Construction marketing: Taking the paths less visible

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Most entrepreneurs or leaders within the architectural, engineering and construction community start and operate their business with marketing as a second thought, if that. Generally, successful businesses are started by practitioners or tradespeople with a network of existing relationships who are willing to give the upstart competitor a chance, perhaps knowing the individual’s abilities (and of course, business start-ups in this industry usually set prices below-market, thinking they are profitable, perhaps because they haven’t correctly factored the real overhead and risk costs of the business that they will need to discover through the experience of hard knocks.

As the business grows, success is largely through repeat and referral clients. You can see this in our ongoing survey on the sidebar — right now referral and repeat business accounts for 73 per cent of the total business volume. These numbers cross the trades, industries and specialities — perhaps the only place where repeat and referral isn’t so great is in the area of “tin man” or high volume residential roofing and siding-type services, where volume is pushed through with aggressive advertising and selling.

Fair enough.  But what happens when the referral and repeat business seems to dry up (as it can in a recession) or you want to speed things up and attract new business.  You then are tempted to look to other sources and of course run into the problems of dubious sales practices and representatives pushing their solution on you.  The “solutions” they advocate usually fail.  Worse, and this can be the biggest challenge, even ethical sales representatives with worthy offers and services also must show you that when you elect to invest in marketing, the up front per-lead/conversion cost will be far higher when you are seeking to acquire new business than when you are passively maintaining your repeat clients or following up on spontaneous referral inquiries.

The way around this problem, of course, is to “rely” on repeat and referral business for the consultants and services you select.  This can reduce your risks and costs somewhat but even then you have another problem — the need to truly change your thinking and perception and allow yourself the time for the marketing “work” to provide rewards.

(I for example advocate structured and systematic programs to develop and encourage repeat and referral business, but you need to spend time, effort and money on this work — which takes you away from the time you could practice your trade or profession or worse, seems to have you paying for something that you are currently getting for free.  Add to this, you need to set up systematic measuring and evaluation processes, and you most likely are tempted to just forget the whole idea and go back to the your old ways.)

No one here can knock sense into your head.  I can cite examples but cannot get you to change but I can give you some really simple guidelines to help you get started.  You probably won’t go the whole way in implementing the solutions here, however.

1.  You need a business plan, structured operating processes, and a marketing budget

This can be off-the-shelf stuff, and generally is available from a diversity of business consultants and services.  It seems like “dead money” at the start, and in fact, it may take a few years for the plan you develop to more accurately reflect your business realities, but unless you know how well your marketing is working and how much you will spend on it, you will fly blind.

2.  Marketing budgets vary, but as a rule, you will want to allocate 2 to 5 per cent of Gross sales (plus direct selling costs).

I dare not tell you exactly how much to spend on marketing — every and practice is different.  This allocation includes advertising, marketing consultants, public relations, “special events” for current and past clients, and other direct costs.  Direct selling costs include the salary for your estimators and employee or contract sales reps (commission, salary or contract) or, if you are an owner-seller, the portion of your salary/time for sales and business development work.  It can include perks including travel to out-of-town marketing conferences (or market research trips) and major league sports seasons tickets.  Just be realistic in your value/reward assessment for the perks.  The sales component can range from another 5 per cent to upwards of 20 per cent, depending on your industry and speciality.)

3.  At the beginning, 75 to 80 per cent of your marketing budget should be focused on repeat and referral clients.

You might as well catch the low-hanging fruit first.  An organized referral program can dramatically increase your results and simply showing appreciation to existing clients can, in addition to attracting referral business, can generate repeat orders.  Setting up a maintenance contract and service/follow up program makes a lot of sense.  Teaching your front-line employees the art of “wow” client service (and hiring the right people for the work) can pay incredible dividends.

4.  Just because you’ve done it in the past (or everyone does it) doesn’t make it right (but don’t dump everything for the latest fad.

I don’t really like Yellow Pages advertising and won’t recommend it to anyone these days BUT if you’ve been using the Yellow Pages for years, track your leads and results and can see value, don’t pull your ads.  Conversely, you might feel it important to follow the trends to online advertising and social networking (maybe even blogging).  These can be effective approaches, but maybe not nearly as effective as taking your current best clients out to lunch or a coffee and with their permission, working with them on an introductory greeting (snail mail) letter to their friends and colleagues.

I’ll leave you with a final thought.  I’ve distilled the core marketing principles I advocate in a single blog posting.  This doesn’t cost you a cent to read and you’ll notice my advice is not expensive — and certainly not self-serving (I don’t purport to be a general business consultant though can help with marketing activities if you are ready for that level of involvement).  Most readers here won’t follow the advice.  You may be one of a few who read it and take things further, maybe purchasing my book or contacting one of the reputable consultants or service providers in this industry.  But even then, you’ll probably give up before you get too far.  This is because it is hard to break from the mold, to go into new directions, and to pay the initial start-up costs of change.

The rewards are there, however, and tomorrow I’ll provide you a 90 day crash course in changing your direction and getting your marketing on track.  Note however (yes this is slightly self-serving) you need to discover (and invest in)  my book to get started, unless you can get a public library to purchase it, or you can borrow it from a friend, or you are an existing or previous client of mine, in which case the book is 100 per cent free.

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