New and old ideas in the AEC marketing world: Which way should you go?

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Some fundamental marketing principles change rarely, while others are shattered and need to be revised, largely because of changing technologies and business practices. The challenge in effective AEC marketing, in my opinion, combines knowing which rules have remained consistent and which have changed — and adapting your approaches and business models accordingly.

As an example, we’ve enjoyed as a publishing business some strategic marketing advantages over the years; namely we generally do not need to pay third-party organizations for marketing services, arranging trade-outs where it makes sense.  For example, relevant construction trade shows and events usually will agree to give us booth space in exchange for advertising.  In this context, our services are complementary; while we’re both selling marketing services, we have good reason to want to “purchase” each others’ services and because there is little incremental cost on either side for some co-ordination, this sort of alliance makes sense.

But that doesn’t answer the question: Does it make sense to promote your business through trade shows and businesses like ours, in this era of instant website visits and social media connections?

The answer to the question: Yes, if you follow the old rule — know what you are seeking to achieve, and measure your success.

Presumably, if you are engaging with trade shows and publications, you are seeking leads and would like to know if you are generating enough new business to justify the cost.  And that leads to another question: Do you have valid metrics to truly assess your results?

At the best of times, any value-for-money measuring in the AEC sector is difficult, because this is a low volume, high transaction cost business.  Even a local renovation contractor might (unless very large) be happy to complete 12 to 24 projects a year, at a selling price of $50,000 to $150,000 each. So how much response does a single advertisement need to generate to be profitable?  Assuming you budget a cost of sales of 5 per cent of gross sales volume, and your total sales are $120,000 a year (12 orders at $100 per order) , you would have a $6,000 budget. Allowing that you would normally achieve 70 per cent of your business through repeat and referral clients, this suggests you could “afford” to spend that money through a variety of media and you might be able to justify it with ony three or four orders a year.

BUT:  What if you took that money and really developed an effective, current, and response-generating website, or put together a comprehensive repeat and referral follow-up program?  It seems obvious that the right thing to do is to take care of these issues first, and then use the remainder for the “others” in the marketing space, and calculate your results.

(There’s an interesting scaling issue here.  You really shouldn’t need to spend more than $5,000 to $10,000 a year on website and social media development, and while you can certainly create expensive events and follow-up mailings and communications for repeat and referral business, you will find there comes a point of diminishing return. So once you get your business to a certain size, the budget for other marketing initiatives — including publications and trade shows — can become more valid.

Conclusion: Remember the old, remember the new. Strategic budget allocations for website and social media are new “good” expenses, and anything you can do to prime the pump for referral and repeat business (old) is excellent.  If you remember the traditional values and adapt to the new trends, you’ll do well — and you won’t burn your marketing budget.

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