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Saturday, October 31, 2009

The endorsement letter

Endorsements work. This images is from a screen shot of a Webinar with Mike Jeffries posted on Michael Stone's website.

Yesterday, I listened to a webinar hosted by Michael and Devon Stone of Mike Jeffries of Jeffries offers a free eight week course: "8 Weeks of Low Cost or No Cost Lead Generation Strategies and Tactics" and his first suggestion is elegantly simple and effective: Arrange with your best and most influential clients to send out endorsement letters on your behalf.
Endorsement Letters

Find a customer who is very happy with your services.
Let them know that the best work you get is from referral.
Ask if they would be willing to send a letter to people that they know well - explaining why they were so happy with your services.
Write the letter - offer to address and mail it for them AND cover the cost.
Expect a 10 to 15% response rate.
Imagine what that would do for your profits.
Jeffries describes this process as "putting referrals on steroids". He suggests you can help out with the letter-generation process by preparing the letters and even sending them out for your great clients.

We use a variation of that idea as a cornerstone of our own selling process in the business-to-business space, but add another twist: Our endorsement letters go to the suppliers of the people referring the business.

The principal is simple: If you receive significant amounts of money from an organization or business which you genuinely respect, and that business asks for a small favor or request of you which could help your own business, as well, it is hard to say "no".

Jeffries and Stone, of course, are using other marketing techniques in this webinar and eight week course, and they are selling services which are not free. But you don't have to buy their stuff: They are delivering value with insights, observations, and useful resources, and so deserve some recognition here.

Friday, October 30, 2009

Marketing, quality and value

Home Shows can be truly effective in supporting referrals and word-of-mouth. If you have a great reputation, people will 'rediscover' you at these events.

We all appreciate the power of positive word-of-mouth advertising.

In fact, the absolute power of word-of-mouth is so great that many generally successful businesses think that advertising, promotion and marketing is beneath their dignity. In good times, especially, they receive enough work through referrals and repeat businesses they have to turn away business they don't like.

Conversely, many people perceive a negative correlation between quality of services generally chosen by word-of-mouth, and advertising. Is the lawyer with the biggest ad the best? As a consumer, are you more likely to trust the renovation contractor who buys full page ads and attends all the home shows, than the work done by the contractor at your neighbour's home -- when your neighbour raves about the "find" of such good service?

My wife, for example, is using the services of a woman to help around the garden. She learned about the service provider from one of her good friends, who is really good at finding bargains and good value. Now that this person is working on our garden, two immediate neighbours have also signed up with her.

Finally, I have a (nearly) absolute rule about hiring. I will never hire anyone (outside of a sales rep), who uses "marketing and sales" techniques on me. And I don't really care about how good the resume looks (marketing) except to validate other impressions. In other words, if I feel potential employees are presenting themselves with assertiveness in looking for work, I offer them the opportunity to take the sales evaluation test, but I will never hire them to be writers, or designers, or administrative assistants.

The reason: I know the best employees and the ones who ultimately will be the least expensive, will be the ones who are passionate about their craft, not their sales or marketing ability. (Obviously these rules are somewhat inverted when I'm hiring sales representatives!)

But here is an irony, which you should consider carefully. If your business is so good at word-of-mouth in good times that you think you will never need to market or advertise, you will ultimately be much more successful if you build marketing and promotion into your mix.
The reason is that you can stabilize your business volume and usually raise your prices more than enough to pay the actual marketing costs. (Certainly you can provide repeat client discounts, of course.)

The challenge is that it is hard to make the switch to advertising and organized marketing. The reason: You need to spend time and money on this stuff, not your actual work, so you have a cost to pay.

Added to the challenge, some people, most likely in your immediate orbit of potential clients, may feel the same sense of disconnect between advertising/marketing and quality. You are fighting against your perceptions and those of the people closest to you.

Here are a couple of ways to get around these challenges.

Focus on media/publicity rather than conventional advertising

Great media publicity is almost like magnifying word of mouth. You will earn credibility and respect. You cannot of course control when and how the media reports on you, and you need to learn some basic public relations and communications skills.

Advertorials are often the soft-entry to media publicity

These are largely our business. You have much more control over the content and delivery time, and (at least as part of our service), we'll take some time to show you how to manage your media relationships.

Organized referral/thank-you and relationship building programs make sense

Instead of relying on word-of-mouth, encourage it through organized referral programs. These may simply be to provide your current clients with discounts on future work (and discounts for their friends) for referrals, or you might set up "Thank you" or networking events for your current and potential clients.

Finally, of course, you should not sacrifice the quality of your service and the word-of-mouth you've earned when moving into the advertising and marketing space. A high referral/repeat rate will still most likely be your best sign of business success.

Thursday, October 29, 2009

Measuring passion

You can download the first in the part of the SMPS Marketer article on Metrics at the Wordpress version of this blog at

I'm working on the second of a series of articles for the SMPS Marketer about the effective use of metrics in architectural, engineering and construction industry marketing. Yesterday, my ears perked up when the marketing representative for a highly successful West Coast architect said her practice had discovered a way to measure "passion". (I don't have permission yet to share who the architect is, but hopefully will soon.)

She said every project and pursuit is coded into the architect's accounting and project management systems. Once the "go" decision is made, the time and cost of pursuing the project is calculated.

She said the practice has discovered that the more time the Principal in Charge spends on the project at the pursuit stage, the greater its chance of success. In other words, if the PiC simply hands the file over to the marketing department and tells junior staff to use boilerplate material to get the proposal ready, it will likely fail. If the PiC engages and spends significant time, it will succeed.

This metric makes a lot of sense even if it doesn't come to mind immediately. After all, why would a Principal spend a lot of time on the pursuit of a project unless it really mattered and the principal really wanted it to succeed? The conclusion, also, is that Principals who spend more time on individual pursuits are likely to be much more aware of the importance of success of the project, and unable to blame its failure on external forces. This is the classic quality vs quantity story.

The practice only recently implemented strong metrics systems, but is noticing changes. Note that this type of measurement requires a robust interface between marketing and accounting/time management systems, and clear rules requiring participation -- Principals cannot sluff off their responsibilities by saying "this isn't my way of doing things."

Nevertheless, I think businesses of all sizes can learn from this example. If you are the person in charge of the project, takes time to get involved and uses delegation as a support but not as a replacement for real energy and commitment, you have discovered your passion for success.

Wednesday, October 28, 2009

Enterprise pricing -- how to collect $100 for $10 in real value

I prefer to sit in the big seats in the front of the plane. How do airlines get away with charging five to 10 times the price for the trip to the same destination as the economy seat travellers pay. (Of course, I never actually pay the real business class fares, but many do. Why?)

As a business owners I want to run for the hills when I see signs of "enterprise pricing". As a marketer, I drool. Nothing is better for increasing your margins than the ability to disassociate the actual cost of your service from the decision-making process to purchase it.

"Enterprise pricing" is the ability of business-to-business marketers to grossly inflate the price of their services because the decision-makers are not spending their own cash. Instead, they are using their company's resources.

Take business class airline fares for an example. Does it really cost the airline five times the amount to provide the service in exchange for a bigger seat, some extra service, and a little food?

Of course not. But the people sitting in the big seats in the front of the plane are rarely spending their own money for their tickets: They are able to charge back the costs to their clients or just have the company's "travel department" pay the fares.

Notably, "business class" seats are much more reasonably priced on resort destination routes, where individuals might choose to spend some of their own money to have a little luxury. (This suggests one advantage of starting a business in a resort destination, but that is another topic.)

I see this phenomena in many other places and one sign of it occurring is that the service can support the cost of sales representatives. "The more selling that goes on, the less value there is," is my purchasing decision-making motto. For example, our service for page turning software,, charges about $200 a year for a great package of resources. But you can step up a little and pay $3,000 for a little more for "Yudu Pro" -- and have the guidance of a sales representative. Of course, this is the "enterprise pricing" at work.

Enterprise pricing works primarily in the business-to-business space when you are dealing with managers rather than owners, but you can sometimes see signs of it in the consumer marketplace, usually for insurance claims. If you can find a situation where consumers don't need to use their own money, you can inflate the prices -- of course to the limit that the business (insurance company) paying the bills allows this gouging. The gaming that goes on here is undeniably intense.

As a marketer, of course, you should ask the question about whether you can disassociate price and value sufficiently to earn a decent margin. Here things get quite interesting.

If business-to-business, enterprise marketing pricing is prevalent in other sectors, why does it seem construction businesses do better in the consumer rather than business-to-business space? I've heard stories of painting contractors accepting fees of 30 cents a square foot for new home construction (in bulk), compared to $2.50 a square foot for residential work. Obviously, the business-to-business contractor in this environment is working virtually for free.

The answer in part is the power relationship and the relative importance of the cost to the company purchasing the service from the company selling it. And here is the key formula to success in collecting your enterprise pricing: Provide a simple, bundled, and easy-to-manage maintenance service rather than new construction in the business-to-business space and you can collect that lucrative enterprise pricing income. (In other words, if your service is purchased by a general contractor whose business is buying sub-trade services, you will find it hard to earn a margin, if you can connect with a corporate manager who doesn't full-time manage construction costs, you may make a fortune.)

You may be scratching your head about this blog entry, but I urge you to reread it several times and begin thinking differently about your pricing, margins and market. Yes, we talk elsewhere about branding -- the art of through marketing creating a perception of value that justifies higher-than-base pricing.

But spend some time as well, thinking about how decisions are made, and if you can figure a way to disassociate the your service pricing from the personal responsibility of the decision-maker (and get around the various corporate defenses of "abuse" of this practice), you may find you have enough spare cash to take many vacations sitting in the big seats in the front of the plane.

Of course, the passenger next to you (me) might be there because he has learned to find the loopholes in "enterprise pricing" and has discovered the bargain right under your nose.

Tuesday, October 27, 2009

The planning meeting (2)

The setting for the 2008-2009 planning meeting, a secluded lake chalet. We held this year's meeting at a dining room table at consultant Bill Caswell's Ottawa residence. The result: A strenuous and somewhat tiring day -- but we got (most of) the job done, and began to shape the picture for a much better year in 2010. Planning is essential, even if sometimes it can be painful in hard times.

The planning meeting yesterday proved to be long, tiring, and somewhat strenuous -- and as the clock ticked and our minds started frying with fatigue -- we concluded it without working through a key element of the planning process, the 2010 expense projections. Our consultants, led by Bill Caswell of Caswell Corporate Coaching Company, realizing that we lacked time to do this during the meeting, promised to pull together the numbers and prepare them in the overall report.

Several new employees attended, and two participated remotely. Designer Ray Levielle joined us by video link and Bob Kruhm in North Carolina spent all day on the phone. Unlike previous meetings, while I had a camera with me, I failed to capture a picture of the gathering.

The numbers this year showed the reality, horrendous losses earlier this year, some degree of stability and even gains this summer, and another bout of losses in the months immediately before the meeting (relating in part to the departure of a couple of sales representatives). The year-end looks okay, and -- at least on the revenue side -- the next year appears promising.

We "resolved" several key issues by agreeing to assign employees to co-ordinate ideas/answers. Of course, this reflects the reality that you cannot solve all problems in a single meeting.

Were there flashes of insights, magical answers, and clear resolutions of issues? The answer, I'm afraid, is "no".

In reality, the meeting couldn't achieve its full potential in part because of the necessary restraints. We were trying to force two days of intensive business decision-making into one, and we needed to operate in a setting/environment which, while functional, didn't allow the fullest natural environment for creativity and innovation.

These are the realities of operating in austerity. (Of course, spending the full cost of a complete meeting like we had last year, would have drained our budgets by $10,000 or more -- and I shudder to think about what that type of expense would do to our operating numbers.)

Nevertheless, I'm convinced the planning meeting/process is an essential for any business which wishes to grow beyond the tiny stage. You can, if necessary, hold the costs down, but it is not something to forgo. So, even though I am writing a less-than-enthusiastic review of my own meeting, I still consider it to be a success.

Monday, October 26, 2009

The annual planning meeting

Today is our annual planning meeting. Things are a far cry from last year, when we rented a Quebec chalet for $1,000, and employees flew in from North Carolina, Sault Ste. Marie and Toronto. I shudder to think about the overall budget for the event, including consulting fees, travel, and time.

The recession had just started hitting, and we spent a fair bit of time discussing whether it would hit us. In fact, we made some strategic decisions to bolster our position including a rather creative one to raise our prices. (This actually proved to be wise; sales certainly dropped, but I don't think it was the price increase that caused the decline -- and the yield on sales we achieved obviously was better.)

But I didn't realize how much I had allowed costs to rise, and the thinness of the ground. Sales for the December issue were fine, but dropped through the floor in Jan 09, to create the worst monthly loss in years.

Initially, I didn't worry -- sales seemed on track for February, and the team had a cohesive, positive outlook. Besides, the business plan and projections seemed overall to be healthy.

But things started going very wrong in late January. As cash dried up, key bills could not be paid in a timely manner. Worse, we were preparing to add two new employees and expand the business. Then the February sales figures arrived. They were good, as expected, but with rising costs, the break-even point had increased to the point that even with the good sales we were treading water.

We lost money in March.

Now I knew we had a crisis, and pulled out all the stops. Things became really messy as the business suddenly went into survival mode. Sheesh, where did the business plan go?

We fought through the crisis, and things look much better now. Lots of cuts, lots of painful changes, and the real world of the business now is nowhere near what I thought it would be a year ago.

Does this suggest business planning is folly? You can argue that you can't control the variables and circumstances can change rapidly; as they did this year. In fact, the business plan fell off its tracks right at the beginning of the year.

But the plan also provides a cohesive benchmark, and clear indications of where we thought we should be, and when we weren't heading in that direction, gave me enough insight to do what needed to be done.

So we have simplified things and cut costs, but will still spend an intensive day planning the future. Some out of town employees will join by teleconference, and our venue will be comfortable but not the big chalet we used last year. We'll get the job done.

Sunday, October 25, 2009

The start-up marketing challenge (2)

Yesterday, I asked members of the forums how they solved the start-up challenge. The answer, three people reported, is "business cards" -- lots of them -- but not just blind distribution. It is a selling effort.

Consider this posting of Rory Swain of Servicez Unlimited Inc., a Washington, D.C. area contractor.

My first year in business in D.C. . . . ALL of my business came from handing out business cards. I would give out 20-30 a day seven days a week . . . I also stopped and talked to everyone I handed out cards to.

Usually at least one or two of the persons I gave cards to had a project or knew someone that needed work done.

Within six months of being here I had about 30K worth of work. I worked eight days a week 26 hours a day, 400 days a year . . .

I forgot who it was but some once said on one of the forums I am on that they were handing out cards and shaking hands like they were running for mayor of their town.
Jesse Kirchhoff from Handyman Solutions in Jefferson City, MO, wrote:
"Well made" business cards and meeting people are the cheapest advertising methods by far. I give business cards to waitstaff, grocery store clerks, my doctor, the mail man, billboards, EVERYBODY even if they do not look like your type of client. The old five-foot rule definitely works.
1,000 professionally designed and printed cards that really stand out can be had for less than $300. Reorders are only $60 after that. If your card blends in it will not be remembered.

Join civic organizations and volunteer. Not only do you get to meet and greet people face to face to build trust and credibility for free - but you also get their email and mailing address (which must be used sparingly so as not to abuse)
If you are looking for business cards without breaking your budget ("Free" may be an exaggeration as you have to pay for shipping) , consider -- yes, they pay me a commission for the referral.

Finally, SLS Construction in Cullman, Alabama, wrote:
I take it, no five-year plan - limited money?

It depends, what works in his market and who is his target clientèle? Out here I get a ton of responses off two ads that only run me a little over $8 a piece in a small local classified-only paper. In some markets - print is dead (unless you over 40 or 50 or ?) and then it should be mostly Internet based.

Business Cards - they need to be talking to and handing out at least one business card a day, when you have nothing going that day - at least five. (It must have the web site listed, if they don't have one they need to get one.)

Once business starts coming in, then they can start looking at the fully integrated marketing plan. I personally would advise all three being done at once for them - create a web site, small print ad, and network.
Simple and straightforward advice, indeed. If you are starting out in a renovation/remodeling business, you now have the proven success formula. These guys did it, and succeeded.

Saturday, October 24, 2009

The start-up marketing challenge

Start-up architectural, engineering and construction practices/businesses have the standard "experience" problem plaguing prospective employees either just getting started, or starting a new career.

You don't have experience, and no one will give you a chance without experience and verifiable references. This is especially painful for public projects, where supposedly the competition is fair, but you require a bond, and surety companies won't touch you with a ten foot pole.

If you are a renovator, designer, or the like, how are you going to stand out from the clutter of really bad hacks, willing to work for next to nothing, and what kind of clients are you likely to find who will give you a chance, who don't know you already?

Obviously, every year, many businesspeople surmount these challenges and successfully launch their businesses. Generally, you can overcome the start-up challenges with a combination of these traits:

You have experience, connections and knowledge (and relationships and reputation) in the area you wish to serve.
This occurs for example when you have been an executive at one company and are starting out in the space as a competitor. Your suppliers (and, if you are not subject to non-competition agreements) your clients know your integrity, reputation and capacity. The advantage of suppler connections cannot be understated. I know of one roofing contractor who got his start because suppliers, knowing his character, extended 90 day credit, and he could get bonding for small jobs (again based on his reputation and personal assets). So he then went to bid public jobs, undercutting the competition, but not worrying about cash flow with supplier support, thus building his reputation and market potential.

You have lots of money
Yes I know this is the quickest way to lose it, but you can certainly start a lot easier if you have money to lose. The danger is you will probably lose it if you are not really careful. My suggestion: Read the third option on this list before spending any of your money and starting up. You need to establish your business on the hard knocks of reality before it hits you in the pocket-book.

You learn/know how to sell directly
You will not be successful at a start-up unless you can sell. Plain and simple. You cannot get others to do this for you (the exception is a partnership between two people who know each other well, have plenty of experience in the business, and fit all the qualifications as a team for the first route above. Then, of course, as a partnership, you are treated as "one" and thus are defined to have selling ability.)

Note I didn't say you have to like to sell. If you get your business of the ground you can hire others to help you on the selling function, but you simply won't be able to lead unless you can do it yourself.

Early stage selling may involve canvassing, cold calling, knocking on doors, and calling every friend or near friend you have. If this is too sickening to do, just try the same techniques to find a job!

You have a defined, unique focus and niche
This is an important principal in marketing, even at start-ups. You need to know what you want to do, and be willing to drill down and stick to it. The more specific, the better. You can't do everything, and if you want to dabble at several unrelated things at the same time, you will struggle.

You should follow your strengths, doing what you enjoy, and what you are really good at doing.
This is going to be a rocky experience, frustrating, challenging and fraught with failure and defeat. You need to have the stick-it-to-itness and ability to rebound or you will give up before you get too far.

Realistically, not everyone is cut out for business, and even if you are, your first "choices" may be bad. You need to figure out what you really want to do, and be willing to pay the dues. It isn't easy. But the rewards of success make it all worthwhile.

Friday, October 23, 2009

Finding your way: Self employment, start-up focus and marketing

Yesterday, I had coffee with a friend who I've known for many years. Formerly employed by a major corporation, over his life, his pay cheques have probably been much larger than mine (we've never discussed specific salary or income levels: bad manners to do that, of course.)

He's seen shifts, changes, bumps and grinds, and experienced the painful reality of corporate life: When decisions are made outside your control, you can be victims of corporate misfortunes not your fault.

His challenge now: He doesn't know exactly what to do, and his explorations in starting up in business for himself have had their share of disappointments.

He started work co-ordinating a renovation project (he is skilled with his hands as well as his mind). Even with a proper contract and clear processes, things went truly bad when the homeowner suddenly decided that the project would end mid-stream, immediately. Pay -- including the thousands of dollars for ordered and delivered kitchen cabinets? "No way," the homeowner said. Lawyers say he is well covered by the contract, and with changes impending increasing the small claims limits within Ontario, he is waiting a couple of months to file the legal papers. But right now he has $7,500 in kitchen cabinets.

"There are people out there willing to work for virtually nothing, and I've been offered $1,300 for the cabinets," he said. "I don't know if this is for me?"

I started the conversation, before knowing this story, asking him what he really enjoys and is good at. He said he could be a great consultant, and maybe he could be a great renovator. Well, those are two rather different career tracks.

I have a potential business/career opportunity in the consulting space. This blog (and my own expertise) are leading to plenty of initial inquires, but I haven't found a way (yet) to effectively guide these potential clients. The problem in part is that many readers here are very small businesses and start-ups (like my friend) without much money for full-scale consulting services. We need to have a system to process the leads and guide the qualified ones for revenue-generating services.

But I have an existing business, and right now the marketing from this blog is focused on guiding potential clients to the services we currently offer. They are useful, of course, but quite specialized, and I sense that while they could be of value to many readers here, the blog isn't really the best way to refer the potential clients to my current business.

I proposed to my friend that we could build a consulting business, in part, by rethinking this blog's lead management system. He expressed interest. But I didn't rush the decision.
I probed deeper to get a real sense of what he really wanted to do.

Does he really want to be a renovator, or does he really want to be a consultant (or does he want to go back to the corporate space?) Is one bad experience as a renovator dissuading him from a really rational career choice? If that is the case, I suggested he join the relevant home builders association, and budget some money (about $3,000 to $5,000) for marketing to build a brand and distinguish himself from the low-ballers. It won't be easy, I told him, but it is the way to go if he really wants to work in that field.

I explained to him that I have always had the good fortune of being "dumbly narrow". In other words, from when I was 10 years old, I knew that I wanted to be a journalist and publisher. It took a while to fulfill these visions, but ultimately I found my way. With the decision in hand, I developed the necessary supporting skills and eventually had my own business.

I could push him to work on the consulting project, and he might be really good at that, but equally I listened to his "heart" and realized that it is wrong to sell this too hard.

So what should he do? Where should he focus? And how can he make the commitment to the course he wants to take, with the ups and downs, and the frustrations and economic risk?
These are easier questions to ask than answer. It is easy to say "go where your heart tell you to go" but there are still painful choices. Life isn't easy at the start-up stage; and things go wrong.

Thursday, October 22, 2009

Learning marketing lessons from the scammers

As construction industry marketers, should we spend some time learning the scammers' tricks? This is a challenging question because, of course, great scammers are also brilliant marketers.

They are able to pull the wool over your eyes enough that you part with your money and beliefs for something that is only in their self-serving imagination.

Scammers, of course, distort the concept of trust -- they win your trust through trickery and psychological manipulation, and then destroy it. Scammers create fear in the marketplace. You distrust strangers, "too good to be true" marketing messages, and sales pitches. Trouble is, the best scammers are your "friends" -- or worse, convince your real friends that they are for real, so they become unwitting agents of the original scammer in pushing the fraudulent arrangements (Bernie Madoff.)

Notably, of course, (especially in the online world) scammers are willing to spend an inordinate amount on marketing. Some of the best online scams design "fake newspapers" and then hype the traffic to the phony publications with expensive keyword advertising, paying rates no one else would spend.

These high budgets cause the scammers' ads to appear as paid links at the top of real listings, and start people down the path of some very bad relationships. They especially prey on the vulnerable with "work at home" offers. (Does that say something about what a disturbingly large percentage of the community and market really wants -- yes, to "work" at home without really working, and make lots of money doing it. Dream on!)

In this environment we have the choice of copying the scammers' best techniques but with honourable objectives -- or we can learn enough from them to understand the power of psychological manipulation and control.

Wednesday, October 21, 2009

Craftmanship or Systems: Which is best?

The Mountain Equipment Co-Op building in Ottawa, one of the award-winning projects of Christopher Simmonds Architect.

Yesterday, I met with Chris Simmonds, an Ottawa architect who won the Peoples' Choice Award in the recent Greater Ottawa Home Builders' Association housing design awards competition for a luxurious home in Mississagua, near Toronto. (He entered the home in the "open" category as it is obviously far away from the Ottawa market area.) His practice -- he has a team of about 10 -- has built luxury residences, community facilities, and environmentally sensitive institutional buildings. "Underneath the hood" is an incredibly brilliant designer with a great sense of style and function. He conceptualizes big things with the little details -- and his staff, with various capacities and specialities, execute the vision.

Meanwhile, I'm watching the work of Stephen Sellers, whose "Professional Contracting Association" I discovered by monitoring his Adwords ads. In my conversation with him a few weeks ago, he described a small, part-time business, based on systems. Cautious to give him an unconditional endorsement -- after all, he has a new business, and his market credentials haven't yet been established -- I've been watching as various pieces of his marketing material arrive in my in-box, all building the base for his vision of a stream of increasing income from contractors looking for practical marketing solutions.

As far as I can tell, Sellers built his system in a box; a really comprehensive system with well written and strategized materials. There is a lot of skill in doing this right, but once he's done, his business should virtually "run itself" and generate money, consistently.

Which approach is better? You can't replace the quality and individual attention from Chris Simmonds and he gets to do the type of work he loves. Sure, Simmonds has systems within his practice to allow him to handle the volume of work -- and he certainly appreciates the basis of publicity and communications: Entering competitions where he can win recognition, and then find new business.

Sellers, meanwhile, described systems gone wrong. He had purchased a franchise which simply wouldn't work -- he paid for processes which hadn't been validated in the market. A systems person, he decided to learn everything, and get it right. I think he has.

I think both the systems and craftsmanship models have place within the industry. If you want to grow a really large business, you will probably need to move more in the systems direction, but if you are really good at what you do, you can indeed "have it your way."

Tuesday, October 20, 2009

The competitive impetus

Yesterday, I received a call from someone who noticed a long -established competitor is responding to his group's initiatives with changes and improvements to the competitive site.

We agreed that this can be seen in a flattering light; if your ideas are good enough that they are being copied, you are on the right track. Nevertheless, the question is, what should you do when you see the competitor sniffing around in your "space" and, seemingly, stealing your ideas.

One solution, not recommended except for those with very deep pockets, is to bring the lawyers out, as has happened recently with Reed and McGraw-Hill Construction. These mega-corporations can afford a few million dollars each on legal fights without worrying about the dollars and cents of litigation (these fights are lawyers dreams for billable hours!)

I decided to engage a competitor in the legal framework only once, about 14 years ago. The competitor was trying to stomp on me AFTER he broke a buy-out agreement, which resulted in the voiding of the non-competition agreements. I won't forget the day the process server arrived at my office, with a writ claiming $1 million in damages. I called friends to recommend a lawyer, and they all recommended the plaintiffs!

Fortunately, my affairs were structured so the other publisher had to sue the local Board of Trade (Chamber of Commerce) as well as my business, making it rather messy for the plaintiffs, also business-to-business publishers. As well, my lawyer confirmed to me that I had actually acted appropriately throughout.

In the end, at an injunction hearing, the judge issued a split ruling: Clearing my business of any liability (and awarding costs), while finding the Board of Trade and its then president had erred.

The story ended with the Board of Trade paying about half of my legal costs and its then-president resigning after he was picked up in a prostitution sting. I had nothing at all to do with that, but it certainly added up to an amazing business year.

So, while lawyers and legal actions can create competitive chaos, are there other, more effective, responses? Here are some other ways to handle competitive challenges:

  • Be true to yourself, but don't be afraid to copy good ideas (that aren't patented or protected by trade secrets you've cracked, of course) and implement them in your own business.
  • Remember you have a primary niche and market. You are generally wisest to focus on your market and maintain a leadership role. The challenge comes when an extremely well-funded competitor tries to invade your space. You can't generally invade their space in response, so your best approach is simply to be much better than they are at what you do.
  • Connect and relate to your current clients better than ever, keep your marketing and product focus high, and constantly improve.
Healthy competition will improve your business and sustainability. In my years in business I've seen "brilliant" competitors come and go, and usually the failure occurs when their ego gets ahead of their business.

(Oops. Is this speaking about me? Yes, last year I felt smug as I watched a competitor crash and burn but beneath the surface I was making many of the same mistakes -- fortunately we caught them in time, but it has been a scary ride.)

Monday, October 19, 2009

Three rules for construction marketing success

Here are three rules which will virtually ensure you have a sustainable and successful, construction marketing strategy.

  1. Create incredible (free) experiences for current and potential clients, delivering value far beyond their expectations.
  2. Get your suppliers -- the organizations to which you give money -- to pay for your marketing.
  3. Consider creative "inversions" of the above two rules to surprise the market and achieve marketing star status.
You don't need to be a rocket scientist to realize that when you put the first two elements together, you can generate extremely effective marketing at truly low cost. You reach the level of brilliance when you figure a way to change the rules and modify the process, however.

Our original business model, developed in the early 1990s, has worked wonderfully to connect the first two rules into truly powerful marketing packages. We discovered that we could write positive editorial profiles for businesses and organizations, and then work with them to obtain advertising support from their suppliers.

This concept is effective and has been sustainable for almost two decades. The challenge is defining who "our clients" are. Are they the businesses which receive the editorial profiles, and don't need to pay much, if anything, for the publicity, or their suppliers, who write us cheques for the advertising?

The search for answers to the latter question, to find ways to provide real value and "wow" for our true advertising clients, led me to study marketing with intensity with the objective of providing truly valuable (and free) marketing consulting services. This blog and the Construction Marketing Ideas newsletter are the result.

You might notice a virtuous evolution here. The blog and newsletter -- originally (and still) intended to provide after-sales service to existing clients -- allow us to meet a new group of potential clients and cost little in cash to achieve true impact and results.

How do you apply these principals in practice? The answers, depend in part, on your scale of business.

Very small and start-up level

Here, you have several challenges, simultaneously. You need to bring in enough money to keep going, lack support resources and staff, and the marketplace is likely to be skeptical of you.

Your first, and obvious, answer, is to call in some favours from friends, family, and former clients.

Then, you need to do something different. But how do you figure out what that "different" should be? I wish I had a simple answer to this type of question: In fact, it is one of the most frequent inquiries I receive in the "free advice" invitation on the sidebar and it is my hardest question to answer: I can't delve into the micro-environment of your business and you are unlikely to have the resources to pay me a per diem to investigate potential ideas in great depth.

Generally, I think you should aim to be the big fish in a small pond, and look to your suppliers for some supporting resources to make you seem even bigger.

Small to medium ($250,000 to $2 million annual sales)

Here, you have a client base but not a whole lot of money to squander. Look into client appreciation events and even better, client appreciation events that support your marketing.

(The idea of providing a free inspection or service call in exchange for the right to put up signage, or a "thank you" dinner at a great restaurant -- maybe one of your previous clients -- has real merit.)

Medium to substantial ($2 to $10 million)

Now you have some power in the marketplace. Consider organizing supplier-focused trade shows, using our services for editorial features, and organizing a formal marketing department where you can apply all the best practices disciplines of the industry in your business.

Large (more than $10 million)

By now, you will have a marketing department, public relations and communications strategies and the like, and you will likely have systems and a budget in place for community service and co-op and client support initiatives.

Regardless of the size of your business, however, the three rules above will provide powerful clues about your marketing strategies. Before you jump into spending money on your marketing, consider their implications and whether you can apply them. You may magnify your results, while reducing your costs. In fact, you might even turn your marketing initiatives into a profit centre.

Sunday, October 18, 2009

Winning Awards: Scale, quality and marketing

My wife and I have attended the Greater Ottawa Home Builders Association Housing Design Awards Gala for 17 years. We have reason to be there, even though we aren't home builders and have never designed one. With my ongoing responsibility to publish the association's internal newsletter, The GOHBA Impact!, I'm there in a journalistic capacity.

However, with a week before our firm publishing deadline, and the fact the awards are extensively covered by the local daily media, I don't need to "work" that hard as a journalist during the evening. We can soak up the atmosphere and, today, I can discuss some general concepts about the awards and award-winning process, without naming individual businesses. (I'll write the appropriate, totally positive story next week.)

In general, awards competitions (if properly and fairly judged as the GOHBA Awards are), are incredible marketing equalizers. You could put the entries into three core groups:

  1. Smaller or high-end boutique builders and designers who submit selectively projects they truly believe are really the best in their categories;'
  2. "Category stuffers" -- larger niche businesses who enter multiple entries within specific categories where they think they have some chance of winning or which suit their marketing framework/focus.
  3. Larger builders who may try to emulate the ideals of (1) above, but simply don't have the oomph, in part because of their size and scope.
I'm not suggesting anyone is wrong here -- the reality is that really great work requires individual creative talent and ability and is hard to replicate and expand on larger scales. Boutique high-end builders and designers are likely to walk away with more awards in the first category simply because they really do amazing work which dazzles the judges (and they probably take as much care in their entries as their original work.)

Category stuffing makes plenty of marketing sense, especially if you have a significant marketing and advertising budget. Entry fees aren't that high, and if you are the only company in the category, with multiple entries, you are sure to win (and you can then compare your work objectively to see why one project succeeded above the others).

Of course, it may be somewhat embarrassing in the room when you are competing against (1), and if you have three entries within the category and the one boutique project wins against your force. But realistically, the people in the room aren't your potential clients, they won't see the competition, and you only need to announce and trumpet your success if you win.

Finally, the third category, large builders and renovators with multiple projects, often fare poorly in these competitions, simply because it is hard for them to convert volume into the dazzling quality that appeals to judges. Of course, the awards organizers (and judges) still found ways to recognize and respect the builders who have contributed significantly to the community and the association's budgets. These builders know they can't really expect to do well at the awards, but are good sports about it.

Can we learn some marketing lessons here?
  • I've seen astounding and truly exciting business growth stories from smaller builders who won key awards. One modest builder, who won the "People's Choice" Award a few years ago, saw his business virtually double. There can't be much better return on your marketing investment: An entry fee, and you win the recognition (with the support of the awards major sponsor, the Ottawa Citizen), of greatness with plenty of free publicity.
  • Of course if you only enter in one or two categories where you truly think you are great, but win nothing, you end up with nothing (except perhaps a slightly bruised ego.) You have the choice of following the third point.
  • Category stuffing, when allowed by the rules, is a wise marketing move. You can broadcast any win you achieve, and ignore the results if they aren't so great. If you are spending thousands of dollars on advertising and marketing, the entry fees are not going to break your budget.
(My views have changed on some of these points in the past year. See last year's posting on the same topic.)

Saturday, October 17, 2009

Pumpkin marketing

Michael Stone, I believe, hits a marketing home run with this suggestion in his recent Markup and Profit Blog posting:

If you ever read the Peanuts comic strip, you’ll remember Charlie Brown and the Great Pumpkin. The Great Pumpkin appears on Halloween and does something (I can’t remember what).

Here is my take on pumpkins and your business. Many of us have small farms nearby selling pumpkins. How about offering the owner a lump sum for 100 – 150 – 200 pumpkins? You figure out what it’s worth and make an offer.

Then send a note to all former and future potential customers telling them they can take their kids or grandkids to the farm, using the coupon you are giving them, and get a free pumpkin. Maybe schedule it for one or two specific days only so you can be there to personally greet each family. In a few special situations, like military families where dad or mom are away serving our country, make sure everyone in the family gets a pumpkin even if you have to buy a few extra. (Don’t do that for business purposes – do it because it’s the right thing to do.)

When you send the note, thank each family for their past business and extend the assurance you will do a great job in the future. Ask if they know anyone who wants to do work on their home or building. Referrals are great things. One new job and you have paid for this whole program, and it’s fun as well.

Might be worth a try. Okay, it’s getting close to Halloween and you’ll have to really move to get it done before the holiday, but is there any special event in your area for Thanksgiving or Christmas? Maybe arrange for a discount on tickets to a show, or a tree lighting event, or for Christmas trees, or holiday candy somewhere, or a free ornament at a local bazaar, or . . . . get the idea?

Little gestures can go a long way -- and don't cost much money. The good will (and resulting repeat and referral) business generated this way will pay off far more than a Yellow Pages ad or invasive and irritating canvassing strategies.

Thursday, October 15, 2009

Metrics; The SMPS Marketer article and survey

After several months, my story: Marketing Metrics: Measuring Your Results has been published in The SMPS Marketer.

You can read it by clicking on this link, or by visiting the Wordpress version of this blog at

The article makes the point that measuring your marketing methodologies is an important element in achieving business success, but acknowledges that this isn't always an easy thing to do (and that some highly successful architectural, engineering and construction businesses don't have formal measuring programs.)

P.S. Can you catch the typo that might really impact my ability to measure the results, and figure out how I solved the problem? You can email your observations (and I'll measure how many answer.)

Competitive intelligence, marketing, and confidentiality: The Reed - McGraw-Hill Lawsuit

A story of competitive intelligence with marketing intent has come to earth with the filing of a lawsuit by Reed Construction Data against McGraw-Hill Construction Dodge.

The suit charges that Dodge has unlawfully accessed confidential and trade secret information from RCD since 2002 by using a series of fake companies to pose as RCD customers.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, seeks an unspecified amount in lost profits and punitive damages, trial by jury, and injunctive relief as a result of Dodge’s misuse of RCD’s proprietary construction project information, Reed announced in a news release.

The complaint charges that Dodge hired consultants to subscribe to RCD’s confidential data under the cover of fake names and companies. Dodge then allegedly manipulated the information to create misleading comparisons between Dodge’s and RCD’s products and services in an effort to mislead the marketplace.

The complaint cites eleven counts of misconduct by Dodge, including fraud, misappropriation of trade secrets, misappropriation of confidential information, unfair competition, tortious interference with prospective economic advantage, violation of New York’s general business law, violation of the RICO Act, RICO conspiracy, monopolization, attempted monopolization and unjust enrichment.

McGraw-Hill Dodge has used our information to deceive and confuse the market about RCD and the data we offer,” said Iain Melville, CEO, Reed Construction Data. “This was an attempt by Dodge to force RCD out of business and obtain a monopoly over the construction data industry.”

The story is described in greater detail in the actual court filing, which can be downloaded from Reed's site here.

Business to Business Magazine reported this response from a McGraw-Hill spokesperson:

“We intend to vigorously defend ourselves against Reed Construction's legal claims. We take these allegations very seriously and are committed to ensuring that all employees comply with our Code of Business Ethics.”
The two competitors have been battling within the construction information marketplace for years. The Reed lawsuit alleges that McGraw-Hill used data obtained from unauthorized users hired by McGraw-Hill to adjust its services and adapt its marketing programs to make it look like it was delivering a more useful service. Reed's contract language includes specific provisions regarding non-disclosure of confidential information.

Wednesday, October 14, 2009

It's free -- who pays?

An increasing number of postings on the Design and Construction Network's discussion group are selling messages. If groups allow too many of these to dominate the board, real discussion dries up, and the group loses its relevance.

One of the great challenges in the online world is that access is both free and easy. This means the conventional barriers to the wide distribution of mediocrity or irritation are greatly reduced, so much that appears on line is less than inspired.

We build our own filters to keep this junk out of our lives. Spamblocks stop much of the stuff, and our common sense causes us to quickly hit "delete" to the garbage that still gets through.

Online forums and newsgroups have similar challenges. There appears to be a critical mass beyond which things go really wrong, unless you build in some seemingly heavy-handed controls.

With too little traffic and engagement, there isn't enough critical mass to create dialogue, conversation and real online communities. But after a certain threshold occurs, the spammers and (for want of a better word) proto-spammers take over.

Spammers produce the obvious garbage, with auto-generated crap spewed out in huge volume with the hope that only a little will stick.

Proto-spammers are spammers at heart, without the volume. They are generally not-very-good salespeople, who think that putting out a "free advertisement" (sometimes thinly disguised as an information article) will produce useful results. Just like spam, or irritating telemarketing, or annoying canvassers knocking on doors, a certain number will respond to "selling" posts so, if you do it often enough, you may get some return.

Trouble is, as soon as that type of posting takes over the online forum or group, regular readers who might actually can buy something, usually run for the hills, and the group dies a painful death.

How do you solve this problem? I see two possible solutions.

Set moderators and rules. You need people to stand guard and keep the crap out. Volunteers can develop a code of conduct, a set of rules, and guidelines. If something is wrong, they can kill it. In some cases, they have their own private closed forums to discuss sensitive issues. In large sites, you can even build in an appeal/review process, to allow people who may be inadvertently (or maliciously) screened out a second chance.

Charge a (small) fee. In some cases, the best way to impose the discipline is to charge a small fee. Craigs List is an example. It is the absolutely most effective place to advertise help wanted offers in cities where it charges a small fee. The $25.00 is far less expensive than the conventional job board fees of several hundred dollars, and the quality of responses is excellent. Without the fee, however, multi-level marketers, "home business opportunities" and other scams and dubious employment offers drive out anyone who would actually be interested in a real employment opportunity (or offering one).

Tuesday, October 13, 2009

Social networking and construction marketing

Partial results from our survey on the use of social networking sites for the construction industry. If you wish to participate, just click on the image or this link. You'll be able to review the results of the survey overall once you complete it. Your identity will be anonymous unless you wish to share it.

How effective are the new "social networking" technologies including Facebook, Twitter and for construction industry marketing? And how can you use these resources most effectively.

I've decided to look closely into these matters for an article I'm writing for the Design and Construction Report, a publication born out of the social networking phenomena. The Design and Construction Network, started as a group last winter, now has more than 2,500 members and several local chapters -- and is growing rapidly.

But are people getting business from the initiative. And is the network degrading into a list of "selling" offers, with everyone just pitching their own product or service without much if any effect?

Yesterday, in addition to phone interviews with several people (yes, it was Thanksgiving in Canada, but also a regular business day in the U.S.), I distributed an online survey to about 5,000 people. The results from the 44 who have completed the survey so far are interesting. They show that a little less than 12 per cent have gained business from the new technologies, with being the most relevant and useful for businesses.

Notably, some early adaptors, people who have used these technologies from the outset as individuals, say their businesses have "bans" on their use within the office. However, a few have embraced them, and they say they are measuring real value in the process.

My perception, shared by others, is that the social networking operates on the same rules as conventional networking. If you focus on what you "want" rather than what you can share and give, you will fail. If you focus on how to provide real value to others within the network without worrying about your own needs, the principal of reciprocity ultimately results in return business and favours. In other words, you gain the most by giving the most without regard for immediate return..

Monday, October 12, 2009

DimDim and interactivity

We've all heard about webinars and some of us have participated in them. Even fewer have hosted -- in part because of the cost of setting up the system.

A relatively new service, has solved many of these problems in co-ordinating online interactive meeting with video and two-way communication. I first learned about this resource from the Design an Construction Network when a meeting to discuss how to use Twitter effectively "sold out" (it was free, of course) in less than 20 minutes.

I haven't used the system yet except for some experimentation, but it appears to have all the functionality you could want in more expensive resources, and creates an intriguing opportunity (I think) for you to develop online programs and community activities.

I've set up two DimDim meetings for this week, and will let you know how things go. One co-incides with our regular internal staff meeting on Tuesday and is closed to the public. With employees in remote locations, DimDim may enhance our internal communications effectively.

The second meeting is set for Friday at 2 pm. It is a Construction Marketing Round Table, and I'll invite you to share your observations and find marketing questions/solutions. You can register by responding to the "button" above this posting or the sidebar. There is no charge to attend, of course.

Sunday, October 11, 2009

Ottawa Renovates -- September 2009

We've just published the second issue of Ottawa Renovates, a consumer magazine. The project has proven that you can extend your business beyond its original scope if you think rationally and set up appropriate joint venture agreements and partnerships. The challenge when you stretch yourself away from your core competencies is the risk of cannibalizing your existing resources and (more significantly) diverting your energies on the sideline project.

I think the key to deciding whether to go ahead with a project that stretches you beyond your core competencies is the question of how much of your existing talents and resources support the new business, how relevant it is to learning, adapting and improving for the future, an of course its potential.

Saturday, October 10, 2009

Humble Pie

Yesterday, in baring my soul about the challenges of converting this blog's construction marketing leads to business, I inadvertently practiced one of the most effective marketing principals, in admitting my flaws.

After the posting, two readers sent some truly constructive suggestions (I will quote from their emails once I receive their permission to share their insights publicly), and we received several highly qualified leads which are worthy of follow-up.

Sometimes it makes sense to be humble in your marketing. The reason is authenticity. Most of us know no one (or almost no one) is perfect; by getting down to earth and showing our weaknesses and vulnerabilities, we ultimately are more credible. The key in describing these weaknesses is to frame them contextually so they actually highlight your strengths.

I first learned of the principal of admitting weaknesses from Jon Goldman, but think this article "Admit weaknesses to strengthen trust" by George Dvorsky in Commune: Internet Marketing Optimization, expresses the principal best.

As you can relate, prospects are naturally defensive because they know you’re trying to sell something. To persuade them, you need to gain trust. And you can’t do that with over-the-top rhetoric.

Psychologists know that trust is integral to influence. Honesty—or the perception of honesty—goes a long way to building this trust. Studies show that being and acting trustworthy—such as by showing vulnerability and admitting a weakness—is essential for marketing.

With your guidance and support, I'm sure I will solve the lead conversion problem outlined yesterday -- and when I do, I may graduate to become a full-fledged construction marketing guru. After all, if we can find the way to convert a continuous supply of "free" leads to profitable sales, we have the base for truly profitable businesses.

Friday, October 09, 2009

My two biggest marketing weaknesses

I'm happy this blog has top ranking for relevant "construction marketing" Google keywords. Despite this accomplishment, things aren't perfect around here, with two rather large and as yet unresolved marketing quandaries.

Maybe you have some of the same problems in your own business and possibly you have faced -- and solved -- these issues.

Disconnect between the leads/initial inquiries I am receiving and my actual service

This blog continues to generate between one and five inbound inquiries/leads a day -- with requests for the "Art and Science of Publicity", sign-ups for the free e-letter, or calls or emails seeking marketing insights.

But virtually none of the leads are currently converting to viable orders for this business's current service -- feature reports in either our regional publications or the Design and Construction Report.

It seems either I've failed to build enough trust in the service, or failed to connect enough dots to cause the initial inquirers to say "let's do it."

To draw a parallel in your situation, say your inexpensive (or even free) advertising is generating this number of leads a day an virtually none are converting. What would you do?

It seems you could either stop the advertising an find a more relevant media, review/change your selling process to see if you are "turning off" relevant clients along the way of lead conversion, or change/adapt your service offering to the leads you are actually generating.

Here, my problem is that our service is geared primarily for larger contractors (with sales volume of $2 million or more) and while we receive some inquiries at this level, most are not senior enough to say "go for it". The service is too expensive for very small contractors (under $250,000 total sales a year), and for the ones in the middle, we have a quandary -- it can be worth every cent of its sticker price, but it isn't free: You would need to budget about $1,500 as a one-time investment.

Probably the problem here is that at this level, the work requires a lot of selling skills, but my sales representatives, naturally, focus their energies on reaching out to the larger contractors who (a) don't need to pay and (b) can generate much larger total business volumes for their effort. In other words, leads which might qualify for the paid service are simply lost because they need some encouragement from a good representative, but our representatives rationally are focusing their energies where they can achieve greater return for their time and effort.

The challenge in sustaining interest and opportunities in longer-range projects.

I'm good here sometimes, but not always. This blog is a success story in that I've been able to post daily for more than two years, something few bloggers achieve. But I find many initiatives which start with much promise seem to fizzle -- I seem to lose the spark of creativity and innovation, or my ideas just don't work so well any more.

This is partly temperamental; I'm interested in new adventures and when the process becomes repetitive it fails to motivate me so much; and it is partly practical; time and obligations constantly press and it is sometimes tempting to put some things to the back burner or turn them off. The trouble with either of these approaches is that excellent relationships and initiatives lose their spark, and the great marketing value and relationships/connections built through hard work and initiative dissipate.

I suppose the answer to this question is decide if the activity/engagement really still interests me, and if it doesn't, whether I need to pull back or find better ways to connect these values/interests to the larger goals.

Yes, I've admitted a couple of rather big weaknesses here. There are strengths, of course, to offset them. Clients who do business with us generally receive value far beyond their investment and return for more. I certainly am able to persevere and delay gratification for important relationships and longer-range goals. And, even the leads this blog are generating are not converting the way they should to sales, I'm not paying any cash for them! Maybe I simply need to know this blog's readers better (you!), and discover what you really want. The insights here may lead to an entirely new business.