Free design services: A good or bad idea?

Would a free design service give John Clark's @DesignRemodel in Cape Cod a leg-up against the competition? I'm not sure, nor is he. He welcomes your feedback and comments.

Yesterday, I received this email from John Clark at @designRemodel in Mashpee. Cape Cod., Massachusetts:

Good Morning Mark,

I have enjoyed (and) read your Construction Marketing Ideas blog for some time now. I'd like to take up your challenge.

Offering free kitchen/bath design services:

Many of my competitors offer free design services for bath and kitchen remodeling. Perhaps to the point where homeowners expect it. We on the other hand, will request a design retainer on projects that require such. Of course we get resistance which invariably ends up with us not doing any work on those projects.

My thought, is to offer complimentary design services to those that qualify, as a way to attract new business. To qualify for the complimentary design services they would have to commit to the following. 1. Provide a realistic budget range. 2. Meet in our partner's showroom for a 2 hr meeting to define scope of work and select the products and fittings that they want in their project. We would protect our investment of resources by retaining ownership of the designs and provide no paper plans until a contact is signed and deposit received.

The goal here is to create opportunities to meet, build a relationship and get commitment from qualified prospects.

I have noticed however that few if any of my competitors advertise free design services. By offering and promoting the complimentary services, it may give us a leg up. That been said we would have to be careful that we don't give away the store.

Any thoughts, comments or suggestions would be appreciated.

Thanks!

John Clark, CR

My initial reaction, "Don't head down that path" -- except perhaps as a bonus/supplement to an organized repeat or referral program. I answered him with this email:

John:

I'm not sure . . .

"Free design services" might seem appealing, but will it attract the clients you really want to see, and will the restrictions and controls to protect your intellectual property (necessary, presumably) alienate the potential clients? I'm reminded of several conversations with the late Sonny Lykos who decried the variations of "free estimates" and "free design" that ended up costing contractors much time and effort for low ball if any work.

"Free" is a powerful word, I understand, but it also is overused and can devalue your end product.

Have you considered how your existing clients feel about this type of arrangement?

Maybe it would work in the context of a referral program.... you tell your previous clients that you will provide free design support for their next project, and for the friends who they refer. This way you have a qualification in place anyways and are attracting the type of business you like.

I would be very cautious in going out to the public with this type of free offer, however. Think about your brand, the relationship development process and the like. Are you selling to the low end?

If you give permission, I can post your question (identity removed if you wish) and see what others think . . .

John's response:

Hi Mark,

Thanks for responding.

Sonny was a man ahead of us all!

Yes, I have my misgivings also.

Sure! Let's see if we can stimulate some debate on the pros and cons. I for one would really like to hear from those that offer free design services.

Cheers!

John

What do you think? Is a "Free design service" a viable option to announce publicly, or do you need to embed it in your pricing/offer system once you are at the selling stage (or restrict the service as a reward for repeat or directly referred clients.)

I've hyperlinked back to Sonny Lykos's The Process for readers who are interested in the system he used to get around expectations for "Free Estimates" and "Free Design Services".

Construction marketing: Another perspective about Free Estimates

Leonard Megliola at Bestline Plumbing in Los Angeles shares his operating manual for anyone who wishes to receive it. He advocates that you take all Free Estimate calls seriously -- you never know until you visit whether the tiny, "cheap" job can turn into a $30,000 project. His arguments are convincing.

Readers here know that I am not in love with the "Free Estimates" mantra, especially for large or complex projects. After all some (perhaps too many) prospective clients abuse the Free Estimates gambit to play one contractor off against another, and the phrase, in practice, has lost much of its marketing effectiveness. If everyone is doing it, where is your competitive advantage?

However, Leonard Megliola at Bestline Plumbing Inc. in Glendale (Los Angeles), California, has an entirely different attitude. In his (yes, free) 101-page working manual, he says the issue is how you respond to the caller seeking the Free Estimate. If you start out with the right attitude, without prejudging anyone, you will be surprised how seemingly wasteful calls indeed become goldmines.

He writes:

Give free estimates for more sales and profit. While we would like to get paid for every estimate, we earn more profit by giving free estimates. The amount we earn, by charging for an estimate, is insignificant, compared to money we lose, by not giving free estimates. You cannot be competitive when almost every service business gives free estimates, including kitchen cabinet installers, window installers, roofers, general contractors, painters, etc.

Megliola offers a calculation about the amount of business you lose when you decline free estimates; suggesting you might lose 40 per cent of your leads. He advocates your conversion rate for an average $6,000 sale remains 70 per cent, meaning a difference (for 100 leads, of gross revenue annually of $168,000.

"I made $168,000 more than you by giving free estimates," he writes. "If that is not a lot of money, then multiply that times 30 years = $5 million."

Tied with this assertion, Megliola observes that you cannot judge a lead over the phone:

People with money put on an act to make you think they are frugal, tight (cheap) and people with money put on an act like they are big spenders. A customer calls you and says he is getting 10 estimates. This could be just an act so you lower your price.

A customer tells you he does not to pay for an estimate and he does not know as much as you about why he should pay you for the estimate. Perhaps, the customer is willing to give you an estimate if you convince him during the initial phone call, but you failed, so you it may be your own fault you lost a good customer, or a $50,000 sale. Maybe you can't do a good job selling him that he should pay for the estimate or diagnosis. Maybe, this guy who does not understand about paying for a diagnosis owns a thousand homes and is a huge spender and you just lost a few hundred thousand dollars because your judgment system was out-of-whack.

Maybe some customers have a low priority for paying for a diagnosis because he does not know the value of what is wrong. Your customer thinks he needs a five-cent washer and he questions why he should pay you $95 to tell him this. Some other plumber, who gives free estimates sells your customer a job for $50,000. Was this customer a tire kicker? You don't know and you will never know until after you give the estimate. Are you really willing to gamble the loss of $50,000 because someone would not pay you$95?

If my boss gives me a call tomorrow and the customer refuses to pay for a diagnosis, I am going to the job to try to sell $5,000, $10,000, or $50,000 anyway. I would think of myself as a fool if I sat in a coffee shop while some other plumber gets the job and smiles as he waves at me through the coffee shop window. For you, the business owner, $10,000 can buy a very nice used truck, pay a few months rent in advance, buy a new jet ski, a motorcycle, or something nice for the wife.

I have relatives who do a lot of gambling. I am always amazed at how they will lose $20,000 in one trip to a casino. Then, my parents would and scream at each other because my mother wanted to buy a $5,000 couch set. Put this in reverse for business. A business owner will utilize most of his time scratching his butt to figure out how to pay his debts when he should be utilizing this time to make so much money he could pay his debts and have so much money left over he would not know what to do with it. My point; Some contractors think the lost of $95 is more important than the loss of $50,000.

You give me a thousand reasons why you should charge for an estimate and I will give you a thousand reasons why you should not charge for an estimate. Who made more money in the previous calculations?

Megliola makes a pretty convincing argument here, I admit. His free manual is a worthy document, especially if you are a mechanical contractor. Forward the link to your administrative assistant, download it and print a copy for your own use. (He has copyrighted it, but has given me permission to share the link.)

"Free Estimates" and Sonny Lykos's The Process

Before his untimely death last year, Sonny Lykos sent his answer to the problem of unreasonable free estimate requests. His The Process is a system to explain that while the contractor is quite ready to provide a ballpark guide to costs, detailed estimates take time and effort -- and require a proper design fee.

Of course, once the prospective client commits to the design fee, you have a high chance of completing the work; if not, at least you are paid for your efforts and work in preparing the proposal.

Unfortunately, I lost my copy of his documentation when my hard drive crashed a few months ago -- and the other copy, lodged on our ISPs server -- disappeared when we switched to our new website system.

Thankfully, all is not lost -- in the archives of the Journal of Light Construction, I discovered this fascinating and useful article, Charging for Estimates, and within that article is a reference to The Process, which JLC stored on their own server.

Obviously JLC owns the copyright to the full article, so you will want to follow the link to it and read it directly from them.

The copyright to The Process document itself is owned by Lykos' estate, and since Sonny gave me explicit permission to publish and redistribute it, I am reprinting it here. Read it carefully, and consider whether you can make use of it overcoming the "Free Estimates" challenge in more expensive renovation and remodeling projects. (I've tagged links within The Process document so you can head to the relevant websites directly -- including The Lykos Group's own site in Naples, Florida (Principal Thomas Lykos is Sonny's son.)

(Letterhead)

Date: _______

Dear ____________________:

Thank you for the opportunity to work with you on your pending renovation project. The Lykos Group, Inc., is a second-generation company that was founded in Chicago in 1971 and continued to operate in Michigan from 1972 until 1991, when we made our final move to Naples. Over 66 years of experience is at your disposal.

We are members of the Collier Building Industry Association (CBIA), The Remodelors Council (RC), Florida Home Builders Assoc. (FHBA), The National Association of Home Builders (NAHB), Construction Specifications Institute (SPI), and The Association of Construction Inspectors (ACI).

We have not advertised since June 1991, acquiring 100% of our sales from additional projects of existing clients and new clients from referrals. We feel that this is the best testament to the caliber and value of the services we offer. Our philosophy is that we are a "service provider" first, and only second one that operates in the residential renovation segment of the construction industry.

During those 30 years in our industry, we've learned the dos and don'ts of what is mandated to assure happy clients. There is an accepted "process" employed in all renovation projects that has steps and guidelines to follow and should not be deviated from to avoid chaos.

Enclosed is a synopsis of "the process" — the world of residential renovation. We hope its contents will enlighten you about the way remodeling should be done to make it a pleasant, yet educational experience. You will find us referring to "the process" from time to time as we further discuss your project.

We will call you a day before to verify our appointment.

Respectfully,

Thomas X. Lykos, President

So, just what is a remodeler?
Remodelers take your dreams and aspirations and transfer them into reality. We change an intangible concept into a substantive result.

Please understand that we do this without the luxury and benefits of prototypes or the ideal environment of a factory. We must bring our manpower, equipment, and extremely diversified materials to your home. In addition, we depend on as many as a dozen or more different subcontractors, plus many material suppliers.

Acting as the facilitator of the entire process is an enormous and complex task.

Furthermore, as you see the project taking shape, you will initiate changes to bring it more in line with what you want. Changes are to be expected and are controlled with change orders. Each of us, including you as the client, act as part of a production team and share the responsibility for making timely decisions to ensure that the project stays on schedule.

We cannot emphasize enough the importance of working together with all parties to make sure your desires are realized. Frequent communication, by telephone, e-mail, documentation and in person are the heart of this project.

The following pages will describe "the process" in more detail. By following these accepted industry practices, we can eliminate disappointments and make this a pleasant and educational experience for you.

The Process

O.K. Where do we go from here?
First Meeting
This is a mutual interview — we want to make sure that we're right for you and that your project is right for us. We're both looking for a comfortable fit. We will consider the following, discussed in greater detail below:
1. Your ideas and desires.
2. The project budget.
3. Possible designs.
4. Basic materials.
5. Potential scheduling.
6. The SCA fee.

Second Meeting
1. We obtain a fee for the SCA.
2. We take exact measurements of the area(s) to be renovated — this may include the entire home — and we transfer these into a new CAD-generated floor plan. We create one set of existing and plans and another including the changes. These take anywhere from a few hours to well over a day.
3. Allow several hours for this meeting since I'll be chauffeuring you to several showrooms for product selections.

Third Meeting
1. We firm up the final design, material selections, color selections, and the remaining details.
2. Possibly invite specialty subcontractors (SCs) to view the site for their comments.
3. Discuss and change any other minor items.

Final Meeting
1. Prior to this meeting we create the contract and modify the plans and specifications.
2. Go over the final plans, materials, colors, etc., in detail.
3. Set a schedule — with start and completion dates.
4. Sign and initiate the contract. We receive a "commencement" payment.

So what is an SCA?
A Specification & Cost Analysis is a definitive comprehensive document stating the final costs, allowances, material selections with brand names, and all particulars of the project as agreed upon. All SCAs include a complete set of CAD drawings and plans.

Preparation for an SCA includes evaluation of existing construction and current building codes. If a room addition is involved, site planning is needed as well.

An SCA can be compared to a "brief" in the legal profession, which is defined as "a document containing all facts and points of law pertinent to a specific case." Preparing this document takes a tremendous amount of a professional's time.

Creating an SCA takes anywhere from several hours to several days, when taking into consideration designs, meetings with specialty contractors (SCs) and material suppliers, and estimating, plus the time mandated by permitting requirements.

The "estimating" process of an SCA involves many hours of line-item costing for every single operation of each phase to reach the final cost. It is also based on each SC's fixed bids as well as fixed bids from the suppliers.

Depending on the project and its particulars, the fee for an SCA can be $250 or more for a major bathroom remodel, $500 or more for a complete kitchen remodel, to over $1,000 for a major project or one costing well into six figures. As the cost and square footage of a project increase, so does the time needed to create an accurate SCA, and accuracy is critical.

The SCA eliminates nearly all surprises and ambiguity, ensures an agreed upon contract that is realistic and viable, and discusses everything — on paper.

Upon acceptance of the SCA, we credit you for that fee toward the initial "commencement" payment.

What do you have in mind?
First, give us an overview of what you want to accomplish and why. In doing that, you'll also let us know what you don't like about the existing space(s). We will talk a little about your lifestyle and how we can make your home better. We'll generally discuss what materials or products you'd like to use to change colors and designs and improve spaces.

Tell us your "ideal" scenario — your desired finished look.

After ascertaining the general "scope" of what you would like to do — as mentioned earlier — we'll make a CAD-generated set of plans of your
existing home and a set of revised plans showing the proposed renovation.

Let's also consider options. Later we can change them or eliminate those deemed not viable. This is an exploratory time.

Let's talk about your budget.
Budgets are the foundation from which we proceed; and, therefore, nothing can continue until a budget is established. We provide a "ballpark" price at no charge, but since there is a fee for the SCA and design work, this is another reason to discuss a budget — to save time.

By talking about budgets up front, we ensure that the project scope is within the realm of your desired budget. Time is saved for both of us. When you look at a new car or home, the price category of what you're looking at lets the salesperson know your financial commitment. We don't have that information unless we talk about it first.

As any remodeling project materializes and walls are being built, electrical is being run, etc., there are always things the owners want to change, which is important to make sure you get exactly what you want. Also, when the time arrives for an inspection by the permitting department, the inspector may mandate one or more minor changes; each inspector has his own "druthers." Consequently, plan your budget to include at least 10% more for changes. It's all part of the process.

Designing — the fun part.
This part is trial and error. Like trying on new dresses or suits — longs and shorts, heights and their relationships
to other things, form and function. Think in terms of traffic
patterns, sound transmission, lighting effects (natural and artificial). Visually walk through each area that's affected. Don't forget ventilation.

Look for at least one area, if not the entire project, to offer a dramatic effect, while still being usable.

Actually, the designing part should be fun for you. For us it means back to the computer and the CAD program, but it's worth it. We like to see the smiling faces of our clients.

Materials & Products: Boy! There's so much to choose from.
We know — but we'll help you along the way. Again, keep in mind colors, textures, maintenance, individual design, coordination, and ease of use. Just like selecting a contractor — does it feel like a good fit? Touch it. Try it. Not the contractor — the products. Think in terms of drama, or a little "pizzazz."

Let's coordinate the colors and textures. What trim and accessories work best? A little at a time — it will all come together.

Try to visualize the finished area(s).

The role of subcontractors
Subcontractors are those contractors who provide their own specialty services to your project. In addition to those folks, we must also consider the various material suppliers involved. They are all part of the "production team."

Collier County issues the largest number of building permits in the entire U.S.A. Yep, not just Florida, but the entire country. To that fact, add two more: Kids are no longer entering the trades, and the average age of the person getting out of the trades is at the lowest ever — 33 years old. Consequently, the construction industry has had a skilled labor shortage for several years, and it's getting worse.

So add to the above the local booming economy and you can understand why all contractors are literally swamped with business. That means we must allow for what we call "lead" times, just how long it will be before a subcontractor can start on your particular project. The delay of one subcontractor can mean several more delays down the line, like a domino effect.

In addition, special-order materials may take as little as one week, or, in the case of cabinets, for example, up to16 weeks. Special countertop materials like Corian and granite may take up to several weeks to obtain, not including their installation timeframes.

Patience in this "category" is recommended. Again, it's all part of the process of remodeling.

O.K. On to the "almost" finale: Bringing it all together.
The scheduling is decided here, not by a pending special occasion or when "we" want it done, but by the process. You see, this process too is subject to Murphy's Law.

Once everything has finally been decided upon, we contact each subcontractor and check their lead time and their deposit and payout requirements. We also check with the material suppliers and their lead time for any special orders.

Next, we create the contract. The contract contains several sections, and its financial arrangement is based on the requirements of the subs and vendors as well as our own requirements.

Adhering to the payout dates is crucial to maintain our relationships with your subcontractors.

When payouts are delayed, subs may start another job. Then we must wait for them to return — on their terms. In other words, when payouts are delayed, a major interruption occurs in the process. It's not unusual for work to come to a halt.

The contract also includes all material selections, model numbers, colors, etc., and the agreed upon schedule — see the next section.

Finally, the schedule: When will it be finished?
Because of the critical labor shortage and Collier County's tremendous construction activity, and for several additional reasons, we allow plenty of
time for each project, considering the following:

1. Emergencies. A sub might be detained on another job due to the bane of all contractors — change orders. You will initiate some of them as well, as we mentioned earlier. It's just one more part of the process.

2. Miscommunications from one employee to another. Remember, we're not building washing machines here in a factory, where hundreds are made daily on the assembly line. We're building a single, customized "prototype" that's never been made before.

3. Delivery of a defective product.

4. Waiting for building permit inspections — as many as a dozen.

5. Mistakes — they happen — both yours and ours.

6. Weather, if exterior construction is involved during our rainy season.

7. Change orders. As the project takes shape, you may decide to make a change, or you may say, "While you're here, can you also…?" Contractors call them, appropriately, the "While you're heres." Hidden problems or a building inspector's demands may also require a change order. No change order work is initiated until you have approved and signed off on it.

Prior to starting your project, we create the schedule and give a copy to everyone involved including you.

Glitches & changes
As we mentioned earlier, they happen. That's why a project that would normally take 6 weeks is scheduled for 8 weeks. We don't want to promise or deceive you, and we feel that being above board is critical to what is really our limited "partnership."

Communication is imperative. This can be a fun venture, but only if we are all realistic about the entire process, its highs and lows, understanding the entire process in advance.

Again, please keep in mind that changes and delays are not unusual but typical when building a prototype, which every remodeling project is, and especially when involving so many companies and people other than our own staff.

One of our #1 problems involves clients who do not make timely decisions about product selections. Planning is crucial and cannot be dismissed in a cavalier manner.

Well, we hope that we have explained the process to your satisfaction. Please be neither apprehensive nor anxious about it. We will guide you step by step through the entire journey.

The purpose of this "synopsis" is to provide you with the basics of standard practices in the remodeling industry, as well as our own preferences, to ensure a smooth flow of the work to be done.

As kids we were taught to be nice, fair, honest. Some things shouldn't change as we become adults. In fact, a key word in The Lykos Group, Inc.'s culture is "ethics" — an old-fashioned value we guard carefully.

Upon completion, the thing we want to hear from you is: "I'm thrilled with everything. It's been swell, and here's your final check. We'll see you
In a couple of months for the first warranty inspection."

From all of us at The Lykos Group, Inc. — where "ethics" is defined!

P.S. Here aresome earlier postings in this blog where I reference The Process. You can review these postings for additional insights and comments into its practical use. (Some of the links within these postings may not work because they are quite old.)

The Process
The Process (2)
The Process for Smaller Projects

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 buckshon@cnrgp.com. 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.

Free onsite estimates?

This blog posting, Call another Raleigh Fence Company to Get Me a Measurement? from Keith Bloemendaal of Raleigh Fence Contractors in North Carolina raises some important questions.

Bloemendaal says he is one of only a few fence contractors who are ready to drive out to see the homeowner, take the measurements, and provide the estimate on site. Others tell potential clients to send in their measurements and they will quote the job and one (who really raised Keith's ire) suggested to let another contractor take the measurements, quote a price, relay the information to the competitor, and the other contractor would under-bid the job.

Ouch! So you go out and spend gas and time, and then the potential client just needs to call the competitor with your prices, and achieves the work for less!

Of course, as Keith says, there are advantages in trust building and relationship development in visiting the client and developing the relationship -- qualities that cannot be achieved by the brutally inexpensive invitation to do things over the phone. Yet there are tough challenges here: In a recession, where under-bidding is common, spending your time and money to prepare quotes and estimates cold, only to lose everything to the low-baller, seems a rather poor way to do things.

I'm personally not in the trenches in Raleigh, so won't dare to suggest the best answer, but think some clues about possible solutions are possible through demographic and market analysis of your leads. In other words, are you able to assess your closing rate based on location, source of lead (referral, website, or whatever) and track these in a meaningful way. This might be helpful if your database is large enough to be valid. Here, when you receive a call from, say, your website, and the neighbourhood results are poor, you can decline the business or set it as a low priority. (Of course you should avoid racial profiling or anything that would get you into trouble with anti-discrimination laws).

But this is only a partial solution, because the other aspect here is the sales process and communication opportunities. Should you prepare estimates without a face-to-face meeting and decline all "Just drop by and take the measurements when I am at work" inquiries? This of course prevents you from traveling great distances without any relationship development opportunities, but you then have to match your schedules with the homeowner, and perhaps lose the efficiency of job batching (let alone requiring much inconvenience).

Could you succeed with a video estimate with some added branding resources and options? Here, you are respecting your client's convenience and really focusing on your value -- but, again, all your hard work may go to waste if a competitor just snatches it, develops a high-quality video/marketing retort, and steals your business!

Keith talks about ethics in his posting, and indeed there are questions here that are troubling. But I wouldn't spend too much energy worrying about the behavior of your competitors; things come to roost in the long term. You simply need to find answers in the short term.

Maybe readers here have some other ideas and answers to this challenging problem.

Is this an argument in favour of free estimates?

This image is from an open courseware site. Caption reads: An experiment testing money mapping and value of experience. (Image courtesy of Prof. Dan Ariely.)

Readers of this blog know that I don't think much of "free estimates" as a marketing ploy. It invites you to spin wheels and waste times as purchasers seek out the low-ball offer. But here is a counter argument -- and it is the marketing value of the word "free".

This article describes some research by Duke and MIT economist Dan Ariely in his book: Predictably Irrational: The Hidden Forces That Shape Our DecisionsHis clearest example of irrational thinking is a Halloween treat test. He offered kids who knocked at the door two Hershey Kisses. They could then either accept a third small Snickers bar for free, or trade one of their Kisses for a large bar.

"The bigger bar was a better deal, an 8-to-1 return on chocolate. But most chose the smaller one; the idea of getting something for nothing was too tempting."

I still don't like Free Estimates; but am intrigued at the possibilities of finding something else Free that is actually conditional on your making the purchase. Maybe, indeed,throwing in the big free screen television, or some 'hot button' extra you know the potential client would really like, into the estimate/proposal makes sense (of course adjusting your proposal cost to more than cover the 'free' extra.)

Great idea -- but forget the "free estimates" part

This posting on contractortalk.com suggests a simple but effective marketing/strategy.

Here is a fool proof idea:

1. Identify what city you want your business to grow in. Figure out which newspaper is the most popular.


2. Find the section where the local Contractors and Tradesmen advertise. Place your ad so that it is in the top one or two spots. Your ad should have your Business name, personal name, Free Estimates and Referrals mentioned.


3. Make sure the number you list is answered by a real person who has an interest in generating leads from 8 a.m. to 8pm seven days a week.


4. Make an appointment within 48hrs at the customers convenience, even if it's 9 p.m. at night after you've been working since 5 a.m. When you go, be professional, dress better than your crew of workers, but, in a manner that says, if I have to jump in and hump it with them I can and I will.


5. Engage Good Selling Best Practices.


6. After a year, your closing ratio should be better than 1 in 4, your goal should be 1 - 3. If it is, keep doing it, or hire someone to do it. If it's worse than 1 in 4, you su*k as a salesman and you need to get better or hire someone better. If it's better than 1 - 3 raise your prices until it gets to 1 - 3.


7. Track who advertises in the paper with you. You'll notice there will be a few that are always there and a whole bunch that come and go. Those that come and go are looking for something easy, there is nothing easy about this.

Ok, this has merit, but can we get away from the "free estimates" nonsense? There is no USP (unique selling proposition) here; if you are going to offer something 'free', why not a report on how to do things better, a list of practical ideas, or a reference to a well written blog or website. Sure, you can talk in terms of ballpark numbers -- you want to make sure that your clients are in the range of reality, and your potential clients have the right to know that you aren't way out of their perception. But a full blown estimate with detailed proposal should come with some commitment in return if the job is of any size or significance.

Other posters on the thread debate the need for this extreme level of work effort. I'm not so sure that you can escape that (though the specific hours/schedule may not apply in your business. Ultimately, you'll have staff (perhaps working shifts and rotating on-call schedules) or reach the point that you can narrow hours of operation to your, rather than your clients' hours of convenience, but this is probably not wise at start-up and I've seen through experience the costs of abrogating responsibility and leaving things entirely to others, even when things seem to be going well.

But I'll give the contractortalk.com poster the final word (actually the beginning of his post) because it is the most solid advice I've seen in a while:

What's most effective in marketing is what you put your best and most consistent effort in. Whatever you do, make a two year commitment to do it and stick with it. All of the ideas you and others mention work, but only if you work them consistently. Throwing money at a one time newspaper ad, mailer, door hangers, lead service, etc. etc. is literally just throwing money away. You are going to be in business a long time, take long term approaches so your customers see you as the guy that is always at the Homeshow, always hangs that cr*p on my door, always mails me those postcards..... people trust who they know.

"Free" eh

This posting by Seth Godin, "May I have your attention please" is worth reading, but I'm not sure if you should go down the path and interpret it that the phrase"Free Estimates" is validated.

I don't think it is wise to spend hours preparing quotes, only for you to be one of several 'players' all being chosen on low price. This is asking for problems, and frustrations. "Free" here should be the general knowledge, insights, and ideas you can share with everyone -- and this is often provided in things like a blog, newsletter, or your website. Once you have the leads, and a track-record of satisfied clients, you can be paid for your work in setting up and estimating costs.