it a priority to ask each customer at least once every year for referrals. This will insure a quality target list to expand your customer base. Remember, don't ask, you don't get! After they give you a referral, send them a thank-you gift of some value as appreciation for their help.
4. Website
Either do your website right or don't waste your time. Your website must be a showplace for what your company does best. It must state why to pick your company, what types of work you specialize in and where your company works. It must also be a resource center to help your customers solve their problems. Use quality photos, professional graphics and good links to other sites. Include a home page, business profile, competitive advantages, your expertise and specialties, client list, corporate team, key management resumes with photos, project photos, progress photos, testimonials and a detailed research center giving customers information to use for their upcoming projects.
5. Company Brochure
Ditto the website criteria except don't waste money on twenty-page brochures. Create several small tri-fold brochures or 8 ½ inch x 11 inch flyers for each project type you build. Then have standard backup pages ready when you call on potential customers. The days of big expensive brochures are over. Spend the cash on your website!
6. Get Active in Your Industry, Associations and Community
People want to do business with people they know. A great way to get known is to be active in your industry, association and community. Join organizations where your customers hang out and will see your involvement. And get involved by volunteering to chair committees, get on the board of directors or lead the golf tournament or annual fundraiser. The more you are seen doing good things and helping out, the more people will see the good in you and call you to help them out. Decide where you'll get the most bang for your buck and join today.
7. Image and Promotional Items
Rule No. 1: Don't give out junk! Rule No. 2: Don't feed the monkey when you need to sell to the organ grinder! I see lots of construction companies fall in love with giving out cheap T-shirts, throw-away pens, ugly calendars and useless notepads to the wrong people. Don't waste your money on giving small stuff to the wrong people. Save it up and invest in season tickets to your local team, and take your top customers out with you. A construction contract has never been awarded to your company by your customer's foreman, journeymen, or apprentice wearing your T-shirt or baseball hat.
8. Advertising
Placing ads in newspapers or magazines is expensive for contractors serving local markets. You are investing lots of cash aimed at lots of people who don't need what you sell. Print advertising has its' place for suppliers, specialty contractors and other types of businesses. But don't think it will keep your pipeline full of profitable work. However, I do think you should invest in unique job signs, job trailers that stand out, bright company uniforms, clean and professionally painted trucks and other ways to promote your company image in a consistent manner.
Now Go Make It Happen!
These "Marketing Musts" will make you lots of money! Begin with No.1, relationship marketing. This will give the biggest return for your investment of time and money. If you take out two customers fifty weeks per year, you will need to budget between $5,000 and $15,000, depending on your location and taste. This is small potatoes compared to making another $50,000 to $100,000 on your bottom line by building for loyal and repeat customers versus attracting all your work by being the low bidder.
Next, implement No. 2: constant customer contact. If your complete mailing list comprises 250 customer targets and you mail to them four times per year at the rate of $2 per piece of mail, you will only invest $2,000 annually. You will get a return on this marketing effort.
And then, decide which of the remaining "Must Do's" will give you the greatest return. Some companies will need a professional website others will need a company brochure while others will be able to get lots of referrals. Choose what will work best and make it happen! Remember, any marketing plan in place is better than a perfect plan never executed. See you at the bank!
Construction Business Owner, August 2007
