Construction marketing basics: Focusing on repeat and referral business

New LinkedIn Construction Marketing Ideas group members are invited to share their biggest challenge.  I receive two or three emails a week, and do my best to provide a succinct answer.

Yesterday, a reader observed:

Here is what we struggle with. 

Getting potential clients to do an apples to apples comparison. We give detailed spec sheets with our bids and referral list of past clients to call. Yet unless it is a direct referral from a past client who has seen our work first hand, we hardly ever get a job. Any leads we get from our website so far have not got past the bid stage. Just trying to find out how to get a better percentage of signed contracts.

My answer:

It is hard to get anyone to do a true "apples to apples" comparison because of the invisible variables relating to branding and trust.  Direct referrals from satisfied clients, obviously, are golden -- they are able to share their experience with people they trust, and radiate their trust in you.  When you go outside that orbit you are competing against others who have earned a similar level of trust, or you are competing against "low price wins" clients/competitors -- a loser's game for most of us.

The best advice I can give is to spend more of your time finding those referrals,  building them into the basis of your marketing; coupled with testimonials (videos may be effective) to back them up on your website and in other media.  I offer some suggestions in my "construction marketing ideas" book. 

In my ongoing poll, about 3/4 of most contractors' business arises from repeat/referral -- so even an incremental gain in the percentages in these areas will pay off more effectively than other media.   

Now, in terms of capturing the "other" 25 per cent, I tend to believe that marketing should have its highest impact with approaches that bring you as close to real clients as possible.  Again, if you are seeking to build your brand (trustworthiness reputation), perhaps the highest and most effective longer term approach is to focus energies on community service and charitable initiatives.  Of course, you can't put these in your "marketing budget" because if you do this sort of stuff, you can only succeed when you absolutely don't expect anything in return (a real paradox, but one I've seen play out many times.)

Indeed, the challenge with most contractors' efforts to reach beyond repeat and referral business is that they fail to capture the trust and reputation inherent in their successful client relationships in their outbound marketing, and in communicating with new clients not within the repeat and referral orbit.

You can "build a brand" with lots of money, but I think a more effective approach is to build on the successful qualities that lead to happy clients being willing to refer their friends.  You can do this in two ways:

First, focus on enhancing and improving the "wow, this was great" element of your client experience so you can naturally attract more repeat and referral work -- and strong visual and written testimonials for your other marketing;

Second, reach out into the community with service and contributions which have nothing to do with selling, but everything to do with sharing and community respect/involvement.  This enhances your trust and reputation.  You should worry far less about reciprocation and recognition than in conducting your good deeds -- but these arise naturally when you least expect and demand it.

Cultural norms and industry conventions

Why are time share condos sold by high-pressure, slick, manipulative salespeople? Why are most used cars sold at dealerships (or divisions of dealerships) which appear scuzzy, with cheap brightly coloured pennants? Why do most contractors rush out to public bid competitions and hope to win by "bidding low?"

I wish I could have a straightforward answer to these questions, but the questions provide their own insight. Different industries have different marketing conventions and norms. Breaking free of these standard practices and trying something different is risky and uncomfortable. It is much easier to revert to the norm of, for want of a better phrase, the industry brand.

So most contractors don't advertise or employ conventional sales representatives (and those that do, often in the residential environment, perhaps with door-to-door canvassers, play the game at the sophistication and client interaction level of time share operators.)

The construction industry marketing norm, it seems, is either not to market at all other than to provide great service and value and hope for referral and word-of-mouth return business, or to use the cheapest, most irritating and intrusive marketing methods known to any industry.

Surely, there has to be a better way.

Yes, some used car dealers have spruced themselves up and now behave and look much more like their new car counterparts. I'm not sure about the time share guys -- maybe it is impossible to do better for a product that has such high conceptual/emotional value at the time of sale, but so little resale worth.

Maybe, however, just a few contractors have discovered the magical combination of providing a level of service that invites referral/repeat business AND enough marketing and advertising to prime the pump, encouraging the referrals and repeat clientele and drawing out new business.

But this type of marketing feels risky. And it requires you to invest time, energy and money in what at first seems to be a secondary activity.

So you don't do it until you are desperate and need fast results. And then, sadly, you reach out to the worst industry conventions and practices from other sectors and think your marketing must be like a conventional used car dealership or time share operator.

Most of us simply won't change, and when we "change", we follow the predictable, wrong path.

That's sad.

What works?

If successful marketing is all about obtaining more, higher margin sales, and achieving these sales is all about your brand, and great branding is all about trust, what is your most effective marketing strategy?

The answer is you want to find the lowest cost methods, with the highest leverage, which results in the greatest amount of trust among potential clients.

Here, things get interesting.

• Conventional advertising in mass media may reach many people, but can you build a campaign that creates trust (brand) at reasonable cost -- especially if you haven't advertised much before?

• Word-of-mouth referrals of course are inexpensive and loaded with trust, but how do you leverage this asset? If you do nothing, often nothing happens.

• Great media publicity, in electronic and print media read and viewed by your potential clients -- especially in a community where you have great word-of-mouth reputation, offers truly high leverage opportunities, little cost, and great trust-building advantages. (That is where our publicity and media services come in handy.)

• Community service, through active, engaged participation in organizations and groups related to your clients, has less dramatic leverage opportunities, as many of your relationships are one-on-one and in small groups, but the intensity of the relationships and their quality (especially if you are connecting with community referral leaders), can be dramatic.

If you put everything together into an effective package, you can leverage all the resources to maximum effect: Consider the impact of taking the lead on a community activity, relevant to your business, worthy of great positive publicity.

Would your results be greater value for money than conventional advertising?

I think so, by far, but I also acknowledge this type of activity requires work, specialized skills and knowledge you are unlikely to have, and is rarely if ever conveniently packaged for you by friendly and co-operative sales representatives.

That of course brings you back to our own organization's philosophy. We'll do our best to help you with the bigger picture. But we can't do it for you. You need to put these pieces together in your own mind, understand your market, and then take the lead to make things work.

Branding and public bidding

You might be thinking: "This 'branding' stuff might be relevant if I am competing for work with residential clients or perhaps for non-public commercial work, but what does it have to do with conventional public sector advertised bidding opportunities?"

To some extent you are right. In the purest environment, where low price rules the space, it isn't about brand as much as it is your efficiencies in keeping costs so low that you can win the work, and still make a profit (hard to do.)

But things aren't always as they seem to be, and if you are one of dozens chasing public works, you should appreciate that in many cases the game is stacked against you from the start, and you can't even see it -- because your competitor has quietly won the branding war.

I've often cited an example of a Midwestern contractor who must obviously remain unidentified. His business consistently wins work at the local hospital, even though tendering rules there are always that the lowest bid must win the work. How does he do it? The contractor and hospital administration pre-arrange change order authorizations, so he can bid the work low and know that, with the change orders approved, he will still make a profit.

You may find the ethics of this story dubious; but there is nothing fishy about why this is happening. The hospital administration had been burned too many times by low bidders not completing work well, so they want to be sure that the contractor they really wish to win the work gets the opportunity.

If you are one of the many 'outsiders' thinking you can win by bidding low, do you stand a chance?

The gaming of "low bid wins" rules almost inevitably reflect two possibilities. The first is corruption -- someone is greasing some palms to restate the rules. The second is branding -- the successful contractor has built so much trust, and such positive relations and such a healthy brand, that the game is stacked from the start.

Assuming you don't want to get into bribery, if you aren't connected (with a great 'secret' brand with the public sector purchasing authority), you often can't get in, no matter how hard you try.

And where the competition is truly fair and open, and when the project size is small, the competition is likely to be so fierce that the low bidder will be working for minimum wage, if anything. In other words it is a victory that counts for little if you want to succeed in business.

In some cases, especially for design work in the public sector in the U.S., this favoritism is formalized legally through the Brooks Act provisions which mandate that experience and quality count more than price.

Are there any answers to this problem?

• First, you must be realistic. If you don't have a previously established relationship and some inside track knowledge of your likeliness of success, your chances of winning are remote. So focus your resources to where you have some relationships and a reasonable chance of success.

• Second, spend far more of your marketing time building these relationships than chasing bids once the opportunity is public. In other words, get to know the people who can authorize business with you if they are comfortable with your capacities. You may find value in joining and participating in associations relevant to your potential clients.

• Third, when you get your first job, live up to every possible standard of communication, quality, and service you can. Build your brand. Then the next time around things will be much easier.

• Finally, while proposal presentation is more the icing on the cake than the substance, consider carefully how you document and answer the RFP and tender calls. Of course, ensure you provide all information required to comply, and don't include any information not required which might cause problems. Then consider creative options including the effective use of photos, video clips (if the application is on-line), testimonials, references, and constructive suggestions to increase the project's success. If you believe you have a realistic chance, go all out and ensure your proposal is far better than the norm.

Building your brand

Mel Lester's posting on Building Your Brand almost exactly replicates my own thinking on this topic, expressed both in previous blog postings and my upcoming book. (Also, click on the image for a previous post citing Marty Neumeier on this vitally important topic.)

For most people in the construction industry, Branding is a concept that seems both distant and irrelevant. Alas, too many professional marketers focus on the superficial elements of branding, things like logos, graphics and advertising strategies.

As Mel rightly points out, the brand is largely built out of the client (and employee) experiences; these become the company story, image and perceptions.

Why is a healthy brand important? It comes down to the quality of clients you are able to attract and retain, and the amount of money you can charge them for your services. A great brand equals higher pricing power -- you can earn more for the "same" service.

Your construction marketing goal should be to escape the trap of competing blindly on price which is a fool's game, usually. But you need a great brand, first, to achieve this marketing success foundation.

Construction Marketing, branding and advertising: How do they relate?

Is having fun at events like the Greater Ottawa Home Builders' Awards Sales and Marketing Awards event part of branding. Sure, but marketers must not forget that their great logos and showpiece sales offices and advertising will ultimately provide less long-term value to their company's brand if the overall client experience is not in alignment with the image conveyed by the marketing initiatives.

A fascinating thread on remodelcrazy.com, Branding Your Business, has now reached its seventh page. You need to be registered with remodelcrazy to read this thread, but since registration is free, I urge you to do it.

The discussion touches around the core principals of marketing and what exactly "branding" means. This is a concept that is arcane and out of mind-reach to most people in the construction industry (and I'll admit, for several years, it was beyond my comprehension, even though our business provides a marketing service). But it is vitally important to understand if you are to succeed.

This post from Jesse Kirchoff of Handyman Solutions in Jefferson, MO, expresses the core concept of effective branding (in my opinion):

While I have been struggling to put my thoughts into written words these past couple of weeks - Chris Wright has wrapped it all up with a neat little bow in his last two posts - but especially in this one sentence "A brand is a collection of perceptions in the mind of the consumer." That nails it right there.

Everything you do or say, the quality of your marketing, the clothes you choose to wear, your hair cut, your attitude, the look on your face ........ EVERYTHING adds to the perception of your company - be it good, bad or indifferent people are judging and putting a "perceived" value on us from that first impression like it or not.

This is why I believe contractors who have relied" on word of mouth and referral business in good times have a great brand -- their challenge is they haven't learned how to manage and control it, so are at the whim of forces beyond their control. When the economy tanked, they suddenly found their business drying up, and (without experience in marketing or advertising) discovered they were floundering.

Advertising of course can be part of your brand -- in fact, it, done right, will enhance and build it. Most contractors however won't want to try to advertise purely to build their brand -- they want people to call and purchase their service, or at least inquire about it. Branding, itself, is a difficult concept to measure, even for the largest corporations, and the benefits are indirect (but truly important, as a great brand allows you to put a higher price -- and thus earn a higher margin -- for your service.)

However, unless you are operating a one-time-visit tourist trap (I think of the line-ups snaking for a tour of the Empire State Building in New York City as an example) -- all the advertising in the world won't help you if people find the experience distasteful, overpriced, and irritating. They won't return for more. (The Empire State Building brand is so strong that the tour operators can deliver crappy service and still stay in business, of course.)

Next post I'll report how some contractors have successfully developed advertising strategies to keep their business flowing, which are consistent and enhance their business brand.

The Marketing funnel

Conventional sales practice requires you to process many "leads" before you find the gem of real business.

Not-very-good salespeople (or not terribly effective businesses) then instruct their sales representatives to "make the numbers" by calling and calling, emailing and emailing, and knocking and knocking on doors. A few thrive within this cold approach to business development -- but most either become drones or burn out and move on to something better, quickly.

Undoubtedly, this approach to finding business actually is effective, to a point. Since it is so distasteful and frustrating to encounter rejection, few bother to go through all the steps necessary to succeed; and since a few people may actually wish your service, if you are lucky, a few of your spam emails or nuisance phone calls may actually respond (and, in the case of spam, because it is "cheap" to send it, you can theoretically just turn up the volume.

Of course, these practices are exactly why most people build up huge defensive walls when they encounter any selling initiative; especially the clients you most want to reach -- the ones with more money than time to waste fending off unwanted solicitations.

You may find the "numbers" this way, but can you find the trust to win the commitment and business you need; and what about the negative fall-out from all the people you bother, who are not at all interested in your service (and won't have a favorable first, second or third impression of your business.)

Effective marketers seek to turn these problems on their heads; winning trust in your business to the point that (a) people will call you to initiate the relationship or (b) you are so well respected that when you call (for good reason), your call is accepted with anticipation.

Here, the numbers game is modified, because you don't want to waste marketing dollars and energies on people and organization with no capacity to pay for your architectural, engineering or construction services. You need to focus your marketing energies and resources carefully to build the trust and relationships of the people you really wish to meet. In the next few blogs I'll look at some ways you can achieve that focus.

More on Branding, eh

I borrowed graphic from Marty Neumeier from Patrick Colling's Brand Architect blog. You can view Neumeier's PDF ebook which includes this formula here.

Marty Neumeier has a simple equation for successful branding

T = r + d

Trust equals reliability plus delight

This formula is the essence of successful brand building.

Great branding is not about logos, advertising campaigns, your website, or anything like that, except to a truly tiny degree. (These things are important when you have a really big business, but the time and energy you spend on the "reliability" and "delight" with your current and previous clients should be an order of magnitude greater than the time you spend on your typical "branding" efforts.)

So, to build a great brand:

• Return your calls promptly;
• Deliver "wow" service to your clients;
• Keep your job sites clean every day (and when you are done for the day, especially);
• Contribute to your community in meaningful ways (the community of your clients, of course);
• Respect privacy (if you really wish to canvass, telemarket, or use bulk email, consider the risks before moving forward);
• Treat your employees with respect, as you expect them to treat their clients and peers with respect;
• Send thank you notes;
• Go the extra mile to be thoughtful;
• Have fun with your work (if you do, your clients will sense your passion).

Then you can get your logo "just right", have an effective website, and design advertising campaigns that attract results.

Branding, eh

Most people in this industry associate "branding" with big name companies like Coca-Cola, Google and Apple. The concept is confusing and sometimes debated. Why worry about branding when you are just trying to get by?

In a posting on the Design and Construction Network's LinkedIn discussion board, University of Malaysia associate professor Chris Preece directs readers to his blog, where he writes:

David Meerman Scott asserts that "branding is only for cattle"! His argument is that marketers who "obsess about brand usually focus on aesthetics over buyers. They are more interested in the colour scheme of the Web site than in meeting their buyers' needs with a content marketing strategy. They care about logos not buyers."

Whilst I feel David is harsh in saying that "marketers are a bunch of flaky wimps", he does make very sensible points for those engaged in marketing and branding in the business-to-business market space. He maintains that "while the rest of the organization is focused on metrics and revenue and ROI and reaching buyers, these ineffective marketers are worried about how the T-shirts look."

So is it time that we start to rebrand branding? There is much misunderstanding about what branding is, or should be, even among marketers let alone hard-nosed CEO's and engineers.

This provoked some interesting responses including a link by Erin Orr. Marketing Director at FOX Architects LLC to an effective downloadable pdf from Marty Neumeier.

Branding, Marketing, Advertising, and Salesmanship

At times the debate on this contractortalk.com thread, Branding, Marketing, Advertising and Salemanship, has grown heated, and I've contributed to the heat. The issue: Is branding relevant for most contractors.

Readers here know that I consider that most contractors with a solid reputation and much repeat and referral business to have an excellent brand, whether or not they are great at marketing. Mike Finley, a successful Colorado contractor, disagrees that this client-centric perception of branding is correct. He says branding is far more related to whether people with no connection with your business "know" it and have a perception and desire to do business with you, regardless of your actual client relationships or product/service quality. He cites businesses with dubious service and client value with big brand names, who do well regardless of how "good" they are in the client experience process, and suggests that branding is out of reach for most contractors.

Of course, there is some truth in both arguments. Polaroid's brand is worth at least $58 million even though the company is bankrupt and its products have been replaced by the digital camera -- at least that's the value bidders are placing on the company name and assets in a current court-supervised bankruptcy auction. And in a large city, unless you define your community by a specific niche or neighbourhood (recommended!) it will be virtually impossible for you to obtain enough mental impressions on potential clients who don't know you at all to lock you in their minds.

The other side of the argument, the one that I've advocated, is that your brand is indeed healthy if current and previous clients are so impressed with your service that in good times you have enough business with repeat and referral clients that you don't need to do any marketing at all.

I advocate that successful marketing need not be expensive or complicated, but you are starting from a good base and now can leverage your existing healthy brand through creative outreach and client service programs, and if you wish to stretch things further (also recommended!) that you plan effective media and advertising campaigns built on the demographics of your best clients.

Regardless of whose side of the debate you are on, you will find the this thread's discussions rewarding and probably helpful to your business development process.

Fear and the brand

The Tower of Terror is probably the most popular ride at Disney's California Adventure. It is a wild "elevator" ride in the Hollywood Hotel -- at one point, the doors open and park visitors can hear the screaming riders from high up.

If you play the video from the previous California Screamin' posting, you'll see images of one rather wild roller-coaster ride. The idea of this type of entertainment is to give you a thrill: Doing something scary that you know is safe -- even for your kids. And from a marketing perspective, that is the magic of branding, or more accurately, the branding experience. It also is a key element of success in marketing construction services.

To explain: On Friday, as I considered whether to risk riding what seemed to be the scariest rides imaginable (like a really fast roller-coaster with a 180 degree loop), I thought: "Has there ever been a fatality at a Disney site when a ride failed?" My reaction as I boarded the ride -- "This stuff is so safe that there is no real risk."

It turns out there have actually been some accidents and crashes (mostly fortunately minor in nature) over the years at Disney park attractions. You can find out additional details at Rideaccidents.com. But I didn't know this when I was there; I sense most Disney patrons have similar perceptions. In any case, most people consider the rides safe enough for the risk (certainly thousands of people fly or drive to Disney sites each year, and I expect there are enough plane and car accidents along the way to top the Disney accident frequency.)

Consider other elements of the Disney experience: You don't find the low-lifes that hang around many amusement parks and carnivals; all employees of course are briefed and trained (and I'm sure screened) for client suitability; the fun is tightly scripted and controlled, and once you've had the experience, you know what to expect.

There are changes every year, but the basic rules remain the same. You pay a flat rate to enter the park for the day, ride as much as you like (but usually get only one shot at the really good rides unless you are willing to endure a truly major wait), and you can spend as much as you like on extras including food and souvenirs (but Disney does not impose the irritating restrictions on your bringing your own food on site to save costs.) In other words, the experience, while not inexpensive, leaves you feeling you've been treated fairly.

Of course, Disney has turned it experience into corporate programs for training and motivation at the Disney Institute. I'm not sure if these services are worthwhile to most construction businesses, but you can see here how they are able to leverage their brand in new and interesting ways.

Fair enough. But what do amusement parks have to do with construction businesses? The answer is in your ability to overcome the fears of your current and potential clients of the bad experiences they either have heard or experienced in the past. If you are an architect or engineer, are you dealing with people who have had bad luck with sloppy design, missed schedule, or less-than-perfect trade relationships? If you are a general or sub-contractor, have you met people who have been burned by incomplete jobs, messy sites, and offensive employees? And if you are a residential contractor, do your clients have experience (or fear) of work not completed right, on schedule, and with massive inconvenience to their lives?

If your work shares any of these less-than-wonderful qualities, your brand is mud. You can spend a fortune on advertising and marketing, and end up with very little: Sure, a few new clients (or suckers) might arrive through expensive promotion, but your marketing cost will magnify because you will lose many potential clients as bad word-of-mouth spreads faster than your marketing can overcome.

Conversely, if your work is good enough to attract unsolicited repeat and referral business (to the point, in good times, you didn't need to advertise because you relied on repeat and referral business), you have an excellent brand. You now need to leverage and develop it through marketing, both to current and potential clients and new customers.

Here, advertising really will work for you and if you are truly successful, you will budget in the range of five per cent and 10 per cent of your sales volume for advertising (and additional funds, if you wish to use a direct sales force). Simply ensure your pricing is able to sustain this marketing cost -- but don't worry, businesses with solid brands (that is great reputations) can charge more for the same services as their competitors.

Consider Disney. They don't offer many coupons, discounts, special savings or the like -- especially for short-term visitors. Disney has built a brand based on safe, fun, family entertainment. The story may be partly mythology -- as I strapped myself into the roller coaster seat, I (falsely) thought no one had actually been injured on a Disney roller coaster. But I had been sold by the brand, and felt secure that when the ride ended I would be safe, and would want more of the same.

Your objective in developing your construction industry marketing is to achieve the same goal: A brand that attracts repeat and referral business, because clients perceive your service is really safe, fair, and enjoyable.

The sub trade marketing challenge

So you are marketing your subtrade services and want to find new business.

How do you get through the gatekeepers, and earn the respect for your proposition?

You may think your wisest approach is waiting for the opportunity to bid the job and you simply need to get on a prequalification list, or (worse) wait for the job to be tendered publicly.

Go ahead. Spin your wheels. Lose your money.

You haven't passed stage one of elementary marketing and sales. And you are like a large percentage of the construction industry hoping for business and wondering why you are struggling.

You need to think differently. The key is to recognize the combined power of effective relationship-building and effective marketing. When your brand (roughly equivalent to reputation) is so strong that clients think of using you and no one else, and take it for granted that your sole source quote will be fair and doesn't need to be cross-checked against your competition routinely, then you have achieved success. When you are able to chose which jobs you bid, and you know you will be profitable going in, you have hit the business jackpot.

Can this be done?

Yes, but here is an important observation after seeing some successful sub-trades at work. Two whom I have met personally, Mike Feazel in at Feazel Roofing in Columbus, Ohio and Leonard Meglolia at Bestline Plumbing in Los Angeles, say they stay away from most commercial and virtually all new construction work because they cannot see any margin or opportunity for profit in the bidding-war environment out there. (They will do some commercial projects, presumably where they can be sole-sourced.)

Surely, however, subtrades and suppliers find a way to make some money dealing with builders, developers, and owners on commercial projects. They succeed, I think because their business is at the scale where they can achieve incredible operating efficiencies and their relationships with their clients are strong enough that they can squeeze just a little more margin through scope of work or other arrangements than the neophytes trying to win bids through public competitions.

If you aren't at that level yet, consider smaller scale residential and limited-scope commercial projects where you can provide direct services to your clients; and develop your own advertising and marketing strategy to achieve this business.

Or if you wish to work within the conventional space, remember that a little energy spent learning how to market effectively will pay you really big dividends, especially if you an escape the rat race of "low bid wins the job" (and loses a fortune in the process).

Construction Marketing: Leads and sales

Why bother with learning about how to be an effective and successful construction industry marketer? The answer -- and measure of your marketing success -- is the quality of sales leads you are able to generate.

Quality leads convert to high-value business with little selling or pricing effort. In other words, if your marketing is successful, people will pay your price, without resistance, and will sign on the dotted line exactly when you wish them to make their commitments.

In many respects, lead quality is far more important than quantity. If you want lots of leads, I can give you the phone book, or you can call one of the commercial services who will send you dozens of somewhat qualified leads, of which a few will convert to real business. Maybe you have an efficient and resourceful (and maybe a high pressure) sales force, who can drum up business by cold calling or door-to-door canvassing. These methods work, but they are stressful or most of us, and unpleasant for virtually everyone.

Conversely, word-of-mouth referrals and repeat clients because of their satisfaction with your service are golden. You don't strain or struggle to serve them, you enjoy working with these prime clients, and some of them are incredibly helpful for your business, perhaps referring several other high quality clients.

These numbers are validated by our ongoing poll, where hundreds of people have now voted, and 73 per cent say they find most of their business through repeat and referral business.

With this information in hand, you now have a clue to how you should focus your marketing efforts.

1. Develop your service so well that clients want to do business with you by treating them right. Remember, two major client complaints are failure to return calls in a timely manner, and failure to clean up your job site. These are easy fixes.
2. Then, focus on communicating, responding, connecting, and building out relationships with your existing clients to induce and encourage more repeat and referral business.

Your next challenge is to figure out how to leverage beyond these two basic guidelines. Advertising, leads services, and cold calling and canvassing all have their places: They can be expensive, short term, but if you are able to attract the right type of clients who will fit into the referral/repeat matrix you will recoup your investment. But you can do these things intelligently.

I'm a firm believer in effective media publicity (we provide that to our clients in Ontario, North Carolina and the greater Washington DC area), coupled with resourceful association networking, both in the business-t0-business and community environments. Both forms of marketing can be inexpensive or virtually free in cash cost, but require commitments of time, energy and talent.

You don't need to spend a lot of money to be a truly effective construction industry market leader. Simply focus on your core -- your existing and previous clients -- and build out the relationships of trust and integrity to the wider community through their network.

(And what should you do when you are just starting out? I'll discuss your options in my next posting.)

Relationships, resources and marketing: How you can connect with associations and groups

At the reception of the Ottawa Construction Association's Annual General Meeting in February. It makes sense to belong to your relevant construction/trade association, but if you really want to gain marketing power, consider joining relevant client-focused associations. How can you determine which associations to join? Invite your best clients for lunch and find out which groups they support.

This month's Publisher's Viewpoint in Ontario Construction Report

By Mark Buckshon
President, Construction News and Report Group of Companies

When times are good – either for the overall economy, your business, or both – you don't have to work too hard for your business. Clients are calling you, there is more than enough business for everyone in the marketplace, and you can focus on your trade or profession and (maybe) solve labour shortage issues.

When times are tough, even the simplest processes seem to be much more difficult. You are running low on work, and new business isn't flowing as you wish. So you decide you need to reach out and promote your business, to advertise or review leads service reports for whatever opportunities arise. You spend time, money and energy – but find you have even more competition, and even less chance of success.

We certainly cannot change the external economic environment (if we had that kind of power, we wouldn't be writing or reading articles like this), but we can take some measures to create an effective “good times” mentality in your marketing, even though things are less-than-perfect out there.

To achieve great results, you need to appreciate that it isn't what you take, but what you give, that counts; and your objective should be to forge and develop relationships so that your personal and business reputation are so strong that potential clients call you without worrying about the price or competition. The marketing word for this is “branding”.

How do you achieve these results? I've found by far the most effective route is to connect with associations or groups representing the interests of your current and potential clients, and give your heart, soul and spirit to the groups. (You can give your money as well, but you don't need to spend much if any cash here to succeed.)

After a while, your generosity will be recognized by the groups' leaders – and their influence is strong among the members-at-large. With the buy-in at this level, you will find you tipped off about projects. Where bidding opportunities must be competitive, you find you end up with the subjective edge in the selection process.

Remember, from a marketing perspective, your contributions should be to the groups you wish to market to, more than your own trade group or organization (though of course participation and support of your own industry or trade can be healthy and rewarding for you and your business.) If you are wondering which groups to join, take your best clients for coffee or lunch, and ask them which groups they respect within their industry. They may provide introductions to you to help speed up your acceptance among their peers.

Do you have thoughts or questions about this posting? Please feel free to post a comment or email me at buckshon@cnrgp.com.

Open book management and bad news

Readers of this blog know I was blindsided by a really bad financial report earlier this week. Thinking we were on track to profitability, I suddenly discovered that the numbers added to red line danger losses.

Obviously, failing to see the circumstances in a proper manner is a failure of leadership and management, for which I and no one else should take responsibility. But despite the bad news, some things still went very well, the most important being that the business could maintain the trust, respect and community of its employees.

The reason: No secrets. Everyone in the organization has received the same financial reports as I receive each week and clearly we don't massage the numbers to make them look right. So when I told everyone the bad news, everyone here could see things in black and white -- and we could set out to research and find solutions.

We are now reviewing our costs, revenue streams, and objectives, and I am starting to get a clearer picture of the problem with the possible relief that this is something of an annual glitch in part caused by the holiday season's disruption to the sales and revenue cycle. Data is reported weekly but our costs and production are monthly. The Christmas season requires a two-week shutdown, but no reduction in overhead or salary costs.

We handle things pushing back our February deadlines and holding firm on our January issues production schedule, essentially creating a six week gap (we make up the time with the two or three months a year where we have an extra 'week' in the month.) If our production cycle had been normal and not delayed by two weeks of Christmas season quiet time, the calculations match much more closely my original informal working projections. (Employees are required to take one week's mandatory vacation this time of year for this reason.)

This does not change the fact that the hard numbers are unacceptable, nor that I should have been aware of these issues well in advance of Monday. However they partly explain why over the years February/March have always challenged my projections and business understandings; and why if we seemed to be on a steady-state through December and January, we suddenly seemed to hit a wall in February.

Lesson learned: Build up better reserves in the fall for this time of year. Our problems this time around are probably greater because of expansions to the payroll and the fact that December/January results were exceptionally poor, draining cash at a time when we need it most. I now believe, with a tighter control on costs and review of our working objectives and practices, we should be fine in the next couple of months.

So, you may say, what does this stuff have to do with construction marketing? The answer is "everything". Your business culture, your internal structures, and how your employees and management relate to each other define how you connect to your current and potential clients.

And open book management is probably one of the best ways you and your employees can share and work together to maintain morale and respect when things aren't so good. If you have to cut -- if you have to make hard decisions -- everyone knows where things are and can help to find solutions.

Open book management, after all, is all about earning and maintaining the trust of your employees. Since successful branding and marketing relates to how your clients trust and respect your authenticity, you can see how the same principals apply in your external marketing.
This does not mean you have to bare your soul for every detail and broadcast bad news carelessly. In his presentation to the SMPS lunch in Washington, for example, Ford Harding described how a project manager without much sales training and experience attended a meeting with a potential client.

The client had been thinking of engaging the company's services, perceiving it had experience in the geographical area where the employee worked. So, when the potential client asked about the employee's experience there, the employee gave a brutally frank and negative assessment of the business and his experience. The client headed for the hills, naturally. Probably everyone would have been better served with a little finesse -- perhaps a question to see what the client really wanted to know; for if the employee had that information, he might have framed his response in a much more positive (but still truthful) manner.

The costs of failing to practice open book management can be seen in industries where businesses have failed to win and maintain employee and client trust. Consider the U.S. automotive industry, for example, where sloppy industrial and management practices resulted in the (just and necessary) birth of strong trade unions with an "us or them" mentality to management. Today, the industry is in crisis. The financial sector is even more disturbing. Here, the books that may have been open also appear to have been falsified through fraudulent self-serving manipulation. Alas, government oversight also failed.

The power and success of open book management can be seen in this video. Yes, the 1-800-GOT-JUNK story has elements of PR and rah-rah manipulation, but it also shows how allowing the employees to share in the business builds community and mutual respect and support (and helps your brand!)

We're stretching, we're growing, and, with some mistakes and glitches along the way, we are learning how to build a truly great business. You can do the same, too.

Getting your construction marketing right

Mel Lester in his blog posting "The Extreme Marketing Makeover" makes these points:

1. Stop selling and serve the client instead.
2. Stop the self-promotion and provide valuable content instead.
3. Build your brand around distinctive customer experiences.
4. Encourage all employees to nurture their network.
5. Manage business development like a project.
6. Involve staff at all levels of the organization.
7. Create a topical resource library.

8. Double your win rate by doing half as many proposals.
9. Make your proposals more client focused and skimmable.

10. Go beyond meeting just technical needs.

"Radical ideas?" Lester writes. "No, mostly common sense. But still rare among A/E firms. So if the recession has you ready for a change, consider these suggestions for transforming the way you develop new business.

Buying and selling

Consider two superficially equal situations. In one case someone in authority calls you and says: "I would like you to do some work for us." You get the job, do your work to the highest standards, and receive repeat business, year after year. Your client is buying.

In the second situation, you approach someone and say: "I can do this job for you." You are selling. You conduct yourself with the highest level of integrity, deliver exactly what you promise (and even more) and certainly are providing essentially the same service as in the first, buying, example.

Is your account secure? No, because no matter how hard you try to deliver the service in the right way, the relationship is defined by the fact that you sold it, and not that someone decided to call you in the first place. Sometimes obvious -- often unseen -- forces are tearing away at the relationship; perhaps 'buyers remorse' but perhaps, more significantly, your clients don't see the same level of value when they sense they've been sold something, rather than when they decide to call you and buy.

The question then is, should you give up on selling? Well, if your phone isn't ringing, if your current and previous clients aren't buying anything you have to sell, then you have a choice: Close up your business voluntarily, or go bankrupt.

Then, can you get potential clients to want to to buy? Obviously, you need to do good work, but can you (without selling too hard) encourage people to call you, to refer business, to try new things when you've done business in the past? The answer, thankfully, is 'yes', and that is where really good marketing enters the picture.

If you build your reputation -- your brand -- to a high enough level, you will receive the 'buy' calls -- you can then deliver the results your clients are seeking, and you will win more referral and relationship-based business.

The big challenge here is that most construction-related businesses, in hard times like we are enduring, have trouble finding enough people to buy -- and so are tempted to go out and sell. Yo may rush to bid jobs outside your scope of knowledge and relationships, you may pester people hoping for a nibble, you may chase at straws, or (worse) you may start knocking on doors, hoping someone -- anyone -- will answer and say 'yes.'.

Or people from marketing companies might call you and try to sell you stuff. You say, no, but then, some break through the resistance and you buy, but you ultimately are often unhappy -- the same way people seem to be unhappy when you go out and sell your services.

Solution: Think marketing -- smart marketing. Think creative, innovative approaches to create enough value and good-will that the right people will sense you know your stuff, that you will deliver on your promises, and you will honour your commitments. Then you don't have to sell anything to encourage people to buy.

Price, marketing, and sales (for those of us who hate selling)

Michael Stone in his most recent blog entry reiterates that the quickest way to business failure is to try to match the pricing of low ballers.

Low ballers have been in business since at least 1907 that I know of. My Grandfather and I used to talk about his early years as a carpenter. I remember him telling me about the owner of a company he worked for during that time and how the guy was always cussing the “Low Ballers”. So, this is something we just have to live with in this business. Remember, you can’t control them so don’t worry about them. It is a waste of your time and energy.

Stone rightfully advocates that you should market only to people who will pay your price, and suggests you learn how to sell more effectively. He also promotes his useful book, Profitable Sales, a Contractors' Guide.

I agree with Stone, mostly. Certainly you need to have some understanding of basic sales principals and approaches, and we are 100 per cent in agreement that you can't win the battle by lowering your price. Stone is also correct in that you must market to the right people and avoid the low ballers with some qualifying questions and controls.

However, I advocate that effective marketing using your natural talents, skills, and abilities can largely override your need to be great at selling, and that great selling, in itself, without underlying product and marketing skills, is also a road to disaster.

Here, personal experience in the school of hard business knocks has taught me the lessons about the limits of great selling ability. Great selling skills, without underlying marketing and product quality sensitivity, will take you places you probably don't want to go.

You know the types of business I am describing here -- the ones where door-to-door canvassers push junky or sometimes fraudulent services on unsuspecting clients; where boiler room phone teams exploit weaknesses, and where high pressure 'closers' don't let go until you are roped in to buy stuff. Some so-called sales gurus still advocate these hard-rock techniques, advocating a business style reflected by the 90s movie, Glengarry Glen Ross.

Most likely, if you successfully operated a contracting business during good times and are struggling now, you fit into an entirely different category. You are great at your craft or trade, you provide impeccable service, and clients really appreciate your work -- so much that, when things were good, you had a backlog of work, and absolutely satisfied clients.

Now things are hard, and clients are scarce, and the low-ballers are out there, and the leads services are providing crap, and you are struggling. What should you do?

You need to appreciate that your business brand is your greatest asset -- and your brand is your reputation and the trust people have in you. Your strategy should be to develop, maintain, and build on that brand through your marketing methodologies, to the point that clients continue to return to you for more work, and refer others.

The challenge is to avoid relying on referrals and repeat business -- but to systematize the process so you can generate enough repeat and referral leads through your marketing initiatives. You can achieve these results through organized marketing strategies far more effectively and sustainably, in my opinion, than with strong sales abilities (which, if you are like me, you may not have, or wish to use.)

Trust, relationships, brand and integrity

You most likely appreciate that words have different meanings, depending on context. As well, the meanings can be twisted through your own interpretation and memories -- as well as your clients. (Images and videos are even more powerful emotionally and, likewise, can be doctored both deliberately by experience and perception -- consider how Middle East wars are fought these days as much on the television screen as on the battlefield.)

How, then, do you achieve marketing truth and genuine long-range success? I will go out on a limb and suggest some basic principals, enhanced by recent internal business developments and external memories.

People rarely change in deep, fundamental ways
This means your first impressions are often right, unless the other people you are working with have the ability to put on a good front. Not surprisingly great salespeople (and con artists) are really good at modifying their front to turn you on and to get you to buy stuff (or services) from them. They know how to win your trust. If they are ethical, they will earn it and you will continue with a mutually profitable relationship.

Once burned, twice shy, three times a victim
Most people and businesses deserve a second chance, but you are pushing things if you think this should go for a third round. Of course, in the second chance, you should use common sense -- trust requires you to retain an open mind, be honorable and open in your dealings, and so on, but you will obviously want to watch for warning signs and of course be wary of long-term obligations.

You will often hear only part of the story, and in really major cases, will never find the complete answer
Remember the Post 9-11 anthrax scare -- one which initially most of us thought was part of a planned and diabolical Al Quaeda plot? Turns out that the evidence points to the whole thing being an 'inside job' from a U.S. research scientist seeking an escape from obscurity. Unfortunately the authorities initially got the wrong person, and dragged him through the mud. Then they found a second suspect -- who committed suicide when investigators purportedly were about to lay charges. But the evidence against the second person is not entirely compelling -- there are real holes in the story, and the investigation and public glare could cause unintended consequences. The same sort of thing happens in business and marketing. We use our best understanding of what happens to learn and diagnose issues, but often we cannot completely solve the puzzle. All we can do is get a little closer to the truth.

You'll find your answers in many places, when the time is right and if you are ready to see what is around you
In a recent situation, I triangulated my own experiences, with feedback from colleagues and co-workers, in allowing someone a second chance at a relationship. (This included accepting full responsibilities for my failings in the first edition of the relationship.) Amazingly, as things progressed, people told me things that they had kept to themselves, warning me of risks and unexpected consequences. You should obviously be wary of multiple negative warning signs: If two or three people from different backgrounds and circumstances warn you away, you know there are issues -- and if people you highly trust (based on their own experiences) tell you to watch out, then of course you are likely to land in trouble.

Trust means not freezing up, nor does it mean letting yourself become a sucker
Here you have the big contradiction but truth in marketing and business. With all the sharks out there, you will inevitably be burned once or twice, or more, but if you don't take risks, if you fail to let go and allow your trust to express itself freely, you will never get very far in business or life. The answer of course is to combine your own strong personal focus with a diversity of relationships and revenue and investment sources. Then you can tolerate the occasional mistake, and usually turn it into a long-range opportunity. (A really good con artist, like Bernie Madoff, might get through all your screens described above, but the only people put into destitution were the dumb ones who put everything they owned in his hands -- and recommended their friends to do the same thing.)

Your 12 New Years visions (not resolutions)

Last week, I observed that New Years resolutions are, well, a waste. We have an annual planning process and system, of course, but this is done in October. So the ideas here are really not new for the New Year; but they are timeless in their application. You can mix the month and year, and they'll still work fine.

January
If you value and respect your employees, suppliers and clients, you will succeed even in challenging conditions. This is not an argument in favor of becoming a push-over or for careless financial management; but you won't get far without respecting the people around you.

February
Encourage individuality, freedom, and work-life balance, but maintain your discipline and accountability (and expect it from everyone around you.) Regular, systematized meetings are essential. You'll soon enough catch game playing, miscues and misrepresentations.

March
Your brand is built on the overall experience that previous, current and potential clients have with your business. Your brand is trust and allows you pricing power. If you create a wonderful client experience, you'll succeed -- and that experience requires the support and participation of all of your employees and key contractors.

April
Your fastest way to find new business (if your brand is healthy) is to systematically connect and remind your previous clients about why they enjoy working with you. Follow up service/inspection and free maintenance calls are probably your least expensive and most effective marketing strategies.

May
Your business is your personality, and the personality of your employees. Do you speak like a robot with business cliches to your family and your friends; do you think your clients and employees want to hear the stuff out of the boring book, either? Example: "We deliver great client service."
Sure. Yawn. Can you tell a real story of some exceptional initiative where you really went beyond the norm. Better, will your client tell the story for you (the testimonial?)

June
Your business should be fun and you should as much as possible do what you enjoy and for which you have a passion. However, beware of salespeople playing to your emotions, your visions, your fears and your passions. Spend your time doing what you love; spend your money on the stuff you really need to do but don't like so much (and if possible select people to give the money who have the passion and competence for what they are doing.)

July
Connect and participate in relevant associations. In business-to-business (and consumer) markets, your best associations are the ones where your clients and potential clients are members. Put your best and most active contributions to these associations (time more than money) and you will reap the rewards -- in time.

August
If you are looking for "fast action" your best strategy is to revisit your current and previous clients for repeat/referral and additional business. A second-best solution is in-your-face canvassing and phoning (yuk). The latter approaches will work in certain circumstances but you either need a real thick skin or really good reason to pursue them.

September
You can't "rely" on referrals and repeat business to succeed. You need to plan and build the cultivation of these primary business development sources into your marketing processes. The good news is, if you have a solid base of previous clients (and in good times can get away with relying on repeat and referral business), your brand is healthy, so you simply need to cultivate and develop your marketing strategy to your clients. You won't need to reduce your prices, and you won't waste your time flailing about for business.

October
Use RFPs and leads services creatively. Public RFP and fee-based leads services can help you find business, but usually not directly. Sure, you can chase the public bids, and grind your pricing to the floor. However, in many cases, the opportunities are already wired. (You know you are on track if you find out stuff well before the information becomes available publicly through the leads services or RFPs). So where do the services and public opportunities help? They provide clues about what may be down the road -- and who may have future work -- and allow you to plan a forward thinking marketing strategy. See September.

November
Share. Be generous (more with your time and ideas than your cash, which you should preserve!) Remember networking success is not about what you take but what you give. You need to suspend your short term needs for long term gains when you are networking; by focusing on the needs of the people around you rather than your own interests, you will find results far beyond the short-term costs.

December
Read, learn, ask for help when you need it. You can email your questions to buckshon@cnrgp.com or use the forms on this blog to request the free bi-weekly Construction Marketing Ideas newsletter.