Getting the basics right (for residential contractors): It isn’t complicated

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Angry contractorAdams Hudson reminds us his Contractors’ Sales and Marketing Insider, that the basics behind AEC marketing — at least for the business-to-consumer residential sector — are quite simple.

He observes, if you are running into problems, you’ll have one of three problems.

Low phone traffic (I would add, web-based inquiries, as more people initially communicate that way) . . .

Look to your marketing for the trouble it’s causing you. The purpose of marketing is to level out weather-driven leads. If it isn’t, chances are you’re either badly under-marketed or you’re spending good money on bad marketing.

As a solution, Hudson advocates following a four-point plan for identifying with your audience — research, resell, reap and repeat, and he offers a coaching service to support the process.

 

Many leads, few sales?

If you’re getting many leads but few sales, that’s not a marketing problem. That’s a selling problem. Sure, you may get some unqualified leads, but the salesperson is usually too quick to blame “price, products or people” instead of “poor presentation and preparation.”

Michael Stone has some worthy resources to help out in the residential sales.

Many leads and sales, but no money

Here the problem relates to pricing and/or business management. If you are pricing too low to be profitable, you’ll dig your self into a deeper hole with every sale you make. If you have excessive overhead and business costs, you’ll also fail.

You’re spending lots of money and lots of energy and getting lots of work done – but it’s not paying off for you. Take a look at your overhead, scheduling and any waste, of course. Also recognize that the real culprit could be your pricing strategy.  If you’re trying to be the “cheapest in town,” your competition isn’t running you out of business – you’re doing that to yourself. When you’re losing money on calls, you’re better off financially not showing up at all.

Hudson advocates two strategies in pricing:

There are two pricing strategies for special offers – one is a penetration strategy, which means that you are basically seeking entry into a customer’s home. This strategy works if your technicians are properly trained to look for additional work and trained to consult with the customer. If they aren’t – and if your technicians merely walk in and perform the service – you are going to lose money and opportunities. Do not discount the importance of maintaining those customer relationships.

The second strategy is to price for profit. By pricing for profit, your customer will perceive that your service has more value, taking these two factors into account: 1) What they consider value for the price; and 2) How your price is positioned against the competition. The key to price for profit is being able to demonstrate value. Your responsibility is to make certain that your technicians inform your customers about the value they are getting.

Michael Stone, meanwhile, in his Markup and Profit — A Contractor’s Guide, gives you some clear guidelines on how much you should charge for your services — far too many contractors fail to consider their true business costs in determining their mark-ups, and travel down the road to failure.

If you are designing and building schools, hospitals and commercial projects, these solutions will seem simplistic — and won’t do you much good. While some marketing fundamentals transcend business-to-consumer and business-to-business environments, the story is undoubtedly much more complicated and longer-cycle in the B2B world. I’ll share some observations in tomorrow’s post.

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