The most recent ContractorCity newsletter reminds readers of construction marketing basics, making clear that while referral and repeat business are vital to your success, you can’t simply passively rely on word-of-mouth for your business survival.
Referrals from satisfied customers are of paramount importance, and should make up at least 50% of your sales. However, many contractors rely far too heavily on word of mouth alone. Depending on any single source of job leads can be counterproductive during a slow business period.
Here’s why: referrals, as great as they are, are an unreliable and unpredictable sales source. Assuming that every past customer will be happily telling everyone about you for the rest of their lives is not realistic. Unfortunately, out of sight is often out of mind.
To make sure that you get constant referrals from past customers, keep in touch with them on a regular basis. Send them an email at least once every few months, or mail a postcard or flyer with your seasonal offers. Include those great magnetic business cards you had made up. This reminds them who you are and what great work you did for them. Their refreshed memory will get you the referral.
To get consistent referrals from colleagues such as subs, realtors, interior designers and insurance agents, be sure to keep in touch with them as well. You can do this with just a little extra effort: show your face, send emails, send flyers, drop your cards off, have lunch with them, etc.
To get new customers, use print, radio and television advertising, flyers, brochures, lawn and fence signs, truck signs, and targeted regular mail and email. If your local ordinances allow it, put up signage and billboards wherever you can. Be creative, work out trades for free advertising – for example, you do some work for a commercial building owner, they let you put up a big easy-to-read sign on the side of their building that everyone driving past on the freeway can see, etc.
Make sure you use all your local networking opportunities. Participate in local business groups and trade associations, attend networking gatherings, do charity works and let the local media give you free publicity. Use your local public relations venues to announce new services, and treat your website like your very own infomercial station.
Being consistent in your marketing efforts means that you are continually generating job leads from a variety of sources. Reminding your customers of the great work you did for them will help them remember to mention you to their friends. Likewise, putting your company name and logo in front of lots of different eyes will bring in the jobs at a steady rate.
Make it part of your everyday routine to get your name out in some way, and you’ll always be able to profitably ride out business cycles.
Note you do not need to spend huge amounts of money on marketing to achieve these results. Systematic follow-up and client communications initiatives (perhaps linked with ongoing maintenance agreements) can smooth out your work flow and allow ou to maintain consistent and repeat contact with your current and previous clients and ensure a relatively steady flow of referrals. Then you can elect to experiment with conventional paid advertising; clearly more expensive than keep-in-touch marketing. The advantage of conventional advertising is, once you discover the base-point to generate enough inbound inquiries and leads through regular advertising, you can vary the “volume” of your advertising (never turning it down completely) to generate the number of leads you need to maintain viability in good and hard times.
This solution however rarely works when you are desperate for business so the time to plan and test your advertising is when you don’t need to do it because your order book is full of referral and repeat clients. Of course, you need to behave counter-intuitively here: I’m asking you to spend money on advertising when you are busy AND to take the time to monitor and track it carefully to ensure that it is generating profitable leads.
When you are busy, you will likely say: “I don’t have time for this” and (worse), “I’m spending money on advertising which doesn’t really work that well, and all I’m getting are calls from people who demand more of my time up-front and are much less likely to purchase our services.”
Your attitude reflects that of the majority of contractors. Trouble is, when things turn south, and the referral volume dries up, you are left high and dry, and if you think advertising is expensive and relatively ineffective, try it when things aren’t going so well! (Conversely, if you have devised a viable advertising/marketing system in good times, while your cost-per-lead will rise during hard times, you’ll have a good idea of what works, which media generate the most profitable leads, and where you can increase your advertising volume effectively to keep the lead flow reasonably consistent.)
From the media perspective, we see this process clearly with our (advertising) client base in Ottawa Renovates!, a regional magazine we started at the request of the local home builders’ association renovation council.
Some contractors and suppliers have no problem spending several thousand dollars in advertising each issue. They also spend a significant sum of money with other media. They track and measure their results and buy even more advertising.
Many others, however, “try” the advertising once, reluctantly, and seeing its cost (and the fact that the advertising doesn’t generate the quality and quantity of leads they dream about) they pull back, often trying to win virtual bidding wars for whatever business walks in the door.
I admit to a bias here (since my business earns most of its money by selling advertising) but I repeat that you don’t need to spend a lot of money on conventional advertising if you have a consistent and thoughtful marketing strategy. If you wish to take the money that might go into magazine advertising and allocate it to a structured thank-you program perhaps with client-focused events, you will achieve results that are just as satisfying. But you need to be consistent and you need to invest in marketing when times are good so you are ready for when they are not so great.