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.

Choices, choices, choices . . .

For fun, here are some ways you can market your business:

Seek referrals, canvass, give speeches, write articles, get others to write articles about you, advertise -- in newspapers, online, radio, television, with flyers, direct mail; participate in social networks (online and off), telemarket, blog, develop your website, send email newsletters, participate in forums, entering design and business competitions, participate in trade or community associations, give away free samples, give away free services, attend or co-ordinate trade/home shows, sell, hire sales reps, barter and contra-trade, find distributorships, sell through your clients or suppliers, bid public jobs, communicate with and subcontract with public job bidders, use leads services, set up job signs, set up show rooms and sales offices . . .

I'm sure I've left just a few things out.

Which approaches/methods should you use/avoid?

Obviously cash is a factor. If you don't have much money you can't effectively do the things that cost a lot -- unless you are extremely fortunate or creative.

Clearly the marketing approach should be compatible with your market, and the values of your current and potential clients. (It gets more complicated whether the marketing should be compatible with your own values -- at heart, it should be, but realistically, if the method works and is in alignment with your clients' focus, can you put your personal values aside for the larger good?)

I think the more the approach costs in time and money, the more important it is to measure its effectiveness. You need to count the cost per lead and the revenue per lead, and you need really detailed analysis if the expense is significant.

(As an example, yesterday I cited a contractor who is spending a significant amount of money on Google Adwords. Would the contractor get much better results by hiring a single employee with one job only -- writing content and designing materials to increase the company's "organic" search engine rankings?)

Ideally, all your marketing approaches will reach the desired market: The people or organizations who can actually use and pay for your services. (This creates a measuring challenge, of course, because you may need to drill down to the multiple elements that go into decisions.)

Finally, you need to give the various approaches time to work effectively. This can, in some cases, require you to spend months of time and thousands of dollars to prove the point. Obviously don't risk this type of money unless you can afford the loss.

Choices

In business, we need to choose which clients we really want, and your choices will likely (hopefully) be different than the others. If you have foresight and good luck, your choices will match your passions and market trends. Then you hit the jackpot. (For years, contractors concerned about environmental sustainability worked in something of a wilderness, but a few persevered, achieved some success, and then achieved a breakthrough when the market caught up with their passion.)

What if your choices and passions fail to match the market? Do you compromise to find enough business to survive, or do you hold true to your values and priorities, and focus intensely and exclusively on what you really want to do? This is a good question.

These days, with the Internet and ability to find small niches over wide areas geographically, you may find you can create a viable business even though it may appear to be a minority interest. Design your plan, develop your scope and look far afield for the few people or organizations interested in your service -- you'll enjoy the experience and build a profitable business.

This of course is harder if your focus is local. The smaller the area geographically you wish to serve the wider your choices and the more you need to compromise your interests. Of course, if your interest is to serve a very small geographical area, you can do just that -- by becoming your community's resource source for referrals and information, you will relate to the much wider world of highly specialized participants.

The point here is simple: If you think you must compromise to make a living, you may be narrowing your choices more than you need. Think wide-angle and specialized, or narrow, and generalist, and you may find a much larger and more influential (and enjoyable) business than you might otherwise expect.

Some worthy resources

Here are a couple of resources to consider in your construction marketing toolkit.

constructionlinks.ca



Joe Roel has built one of the largest Canadian e-lists for construction marketing -- with extensive links information relevant to specifiers and project managers at http://www.constructionlinks.ca/. He saw the opportunity in online media before many of us caught on and built the database from the ground up. Today, he sent me this promotional note:

How can Construction Links help you be found?

Think of our search engines as the librarian’s assistant. At the start of a project, when the designer is looking for products to use on his project. They go to http://www.constructionlinks.ca/

Our index cards are designed so that the designer can quickly and easily conduct product searches and identify the manufacturers/distributors he wants to work with.

Our search engines include Both MasterFormat™ 95 and 2004, keyword in MasterFormat, Keyword in product/service description, company name and searches can be restricted to green products/services (products that have been classified as friendly to the environment or that can help projects achieve their LEED credits).

No matter what the product is that you manufacture or distribute, it belongs in our database and will be found by your target audience when they are looking for it.

Get linked today, start being found by your target audience and specified in their projects.

Although Joe's note has the 'stamp' of marketing hyperbole (first time I've found a use for that big word!) in it, the main thing I find about Joe's service is its depth -- at least within the Canadian context -- and that depth did not occur quickly or without a lot of hard work on his part. So, when Roger Ali, responsible for the Construction Specifications Canada Toronto Chapter trade show asked for some guidance on e-marketing, I connected him with Joe. This of course is the correct implementation of positive networking principals, where you put your own needs aside and think in terms of the people with whom you are working. Since Roger is working on a trade show geared exactly to Joe's market interest; and the same applies for Joe to Roger, why not link them!


Infinite Source Systems

I'm enjoying Steve Sulpher's newsletter, The Source: Construction Industry News. In the latest issue, he writes: Eight Steps to More Effective Bidding Practices. Of course, these steps are most effectively achieved if Infinite Source Systems software is used, but I think you can find value in the observations regardless.

I first met Steve in Ottawa when (as we were launching Ottawa Construction News) he was president of the Ottawa Construction Association. He has since moved to Vancouver (where I was born, have family, and therefore visit at least once a year) and Infinite Source Systems, which has software and services of value to construction businesses truly wishing to streamline their processes. Sulpher, of course, knows the industry and understands its concerns and values -- so, not surprisingly he also sees value in sponsoring and supporting groups such as the Ontario General Contractors' Association.

I like the way both Joe Roel and Steve Sulpher use a variety of creative marketing approaches to build their brand reputation, and develop their market. You might wish to look at their marketing models -- and their actual services -- in developing your own strategies.

Overselling?

Thomas Kral installing a batten grid system on a roof and some solar shingles.

This contractortalk.com thread is fascinating. Original poster "Grumpy" explains that his sales reps are sometimes losing jobs because when they visit homeowners they quote work that may well be necessary, but is more than what the homeowner wants.

Solutions offered by others include a systematized "good", "better", "best" approach -- something that Grumpy (whose profile tracks to roofing contractor Reliable American Inc. -- Thomas Kral, President -- in Glenview, Illinois) is not sure is right for him.

I can see several sides to this story.

First, is the issue where someone really needs more than they are asking -- to do the job requested would truly be unethical (and in some cases unsafe). Second, is the tendency in some cases for sales reps to pad jobs to build out their commissions. Third, of course, is the simple fact that few jobs are truly simple -- and there are very real choices for quality and comprehensiveness.

Then there is the issue of whether to present more than one option, or to provide the "good", "better", "best" choice. I will dig out later today a previous blog post that shows that when you give too much choice, you often lose the sale -- people freeze up and won't make any decision when they are presented with alternatives. On the other hand, a systematized approach presenting three choices gives the potential client the option of voluntarily up selling themselves. (Another poster heads in the direction of doing the basic job, but presenting up selling opportunities on site -- this is frankly to me a scary option unless you are running a one-man band; it also smacks of deliberate underbidding with change orders in mind, something alluded in the dinghy/boat picture floating around many AEC offices these days!)

Right now, I think for contractors without systems requiring high quality standard screening for potential salespeople, the "good", "better", "best" approach is wisest. You can teach even the most junior person how to calculate and present the three options. For organizations with higher screening standards -- like ours, maybe! -- I would argue in favour of a more customized approach. You need to listen to the client in the presentation, and determine whether to offer a multiple choice or simple option. This requires a depth of understanding and finesse that not everyone has.

Editor's note: Thomas Kral of Reliable American graciously provided this photo for blog entry. The posting regarding the reasons for limiting choice is here: http://constructionmarketingideas.blogspot.com/2007/08/image-from-eyesore-too-many-choices.html.

Image from Eyesore

Too many choices cost sales

A story by Nadia Sawva and Clark Steffyin Employee Benefits News reports on a study from UCLA about jam at a grocery store. You may wonder what this has to do with construction marketing.

A lot -- especially if you are in a situation where you can offer a diversity of solutions to a problem or to satisfy the needs of your prospective client. Based on the UCLA study, you will want to narrow down the choices you offer.

The store the researchers used offers a diversity of jams.

The researchers set up a sampling table, and invited one group to choose from 24 varieties.

Then they set up another table, and offered onlysix varieties.

With the extensive selection, 60 per cent of of the people passing by the booth stopped to sample the jam; with the six-only selection, the number of samplers dropped to 40 per cent.

But here is the significant item in the research. At the table where people could sample only six varieties, 30 per cent of the visitors purchased something. With 24 varieties, only three per cent purchased anything. In other words, offering additional choice increased 'traffic' -- but cost real business by an order of magnitude.

The explanation for this dichotomy has something to do with the way we make decisions. We say we want choice, we want options, but when it comes down to it, we have trouble making a selection when too many choices are offered so we respond by not making a decision at all.

This is apparent with financial services, and the article described how investment plans administrators should narrow their choices so that people don't just avoid the decision.

I suppose in practical terms, when we "have" to make a decision -- like purchasing a car or house -- we do our own narrowing down to make a decision. But when we don't, or when the choices are too complex and detailed, we invite the prospective client to 'think it over' until someone comes up and say -- this is right for you -- and you know it is right, and purchase.

In practical terms, you will want to frame your options and choices carefully; perhaps giving the sense of freedom but not overwhelming the people you are doing with with too much obvious choice.