Marketing Basics That Most Contractors Ignore

1. Don't confuse marketing with advertising or selling.

Marketing has been a neglected business discipline in the PHC industry. This is because many companies traditionally have generated work through plan-and-spec competitive bidding on the construction end or Yellow Pages advertising in the service sector. 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, packaging (where applicable) 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. Hire a marketing professional.

This may be impractical for a small shop with just a handful of employees. But as you grow and look beyond Yellow Pages or competitive bidding to generate work, 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 PHC 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 give up your 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. S/he probably will cost you as much as you are paying your best journeymen or service technicians, maybe even more. That's a big chunk of change to put up for someone whose duties might seem mysterious, but that's because good marketers pay for themselves many times over.

What should be in a marketing pro's job description? Guidelines are fluid, of course, 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 the more you spend the better off you are. Throwing money around wildly does not guarantee increased business.

Think of 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 s/he 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. However, any marketing pro worthy of the title ought to be able to diagnose why your company is lagging.

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. Sizable companies should think about giving their marketing specialist an administrative assistant to set up appointments, follow up with contacts and maintain databases.

3. It's not about quality, schedule and price. It's about being unique and adaptable.

Your clients have a right to assume that you will do quality work, keep to the project schedule and adhere to a competitive price. That's a given, and every one of your competitors make the same claim. It's what else you can do for your clients that separates you from the pack.

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 and will appreciate.

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?

4. It's not about customers and competitors, but individuals and relationships.

The 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? Why will consolidators take a pass on a good company unless they can get the owner or key managers to stay aboard? 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.

5. What is your USP?

What makes you different than the rest of your competitors? What is your "Unique Selling Proposition"?

Too many contractors answer that question along the lines of "we do quality work at a fair price." That's a clich*, not a USP. A USP needs to be something specific, documented and not claimed by every other firm around. Here are some examples of genuine USPs:

A. Lowest price. This certainly qualifies as a unique selling proposition. You may not be able to make any money, but the lowest-priced firms always have plenty of work.

B. Worked successfully with the client before. Your history with a client is something nobody else can claim, or take away from you. It's probably the most powerful USP of all.

C. Testimonials/referrals from satisfied clients. The next best thing to a work history with a client is when a third party recommends you.

D. Longevity. A track record that goes back a long way adds to any firm's credibility.

E. Favorable publicity. An article about your firm in the local press or industry trade press is a mark of distinction. Play it for all it's worth.

F. Awards and honors. Same as above.

G. Winning personality. If people like you, you bet that's a USP.

H. "We're the only one in our market that Ä" Complete this statement, and you'll have your USP(s).

6. Under-promise and over-deliver.

Tell a client that you'll have something done in a week and it takes 10 days, you're a bum. Tell that same client you'll have it done in two weeks and it takes 10 days, you're a hero. Same performance, different perceptions.

Why, oh why, does nearly every contractor do exactly the opposite? Time after time contractors make unrealistic promises just to land a job or mollify a disgruntled customer. Then they wonder why people don't trust them.

A successful contractor is one who exceeds peoples' expectations. Go easy on the promises, but knock yourself out to do even better than you said you would.

7. Solicit testimonials and referrals.

If you're any good at what you do, from time to time you'll have people writing a letter complimenting your performance. Treasure those letters. They are a mother lode of marketing value.

But don't wait for clients to take the initiative. No matter how satisfied they are with your performance, most are too busy or too lazy to take the time to write. Make it easy for them to offer testimonials and referrals. Every time clients make a verbal statement praising your work, follow up with a letter thanking them and asking for permission to quote them. (See sample testimonial letter, page 234.) Don't ask them to write the letter. That's intruding on their time. Just ask them to sign their name to words that approximate what they said. Almost nobody will say no.

8. Publicity is free advertising.

The advantage to advertising is that you can get your message across with certainty, at the time of your choosing. But given your druthers, wouldn't you rather gain that advantage for free?

Your marketing program should include regular press releases on everything your company does that could be considered remotely newsworthy, especially in the communities where you do business. A list of potential news release topics appears in the box on page 235. Don't worry if the media don't run all of them. It's worth the price of postage just to keep your name in front of editors.

9. People always turn to the "experts."

One reason it's worthwhile to keep your name in front of the media is that's how you become known as an "expert" in your field. These are the folks news reporters call for comments and background when a story breaks in a particular industry. You don't necessarily have to know more than anyone else in the field. Just be accessible-and develop a knack for talking in short, easily understood "sound bites."

Another way to impress them with your expertise is to become a published authority on topics in your field. You don't even need to be a good writer. You can always hire a freelancer to put your thoughts into words. Here are some topics you could write about that would establish you as an expert in the eyes of clients and the media:"The 10 Most Common Mechanical Design Flaws"
"Top 10 Causes of Construction Delays'
"How to Cut Maintenance Costs by XX%"
"What's Valuable (and What's Not) with Value Engineering"
"Construction Myths & Realities"
"What's New in Mechanical System Technology"
"The Project from Hell, and What Made It That Way"
"10 Ways to Save Money on Construction Projects"
Surely there are others you could think of yourself.

10. You already know your best prospects.

Most businesses look to grow from the outside-in. They spend a lot of money trying to convince strangers to do business with them. While some of your marketing efforts should go toward attracting new business, your best return on dollars spent will come from your existing customer base. Build a marketing database of everyone who has done business with you, and keep in touch with them regularly through mailings, phone calls, e-mail, etc. Instruct your project managers to contact old clients periodically to obtain the inside track on new projects underway or in the planning stages.

And while you're at it, build personal relationships with your clients. Business becomes not only more profitable, but more fun when you turn your customers into friends.

Sample Testimonial
Solicitation Letter

Dear (Name),

Thank you for your kind words about our company. You really made our day!

I hope you'll allow us to share with others the following statement you made about us: (Quote the client's positive verbal statement about you.)

We would like to use this in our promotional materials. If this is okay with you, please sign and return this permission form. You can fax it back to me at (your fax number), or else return it in the self-addressed, stamped envelope for your convenience.

Permission to Quote

I hereby give my consent for (company name) or their assignees to use my comments quoted above in any manner or form, or for any medium, without restriction or limit for the purposes of nationwide publicity, advertising or display. I understand that I will receive no payment or compensation for this permission.

(Signature line, printed name, date)