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".

"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.

Advertising, branding, and service

Construction industry consultant Michael Stone with Sonny Lykos in a December 2006 photo

The late Sonny Lykos outlines in this June 2004 Journal of Light Construction posting, the basic issues you should consider in advertising and marketing. His points remain valid today.

Nothing - NOTHING we do or say that involves a customer is ever to be thought of as minor, small, unimportant, or insignificant. NEVER!

If your advertising brings your client to the door, the way you treat your client defines your ultimate business success, Lykos advocated. this is a fundamental point which you should regard consistently and vitally.

The power of follow-up inspections

The "Mary a Plumber" images from Bestline Plumbing's website may not convey the image of a business with high-brow sophistication and inspiration (and the company's website is certainly not state-of-the-art). But Bestline's owner Leonard Megliola certainly has the basics of effective marketing in his business -- he shares freely his ideas, expresses a strong and vibrant personality, and reaches out to current, previous and potential clients in a manner that attracts profitable business. We can all learn from him.

Leonard Megliola, president of Bestline Plumbing in the Los Angeles area, challenges other contractors and sub trades to think differently about marketing; in the process, he has adapted and implemented some solid and really resourceful practices.

One of his methodologies, also recommended by the late Sonny Lykos, is the follow up service/warranty inspection call. Clients are advised when his company does work, that his staff will inspect the job and make things right if they aren't up to standard.

His employees complete the inspections, as promised, and obviously take responsibility to fix any deficiencies. But these visits have much more marketing power than you can imagine. Clients have other things they need done; they have friends and acquaintances which also need plumbing services, and the good-will created by the follow up service just adds to the marketing value of this initiative's marketing value.

Here is part of his contractortalk.com posting on the topic:

This is how this campaign works and it is too simple. You send 100 letters, to customers you did large jobs for. These could be room additions, new homes, foundation walls, copper repipes, furnaces, roofs, roof valleys, sewers, new drain installations, electrical wiring, roofs. etc.

Your letter tells the customer that you want to inspect only one or a few items. Don't make the letter confusing.

Your letter tells your customers, you gave them a guarantees, and you want to inspect the integrity of your work (list only one or two items), glued joints, copper joints, fire-box, foundation wall, roof, gutters, storm caps, structure integrity, mold, water drainage, wiring, drainage,. etc. The letter tells the customer that you will inspect the job, for free, and if there is a problem, you will repair the problem for free.

People love this idea. We send out 100 letters and the phones start ringing the next day. Guess what happens when people are so happy with us. While inspecting our jobs, these people need more work. Almost every customer needs something and we are closing very large sales on 50% of our inspections. This week, we sold three floor furnaces, drain jobs, a copper repipe, and a huge clean-up job in an attic, removing blown-in insulation, that was contaminated with animal waste.

The first thing we do, when we arrive at the customer's home, is hand them a handful of ink pens and a few business cards. We carry a camera and take pictures of everything. If we find nothing is wrong, smile, and thank the customer. When you find something wrong, give it your best to do what is right. This past Monday, we inspected 6 jobs in less than two hours.

I prefer not to mention the amount of money sold from inspections, but it is more than most will believe . . .

Checking your jobs should be something that you are willing to do just to provide good customer service and build your business. Posts tell me that it is obvious that few to no plumbers actually call their customers a year later and say, 'hello, this is Acme Plumbing. How is everything working? The reason I am calling is because I would like to let you know that we appreciate your good business and we would like to make sure that the work we did is still working fine, ........and on and on.

Thank you for being a great customer. We (company name) would like to thank you for your business.

Most likely, you are aware that the piping (furnace, or whatever) has an Original Owner Lifetime Guarantee and we would like to honor that guarantee. In order to honor your guarantee, (company name) we do periodic inspections to check the integrity of the of the piping installed and to make sure that our work does not cause any physical damage to the occupants or to your property.

Bestline will be performing you inspection between Monday July 21 and Friday July 25, between 9 am and 4 pm. We will be calling to schedule a firm appointment, or you may call us to schedule an appointment before or after the dates we have suggested.

This inspection is absolutely free and there rare no obligations of any type.

Thank you very much.
Sincerely,
Jack
The Big Boss

I can't think of any strategy that is more effective and less expensive marketing-wise than this follow up inspection system. (This obviously only works when the contractor has a direct relationship with the client, either residential or commercial -- you might have challenges doing this if you are working purely as a sub for general contractors, and I can imagine the challenges of GCs and subs working out who pays for what when these follow-up calls are arranged. On the other hand, you might have no trouble arranging with the GC to provide this follow up service in your own name: After all, if you really will honor the warranty then this is one load off the general contractor's worry-list.)

See also how the late Sonny Lykos used this technique to great effect in this posting: "The Marketing Budget"

Healthy business

Clearly, in business, your clients/customers are the basis of your success -- if they truly enjoy working with you, and pay their bills at profitable levels, you will do well. However, unless you are a sole practitioner/one-person-band, you also need to connect and build a culture of co-operation, initiative, and growth among your employees and key contractors. And this is perhaps the biggest test/challenge for any entrepreneur.

One approach is to regard all employees as owners/clients, and treat them like that. If your selection/hiring practices are solid, you won't be risking much with this policy. This approach to business turns the cliche "empowerment" into a practical reality -- your employees will respond with independence, respect, and treat clients like you would treat your clients if you didn't have any employees.

Of course, you need systems, processes, and rules, or things could get totally out of hand. And you cannot escape responsibility by careless delegation. Regular meetings with structured guidelines help here. In the meeting context, you can usually smell if something isn't quite right, and take measures to remedy the problems.

When things are working really well, you can almost sense you can 'go away' and employees will make the right decisions. You don't really leave, of course, but you don't need to micromanage them. Usually, you are in the enviable position of saying 'yes' to requests or deflecting the questions or concerns to other employees who can help better than you.

Don't doubt it -- your clients can sense this chemistry, and they will want to do business with your company when they do. Your employees don't fake it; they don't suck up, they aren't artificial, and they aren't following canned scripts when they encounter situations where creativity rather than rote processes are necessary.

When all is right, you'll find they contribute far more than you would expect otherwise, and you all can share in the prosperity.

It took me almost 18 years in business -- and a near disaster with the company -- to discover these processes. I have always thought that employee independence and freedom are the best ways to run a business, but needed to learn the structural systems required to manage the process and ensure responsibility, accountability, and shared respect.

These qualities, and this communication, is why we assessed the economy at our planning meeting and then projected significant growth this year. Best of all, I believe that the clients who chose to do business with us will grow as well.

(I give credit in this posting to the late Sonny Lykos for his thoughts, and to Bill Caswell of Caswell Corporate Coaching Company for solid advice. And, of course, to this company's employees.)

Not much of a salesperson?

Forrest Castile, of Castile Construction in Eugene, Oregon, has started a fascinating and important thread on contractortalk.com with this posting titled: Not much of a salesperson?

Ok, so it's getting clearer to me. I'm not much of a salesman. I've been busy and slowly expanding for the last 10 years, without much in the way of actually "selling" jobs. All referral work and clients who wanted to hire me. Not sure if it's the current economy, or if I've tapped out the pool I had, or if I'm screwing something up or what, but I'm getting calls, just not really selling (maybe 1/4 close ratio). What next?
1) Try some advertising? I'm in the yellow pages, and have a half azzed page-holder website that's not done yet- HELLO, GET IT DONE DUMMY!
2) Learn how to sell? This almost offends me, as I haven't had to even think about that 'til now. I used to get 90%. Without trying.
3) Spruce up the image? I drive older trucks and wear logo'ed t-shirts (usually clean), could use a haircut.
4) Gotta run- I'll check back later...

Other forum members (myself included) have contributed responses, exploring the challenges of a contractor who has built a reputation for quality, to the extent (in good times) he never lacked work -- but with the changing environment, now needs to start selling. This thread is worthy reading for anyone wondering "where has all my business gone" and seeking practical and effective solutions.

Michael Stone on Sonny Lykos

Here is Michael Stone's observation about Sonny Lykos. You'll also see a link to Sonny's obituary in the Naples newspaper.

Sonny Lykos dies

Sadly, Sonny Lykos has died. His wife Barb sent this note to friend Mark Parlee (who posted it on the JLC Online forum):

April 15 Dear Mark Sonny passed away at 2;15 a.m. this morning. Thank You for all your concern. Barb Lykos

I only knew Sonny briefly before his final illness; during our exchanges he shared some of the most fundamental insights about the business -- including an education in the real meaning of Branding -- that it isn't about advertising, design logos, and "sales technique" but it is on how you and your employees relate to current, previous, and potential clients. Effective branding, Sonny taught me, allows you to escape commodity price traps, and crazy and wasteful competitive bidding wars.

You'll find several earlier entries in this blog where Sonny added insightful comments. His knowledge, and insights, reshaped my perspectives about marketing for the construction industry and, I would say, he has been the single greatest influence on my attitudes and philosophies.

Regretfully, we never had the opportunity to meet in person, but I wish to extend my condolences to Barb and his family. He has left an incredible legacy which will continue to assist other contractors find their way in the marketing universe.

Sonny Lykos

Sadly, last night as we prepared for a day excursion away from computer and Internet, I learned from Mark Parlee that Sonny Lykos has suffered a stroke following his heart bypass surgery and recovery will be long and difficult.
Sonny is the inspiration of most of the recent postings within this blog, expecially his emphasis on Brand Harmony, and interconnecting the entire client experience in the marketing process.
I hope Sonny is able to recover fully and am praying for his return to good health.

Pictures worth thousands of words (2)

An example of shoddy work -- photo taken by Sonny Lykos. "Here's an example of the bath gut and remodel job we just started. Metal pan in the shower that only came up about 3" and stopped at the top if the curb on it's inside. One side of the shower butts into a platform tub, also rotted away."

Over at the Journal of Light Construction Online forum, in a posting in a thread started, by Sonny Lykos, Horror Stories & Photographs, Mark Parlee references back to this blog -- and an earlier posting where his effective use of photos is reported (and a sample is provided through a link to our server).

To aid in navigation, here is a link to the original entry.

Pictures worth thousands of words

This image is lifted from the Parlee Builders website -- one of the better ones I've seen, both for simplicity and communication. Mark Parlee says: "My son designed that website when he was 16 yrs old He went on to Iowa State and graduated with two degrees, one in computer science and one in computer engineering, he did this in 3-1/2 years while working and getting married his last year of college. If you remember the "I love you" virus that went around a few years ago, He had the first repair for it to my knowledge in the country, 6 hours after infection 3 days before Nortons. His company www.flyinghippo.com."

Mark Parlee of Parlee Builders in Urbandale, Iowa, takes the initial client presentation for new home building and renovoations/restorations an extra step -- in fact, several extra steps, with increibly documented photo essays showing the problems he has uncovered -- and advancing the solutions he recommends.

This is something you have to see for yourself, so when Sonny Lykos sent me samples of Parlee's presentations, I requested, and received, permission from Mark to post and redistribute them. Here is one file for you to look at -- I have another couple available to send you if you email me at buckshon@constructionnnrgroup.com.

Why this approach? Parlee explained the reasoning in this email to me:

My company is in the business of exterior renovation, remodeling, and home building.

These reports have to do with the exterior renovation part of my business. The whole process starts with my initial contact with the homeowner and is typically by phone the first couple of times to set up a time for me to go to the home and look it over in detail. In this visit I measure out the homes exterior and take a lot of varying angles of pictures. This allows me to study in detail what I have seen and makes my memories of the visit and what I saw more accurate. From there I go to my laptop and download all the pictures in a file with the clients name for easy future reference.

I have a spreadsheet with all sorts of things I might encounter on a particular job, if an item in there is not relevant to this particular job I simply edit it out or if there is something that I haven't addressed before I add it. As you can imagine for the first couple of years this document was changing and being added to on every job due to experience that I was gaining but it has not changed much recently, I may think of a different way to word something but that is about the extent of the changes as the experience level increases.

I own a very nice digital SLR with a couple of decent lenses, one zoom and a wide angle. This has been a very good addition to my tool kit and really made me see the old adage of "a picture is worth a thousand words" is true on all accounts.

As time goes buy the amount of info I take with me to a presentation has increased from three to four pages to at least 30; this gives the potential client a lot to think about and helps frame up the complexity of the job. I take with me my proposal, 10 pages of product info showing the materials I use and specify, and the pictures of the home showing the damages; I also include pictures of finished details on past jobs to show how we address specific problem areas.

Recently, in the last six months, I started putting my pictures in a PDF with a caption below each one giving some description as to what is wrong or how I will handle the repair. This has put me out in front of the competition as they usually bring just a contract to the meeting and the only goal of that meeting is to get a signed contract not to educate the consumer and develop a relationship. I tend to over explain things but that is how I am and have come to accept that, so have my clients.

When I make the presentation I like to have both the owners there and I will sit down with them and read every line in my proposal. This allows me to give explanation of every step of the job including the fact that I will have a port-a-potty on site, I even state that they may use it if they choose, this is usually good for a few laughs, If that doesn't do it, it may be a sign of weird things to come, I have found that most of my clients will tell you at the end of the job "it was just as Mark said it would be" (as) we do dominate their area for 15 to 20 working days and that can be a big thing to deal with if you are not prepared, Most of the time by the end of the job we are like family; relationship is the key.

Indeed, these are observations that show how successful construction businesss differentiate themselves from the 'mass' of 'low bid (hopefully) wins the job' contractors, struggling from day to day, and burned out when the economy turns south. Notably Parlee's approach, while requiring somewhat more up-front work than a conventional canned presentation, actually doesn't take that much real extra effort, and reduces stress and confusion down the road. And even if more work is required, if the effect is to increase the percentage of positive commitments for his services -- and the average price of these commitments -- is it not worth considering doing something similar yourself?