11 Marketing Basics That Most Contractors Ignore: Part 1
1. Don't confuse marketing with advertising or sellingMost construction companies don't do any real marketing. Many don't even know what it is. This is because most contractors traditionally have generated work through competitive bidding or Yellow Pages advertising. Once the bid is submitted or YP ad printed, not much more needs to be done except sit back and wait for business to come to you. This is virtually the opposite of marketing.
Marketing is everything you do to get the end user to buy your products and services. This includes advertising, selling and even the name you choose for your business. But it goes beyond any of these individual components. Marketing is a way of doing business.
The classic business definition of marketing is "identifying and fulfilling customer needs." Interesting way to look at it, isn't it? There's no mention of your company. Marketing is all about the customer. My personal definition of marketing is "giving people a reason to do business with you." Out of all the companies that do the same type of work you do, why should a client call on yours? Answer that, and you have established a foundation for marketing your company.
2. Your goal is not to generate workIt's to make money. Contractors who keep busy tend to brush off the idea of marketing. Why bother trying to attract new business when you have more work than you can handle? Yet, is it all profitable work? Or do you find yourself taking on a bunch of jobs at cost or a little above just to keep busy? If so, then you need to market your firm to attract the kind of business that won't make you feel like you're on the razor's edge with every job.
This might mean doing less work, but being able to charge more because you're working for better people or doing the type of projects in which you excel. You want to pursue those jobs to the utmost and leave behind those aggravating projects you end up regretting you'd bid on. More money, fewer jobs. Think about it. Wouldn't that be a little slice of paradise!
3. Hire a marketing professionalThis may be impractical for a small shop with just a handful of employees. But as you grow big, this could be the step that takes you beyond a seat-of-the-pants business and into the realm of true professionalism. If you as the owner or manager of a contracting firm enjoy marketing and think you're good at it, then take charge yourself. But realize that to make it work effectively, you pretty much have given up other managerial responsibilities. Done right, marketing is a full-time job. It won't pay off if you dabble in it. Another choice is to hire an experienced marketing pro. He or she will probably cost as much as a good foreman or project manager, maybe even more. That's a big chunk of change to put up for someone whose duties might seem mysterious, yet good marketers pay for themselves many times over.
What should be in a marketing pro's job description? Guidelines are fluid, but these duties would do for a start:
A. Develop a marketing plan and budget. Marketing is not a short-term fix for an ailing business. It works over the long term and in ways that may be subtle. You need faith that it will pay off over time. To do this, a marketing manager ought to put together an organized and consistent way of contacting customers and prospects, and selling them on using your company. A marketing plan needs a sufficient commitment of dollars to make it work, although beware of any marketing professional who thinks throwing money around is the way to business success. Find one who has read Jay Conrad Levinson's "Guerrilla Marketing" books and abides by their principle of getting the biggest bang from the smallest bucks.
Consider funding your marketing program as a percentage of sales. A good rule of thumb would be to devote approximately 10 percent of your annual revenues to generating more business, i.e., a marketing program. This would include the marketing professional's salary, as well as advertising expenditures and everything else that falls under the heading of marketing. Establish concrete goals in dollars or percentage revenue increases over a year's time as a way to measure your marketer's performance. Have a bonus plan for exceeding those goals-along with a termination plan if he or she falls way short. Be sensible, though. Your marketing person could do everything right and the company could still perform poorly for reasons entirely beyond the marketer's control. For instance, the marketing pro can be held responsible for generating more business, but can hardly be blamed if your company operates in the red due to poor field operations.
B. Oversee all company advertising, publicity and selling activities. Once you give the person a budget to work with, let your marketing pro decide how to spend the money. If your in-house marketing specialist creates and places your advertising, you will qualify for the 15-percent agency discount that is the traditional way of compensating ad agencies for their work. This will help subsidize the cost of hiring that person.
C. Produce sales leads and assist and/or train other staff to follow through on them. A sizable company should think about giving its marketing specialist an administrative assistant to set up appointments, follow up with contacts and maintain databases.
4. It's not about quality, schedule and priceIt's about being unique and adaptable. Everyone claims to do quality work, on time and at a competitive price. Your clients have a right to assume all that. What separates you from the pack is all else you can do beyond those basic requirements. Remember, marketing is about identifying and fulfilling customers' needs. It's not what you do well that's the key. It's whether what you do well is what they need. Another way to put this is that it's all about selling benefits, not features. Features are the things your company can do. Benefits are what that means to the customer. All marketing is about WIIFM-what's in it for me?
5. It's not about customers and competitors, but individuals and relationshipsThe contracting business is all about "relationship marketing." Trust is what people buy from a contractor more than anything else. Why do so many contracting businesses fail to outlast the owner? It's because the relationships built up over many years are not automatically transferable to the successors. Many contractors have access to season tickets to local sporting and entertainment events. Often they give these away to customers. This is a nice thing to do for customers, but it is not ideal marketing. Your best marketing tactic is to insist that someone from your company accompany the recipient to these events. Giving tickets away is a nice gesture, but sharing the experience is the way to build relationships.
We'll continue next month with the remaining six marketing basics that most contractors ignore.