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Sunday, March 08, 2009

Free or not so free?

When should your generosity end in construction marketing, and business begin? You hardly will have a viable business if you give all your intelligence, services, and estimates away for free, right.

Then you turn your head and say: "What about this blog and my offer for free insights into construction marketing, and which specialty trade contractor do you know does not actually offer free estimates?"

I wish I could offer you a black and white and simple answer to the contradictions here. Instead, I'll suggest guidelines based on my experience and observations.

Free is good if it leads to further relationships; it is bad if it is a gift to your competitor.

You know the story of the contractor fighting the competitor who says: "Send the competing estimate once it is completed and I will undercut the price." How can you be sure the person who calls you isn't going to turn your estimate into a price-shopping tool?

The best solution here appears to be to use the ballpark estimate approach on initial contact: Then you can size up the potential client: If the estimate requires much time and effort, expect a design fee (see The Process by the late Sonny Lykos). Of course you can elect to waive this fee if you believe the client is sufficiently respectful of your time and cost and is serious about doing business with you.

Alternatively, if the cost of providing a final estimate is relatively low, go ahead, but build enough value-added (free stuff) within the estimate. You might go all the way of the roofing contractor who provides video documentation with the estimate; or make sure you see the prospective client in person to build rapport before measuring, inspecting and estimating.

Consider whether you are one of few, or one of many?

Obviously if you know you are going to win the job because your relationships are strong (and you have received explicit or implicit guarantees), you need not fear pulling your stops out in developing a full-scale proposal or estimate. But you don't want to waste your energies on "free" proposals from public competitions where you are one of many, unless you have a real edge. In any case, this consideration also applies to your marketing thinking: If you can offer something free that is unique (but doesn't cost you very much) you have a real marketing edge; but if "everyone" is offering the same free service, ("free estimates") where is your edge? Without differentiation, you are just playing a mass game without much imagination. Consider something different.

"Free" makes sense within your community contribution program, and with your previous and current clients.

On Friday, I offered thousands of dollars of free advertising to the local community college, which is seeking industry support to complete construction of a multi-million dollar trades training centre. The chair of the fund-raising committee happens to be the chair of the local mixed construction association, who made a personal contribution of $100,000 for the project.

Clearly this generosity makes business sense: It helps build relationships, provides a useful community contribution, and doesn't cost us much in hard cash but has great value to the receiving organization. Consider your generosity within these frameworks: If you can offer goods or service in kind which enhance your brand and support your community, why not?

"Free" is good if it leverages existing resources without draining your cash.

We donate advertising, you may donate in-kind services; but unless you have the resources and reserves, (you might) be careful with your cash. Equally, of course, consider your time cost. It is one thing to produce a quick ballpark estimate; but quite another to produce a detailed proposal with comprehensive plans and objectives which can be shopped to your competitors. The more time and cash the "free" requires, the more you should be sure that you really want to go that way (but alas, I don't have an easy or simple cut-off point here because the right answer is "it depends.")

"Free" can be an effective part of your marketing strategy if you know where and how to convert free to paid services.

We, for example, offer free editorial profiles to qualifying businesses and organizations in exchange for the right to invite their suppliers to advertise support for the project. Naturally, we have set up some qualifying guidelines and rules -- this offer would bankrupt us if we provided it freely to every small business. In our proposals we make clear that we need to earn at least enough revenue to justify continuing the project (though no who qualifies has to pay us for trying), so we can drop wasteful efforts quickly.

"Free" is the best way to thank people who have given you business and support.

Again, in our own business, once you actually give us some money, you will not be pushed to spend more money -- instead, we'll go out of our way to give you added (unexpected) value, ranging from thank you notes, to free consulting advice, to gifts and rebates.

Yesterday, my wife asked me: "When are you going to start charging for your consulting services." I told her: "In time -- right now, the focus is on providing support and value to existing clients, and building our business reputation and brand." So the construction marketing advice here is free, and if you are a current or previous client, you'll receive even more support.

And if you are a general reader of this blog, and wish some free construction marketing advice, feel free to email me at Will I draw the line and expect you to pay, ever? Sure: If your request is for your individual gain, requires a significant amount of time and effort, and is unlikely to relate to larger business objectives. Then I'll provide you a free estimate of the cost.

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