Niches and expansion

A Remodelcrazy.com thread, "How do I market my company?" starts off with this simple but relevant posting:

I need some advice. My busy started out as a Landscape design build company. Now we are venturing into basements and hopefully soon kitchens/bathrooms/other remodeling. My company is called Rusk Enterprises. So my name does not hold me back.

Is it going to confuse people if one week they see an advertising for a backyard, and then the next week for remodeling work? Will this hurt me or help me?

I'm a little confused on how I should proceed with this.

The advice from the marketers is: Stick to your niche. But from other remodelers, the advice is, consider adding the additional services and broadening your scope.

I observe in a posting that you need to focus within your niche, but you can, and should listen to your clients when opportunities to expand and grow the business are provided. We for example, after some ill-fated expansions (including one effort to publish a general business newspaper, a real flop), decided to focus exclusively on regional business-to-business construction newspapers.

This is still our primary business and focus, but last year, a good client suggested I publish a local magazine for renovators. I initially declined because this product would be far out of our niche and expertise, but reconsidered when I realized that the client is a centre of influence at the local Home Builders' Association, and essentially was handing me a ready-made market on a silver platter. I pulled together a joint venture team and Ottawa Renovates has become a true success.

Similarly, while our focus had been in the print media primarily, Tim Klabunde in the Washington DC area suggested last year that we could produce a magazine primarily in online format, and (in conjunction with the Design and Construction Network), we developed the Design and Construction Report.

Client-driven expansion can make a lot of sense, but you should still proceed cautiously, and be satisfied the growth is compatible with your existing niches, values, interests, and of course your existing clients. They are most likely to be your first and most valuable clients for the new service.

(Note you may need to sign into Remodelcrazy.com as a member to read the original thread. The forums are an excellent resource if you are in the remodeling or renovation business -- or are a sub contractor or supplier serving this sector.)

Marketing perspectives: Where is your place?

With several years "active watching" of construction industry marketing, I am starting to notice that industry participants fit into four distinctive categories.

We don't 'market' because we believe in word of mouth and referrals.

Common practice, indeed. Some contractors say they are so busy, even in the recession, that it doesn't make sense to advertise or spend any money on marketing. Existing, repeat clients return for more, and tell their friends and colleagues. No need for a marketing budget, they say.

This could be a recipe for disaster, especially if you are relying on one key client for business or leads. When things go wrong, bam, you are in a deep hole and have no idea what to do.

We bid public work. If we are low, we win.

This is common practice for some well-established contractors, and some start-ups, who don't know any other way to find business. Supposedly fair and open competition, with low prices, seems to be the way to go. Of course, you can't make much if any money this way if the competition is true and open, and if it isn't -- if you are receiving preferential treatment from your public sector clients, you may be behaving more like a member of the first group.

We market, but never (or rarely) advertise.

Common for larger AEC practices, the organizations have marketing department but focus on proposal preparation, media relations, networking, conferences, and the like. Often these approaches are successful and effective.

We budget for full-scale advertising and marketing.

Friends of marketing media, these companies allocate significant resources both for general communications and marketing activities. They are often lead in the residential or speciality markets within their areas.

You are unlikely to jump from one group to another in a quick flash -- if you do, you are likely to be highly disappointed, at least in the short term. But if you are relying on word of mouth and referrals, rather than organizing campaigns to manage them, or if you are relying on repeat business and referrals from just a few key clients, you should take a close, critical look at your business. You may be heading for deep trouble, and not know how bad it is until it hits.

The (publicity) cost of getting it wrong

The Ottawa Citizen yesterday took a pot-shot at a small local roofing contractor because of an apparent screw-up of the work on an elderly home owner's roof.

The story "Excuses rain down on roofer's work" may disappear from accessible archives in a few days, but reading the story, I cannot help but think, "Why?"

The "Why?" is on two levels. The first is, "Why did the daily newspaper care?" Reading the story, the roofer seems to have done a less-than-perfect job, but he hasn't denied responsibility, absconded, or refused to make good.

The second "Why" is why the roofer didn't get the basics of branding and construction business success right in the first place: That is, doing the job correctly and wasting no time in seriously addressing valid client concerns.

You'll notice I am not naming the roofer in this blog posting. I've made it a general policy not to name negatively individual businesses or organizations unless their wrong-doing is so great that it is worth the risk of libel lawyers and I have factually checked the story with our own resources.

Since I'm writing this blog entry based on observations in another publication -- and since a business owned by the person's father with the same name is not implicated -- publishing an identifiably negative report here would cause unfair harm. (This is especially the case because neither father nor son appear to have grasped how to use the Internet for marketing, and only limited references -- including the negative Citizen article -- are available with a simple Google search.)

This silence unfortunately won't help the roofer (or his father) in the near future, unless they simply don't care about negative publicity. Which is dumb. Because unless you are living in a very deep cave, you know that success in the trades depends on word of mouth and repeat business and negative publicity in a major daily newspaper cannot do you much good in either regard.

Unfortunately, this type of story also hits contractors who get it right. Negative news coverage builds distrust, and distrust is the opposite of effective branding.

Nevertheless, this bad news story creates some good news opportunities.

• Could you offer to make good for the other roofer's mistake? (I've practiced this principal a few times in my business history -- when a competitor screws up, I fix the problem, at no charge. Of course it is easier to do this with some advertising than in rebuilding a roof -- especially one owned by a cranky client.)

• Can you gather an incredible collection of testimonials (videoed if possible) to post on your website and communicate your quality, and market that message -- especially if you serve the neighbourhood served by the victims?

• Can you get a neighbour you've served to send a letter of commendation to friends and neighbours?

• Could you write a brief article, "Seven Tips on How to Be Sure to Succeed with Your Roofing Project", and post it on your web site, submit to local community publications, and include it in your marketing materials. The article should not be self-serving; the advice of course should be consistent with your own best practices.

None of these suggestions may apply in your case, but this story shows how publicity is a two-edged sword. Just doing a bad job got a roofer into real trouble; sometimes doing things well can create positive publicity, almost by accident. But if you do your work well AND manage your publicity to encourage and support positive media coverage, you'll achieve the best possible results: Great marketing and branding credibility, without heavy (or even any) advertising expense.

Thanksgiving

This time last year I had just returned from a quick visit to Columbus, Ohio, to gather insights into canvassing.

I'm glad I went, though today would be hard-pressed to find the budget for this sort of adventure. As the recession caught, then burned into my business, non-essential travel suddenly seemed frivolous as we struggled to keep the books in balance and the debt level from flying way above the red line of economic solvency.

You may have experienced similar challenges and stresses.

Hard times require us to tap into our internal strengths, spiritual values, and relationships.

We focus on the essentials, and discover simpler pleasures. (And, if we are fortunate, we can still enjoy some special treats, just as long as they don't cost too much money.)

We have much reason for Thanksgiving.

Surprises

We've had our fair share of surprises this week. Many can't be reported in this blog -- they are internal or personnel-related issues, but one thing defines them: Their utter unpredictability.

Certainly, yesterday and today my work schedule turned on its head as we adapted and revised processes on the fly to ensure that our publications would be delivered somewhat on schedule (they will be late, regardless).

Perhaps my business is more volatile than most -- maybe it reflects my personality. But I think there are other issues here. In business, things happen. The best laid plans collide with the reality of the unexpected. Impressively however the business with a plan, and with some collective experience, has the tools to weather the storm.

Collective wisdom helps, but individual ideas usually provide the answer.
By bringing all your employees into the process, useful suggestions emerge. In this case, a key suggestion from a part-time employee provided the best answer: "Why don't you call a former employee and see if she is available," the employee suggested. I did, and she was.

Regular meetings and processes provide some cohesion and structure in unstable environments.
We had our regular weekly meeting, but I had to reassign some tasks within the meeting on the fly. Nevertheless, we kept communications open and in place.

Ideas sometimes emerge in crisis that solve other issues.
Next week is the major annual construction show in Ontario, and I've always attended. But this time around, family obligations make it harder to participate. With the crisis, one of our employees suggested another could fill in for many of my responsibilities. While the crisis has been resolved, the suggestion still makes sense -- so I'll attend part, not all of the conference (and thus have more time for my family).

Overall, it is turning into a surprisingly successful week.

The best construction industry marketing blog: Update

With a Dec. 20 deadline for nominations for the best construction industry marketing blog competition, I haven't widely publicized the contest -- in fact, the only places this opportunity is referenced is here and at the "other" Construction Marketing Ideas Blog at http://www.constructionmarketingideas.com.

Nevertheless, we've received eight entries so far; and I think there will be many more in the weeks ahead.

Any legitimate blog serving and for the architectural, engineering and construction industry qualifies. "Legitimate" is somewhat subjective, but obviously if the blog is just a Search Engine Optimisation device designed to set up link-backs to your site, it does not qualify. You need to have original content, updated at least monthly, with enough entries to show consistency and continuity.

When nominations close Dec. 20, I will post all the entries with hyperlinks from the new Construction Marketing Ideas blogsite, and we will commence a month-long voting competition.

The more votes your blog wins, the more your chance of winning. You can invite friends and colleagues to vote -- the system will detect if you try to vote more than once from the same computer, so it will be hard for an individual to game the system by submitting many repeat votes.

We'll then elevate the finalists with publicity in the Design and Construction Report, additional hyperlinks and recognition.

To enter the competition, simply complete the form here. There of course is not cost to enter, and no fee for finalists/winners.

Please fill out this form.

Sales: "Be honest, but don't be stupid"

A regular poster on contractortalk.com (Welterweight, he doesn't post any identifying information) started a thread with the "Don't be stupid" heading, and these observations: (I've fixed some spelling and grammar here).

Here is some sales advice

---

"Be honest, but don't be stupid"....

That is something that was told to me years ago. I now bring this up because another home improvement contractor mentioned how honest he was and how he always encourages his potential customers to get at least three estimates.

I looked at him and said that was the most ridiculous thing I have ever heard. Why in the world would you tell a homeowner to get a few more bids? Because you are such an honest guy? if that's the case, become a priest not a contractor. Of course we need to be honest and have integrity but my G-d,why in the world would someone say something like that!

Bottom line: Offer a high quality product, make sure its installed properly, treat your customer with respect (it's their home you are in), and then charge whatever you think you need to make. if you need to make 5k from a siding job then charge accordingly, 10k, the same thing.

But never say, "Mr. and Mrs. Jones, it was an honor showing you my products and discussing all the solutions that would fit into your home. However,before you decide to go with us, get a few more estimates...

What the hell is that all about!

The responses are worth reviewing.

Tinner666 (Albert's Roofing, Richmond, VA)

I get many that say they're getting more estimates. I say "That's fine. I can assure you I'm going to be the highest" If not, call me and let me know so I can see what I missed and add it in."

And, I've said ' Get more estimates if you care to. I'll still be the highest, and give the best job."

DaVinci Remodel (www.DaVinciRemodeling.net, Denver)

We listen carefully on the initial call. If we here the word "bid", we ask "are there other contractors looking at the project?" We then let them know that we do not "bid" projects and our real competitors - who are at our level of craftsmanship and service - also do not "bid" projects.

We explain that the "bidding process" is designed to identify the best price not the best value. "If you were to use the bidding process for your dinner plans, you would eat fast food all the time!" "You would never enjoy a great steak and bottle of wine."

We further ask them: "If me and my real competition (those that offer our level of craftsmanship and service) do not do bids, who is bidding on your project?"

"We would love to help you with your project, but bidding is not something that we do." "Good luck and please call us if we can be of service."

Pcplumber (Leonard Megliola, Bestline Plumbing, Los Angeles)

It is very annoying when a sales person answers and argues every question. It becomes a 'battle of the words."

When a customer tells you he is getting 1,000 bids, just ignore the statement like you never heard it. It doesn't matter because the majority of contractors I run into give terrible bids. The bids don't make the scope of the work clear and on and on.

Stop worrying about what other contractors are doing and just do your own thing.

I disagree with most of the posts that say they try to pre-qualify a customer. We spent several hours with customers and we knew we were not going to get the job, but because we are so professional many of these customers still recommended us to other customers.

We went to many homes where we knew we were not going to get the job and we sold a job to a relative or neighbor during the same visit.

I started this year off with a post that stated my New Years Resolution. It was to never turn down an estimate and go to every customer's home even if they want a light bulb screwed in.

BamBam5144 (Siding, Milwaukee, WI)

Good Reading. It is always nice to prescreen. I love being the first guy out there to give them my information first. Then right off the bat they have something to go off of. Usually they do say "I am getting other estimates" in which I always reply, "that's good you really should. I can promise you though that you will find cheaper prices but they may not be the same high quality products, have the same warranty we can offer or have an owner who limits his installers to nothing but the highest standards. In order to compare prices, make sure you compare apples to apples."

If someone says I need an estimate and they've already received four or five, I push them off unless I have nothing else to do, or I mention to these people that there is a 130 dollar estimate charge that will come off the price of the job once a contract is signed. That helps get rid of these people right away.

If you read through this thread and wonder: "Is there more than one right answer to this question?" you are getting closer to the truth. I agree with the original poster that you don't need to set up and encourage price-sensitive competition, but if a person makes it clear that there will be competing bids, you need to be in a position where you are both first and last in their mind, and you need to prepare them mentally for low bids.

And if you have someone who is clearly bid-shopping for the absolutely lowest price where you don't have any previous relationship, as a rule, it may make sense to pass. (Though note Leonard Megliola's "never pass" posting; I've found as well that when I apply subjective screening criteria I've lost far more sales than if I take every inquiry within my service area seriously.)

So, you think, scratching your head, which suggestions in this thread should I follow, and which should I reject. Here, I cannot give you a simple answer, but suggest you align your response to the successful contractor whose practices most closely match your personality, values, and client demographics. Then consistently follow your own system.