Business (marketing) failure: When the story heads to a spiralling disaster

renovation failure
A Google images montage for "renovation business failure"
renovation failure
A Google images montage for “renovation business failure”

Yesterday, I received a disturbing email from the executive director of an association to which we belong. He has?convened a meeting of the association’s ethics committee, to review a file that will most likely result in the member’s expulsion.

If you look at the offending?company’s websites, you will see one of the best-looking presentations?around. And if you search by the company’s name, you will find generally positive reviews on the review sites, with a few?disturbing recent exceptions. Notably, the company has an “F” rating on the local Better Business Bureau site, with reports about (relatively recent) unresolved complaints and an announcement that the company’s membership has been revoked and is violating the rules by using the BBB logo.

What went wrong here?

I cannot say for sure, but it seems the company — which claims it used its own labour rather than sub-contractors to handle its work — ran into some rather serious problems, perhaps by underbidding work, or through a job (or jobs) that went south. Clients noticed their work was being delayed, the company owner wasn’t returning calls, and then (more disturbingly) learned that suppliers weren’t being paid as well, and — in some cases — liens were being registered?on their properties. Worse, the contractor continued to collect/insist on progress payments and would not finish the work unless he received more money, according to the published complaints.

In line with my practice not to name negatively individual basenesses or organizations in this blog, I cannot show the story in full here — including links to the contractor’s truly well-built website — a masterpiece of residential construction marketing. If you didn’t do your homework and investigate further, you might be convinced to use this contractor.

While the BBB has (thankfully) moved reasonably quickly to pull the company’s accreditation and rating, the other association to which I belong has been slower to get involved. This could be because the complaints started arriving later — or it could be the association’s systems, which are not designed to cull bad-apple members quickly (in part because to my knowledge in 20 years in business, I’ve never seen a situation where the association needed to expel a member.)

There are serious marketing/branding challenges here.

First, the association, in encouraging renovators to become members, now has to deal with the real risk of more business failures. Sadly, the least ethical operators will hang their name/reputation on the association’s good reputation — bragging about their membership.

Secondly, I’m reminded here that marketing and business development is only part of the story of a business success or failure. All the good marketing in the world cannot undo bad business. Ethical, well-run and successful businesses may live on lower-than-real potential by “relying” on word-of-mouth (because they do their work so well at good prices, so that others share the news), but bad guys may market themselves with more assertiveness and energy — only to fail in the long run.

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