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From the Remodeling Magazine Blog
I was talking with the owners and staff of a remodeling business who told me they felt they didn’t have an effective marketing message or marketing materials that identified the company’s business. Holy mistaken identity, Batman. I asked them to specify the three elements that separate their company from its competitors. Their answer: quality, products and service. Sound familiar? I reviewed other local remodelers, and saw that 11 of 13 sang the same tune of quality, products and service. With this repetitive message, your potential clients cannot tell you apart from your competitors. Maybe if you spent hundreds of thousands of dollars in advertising, potential clients might be able to differentiate your company. But what remodeling company has that kind of marketing budget?
I have mentioned this before, but it is worth repeating, , A favorite Quote if mine from John Jantsch, “if a potential client cannot tell you apart from your competitors, they will use price as a differentiator.” That is not a good way to compete, because someone else is always willing to go out of business before you are. You must identify your target clients and what makes your business unique and base your core marketing message on those two things. Let me give you an example of a company that did this successfully.
Pinnacle Renovations has grown over the years. In the last year, owner Paul Klassen says his business revenue from renovation projects has increased almost 50%. He has an extremely talented business staff, creates a great customers experience, and receives excellent feedback. He is harnessing his passion for success by working with a team of business coaches. As Pinnacle’s business has grown, however, his ideal client has changed. Though the company continues to grow, instead of using its original marketing message, the remodeling firm is in the process of updating its marketing and materials to appeal more to its new ideal client and a more targeted demographic.
Pinnacle is adapting to its success by narrowing its focus to a specific type of client. The company had a reputation for being able to engage in larger projects and accomplish custom renovations with a true focus on enhancing their client’s experience. The company’s ability to create an experience has caught the attention of many affluent residents. The company enhanced it’s tagline to “Creating Homes for Life, Making Home Your Favorite Place to be.” Knowing that the company’s ideal client appreciates the customer experience, Pinnacle creates an exciting welcome on the move-in date–similar to those on home makeover television shows—and showcasing the new renovation project by hosting events at the house which ultimately target the next set of potential clients in the ideal demographic.
Lets not forget that what Pinnacle has isn’t easy to duplicate; This is something that is made possible, due to Pinnacle’s unparalleled client focus and attention to detail that makes them stand out in their community. Pinnacle’s referral ratio is extremely high and this definitely the best marketing advantage of all.
I suggest an annual evaluation of your ideal client. Make it part of your yearly business forecasting so you don’t forget. Start by interviewing your existing ideal customers. These are the projects that you wish you could clone. Make sure you speak to the customers that have recommended your company. Find out how these customers found you, why they chose your business, and how they would explain their experience to their friends and family. Ask them what makes you unique and what your company did that sets it apart from past remodeling experiences. Connecting with your ideal clients and understanding how they view your business will help you appeal more of the right clients.
Be sure to read next week’s blog on how to create marketing materials that appeal to you
I have had the pleasure of talking with Mark Buckshon, author of “Construction Marketing Ideas,” about his new book. I have a few friends in the industry that have read it and have told me it is full of great & useful information. I am in the process of reading this myself, but I am not finished with it. I have asked Mark to discuss this book and give us some insight. If you have read this please feel free to comment on it and let me know your thoughts.
Author Mark Buckshon's Book
From Mark Buckshon:
Tim has invited me to contribute an entry for this blog related to my new book: Construction Marketing Ideas: Practical strategies and resources to attract and retain clients for your architectural, engineering or construction business. Boiling a 192-page book (and the years of research behind it) down to a brief posting here is a challenge. However, I’ll practice what I preach in keeping things simple. If you are relying on repeat and referral business to succeed, you are three-quarters of the way to success in marketing and building a profitable contracting business.
You simply need to think beyond passive reliance on repeat and referral business to active processes to encourage and develop more satisfied clients. This is the untypical marketing-guru advice and may seem to be heretical since my business earns 95 per cent of its revenue by selling advertising primarily to contractors and sub-trades.
However, if you have been successful enough to satisfy enough clients that they call you for repeat and referral work, you have the first part of the marketing equation right: You are delivering a service that your clients find valuable and worthy of respect. So small investments to encourage, enhance and expand the referral and repeat business process will disproportionately help your business grow in good times and survive in hard times. The challenge is you must be organized, not passive, in your marketing for this business – and you should expect to spend about five per cent of your overall sales volume to achieve the results you are seeking. You can use these funds in a variety of manners: Enhancing your client ex
perience, developing organized follow-up service call processes, engaging with community groups and associations, improving your website and responsiveness to inbound inquriies and so on. I outline several practical ideas in the book. The book has been suc
cessful since its publication in April. You can read the enthusiastic reviews at Amazon.com and elsewhere. I’m preparing a special Webinar on Construction Marketing Ideas for Renovators/Remodellerss on Sept. 23 and if you register with this special promo code (not available outside of Remodelbuddy.com) you can save 10 per cent on the registration investment and receive a free copy of the book (value $39.95). http://renovators.eventbrite.com/?discount=remodelbuddy.
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Here is a recent article Posted on Remodeling Magazine that I wanted to share.
The Story
I see many remodeling businesses searching for the magic solution on how to generate more leads, more revenue, and higher profits. What is the solution? One remodeling company chose to focus on increasing profitability before planning to grow. Magically, when this happened, the growth came along with the targeted profit increase.
This company has provided bath and kitchen remodels, additions, windows, roofing, siding and sunroom services in the western Pennsylvania area for 31 years and had a solid reputation. The company was profitable and the owner was earning an income, but he knew he needed to improve profitability to sustain the long-term business that he needed for his retirement. He began by establishing a more accurate financial statement in Quick Books to give him better information to assess his profitability on the range of remodeling projects, as well as provide a snapshot of overhead and expenses.
Breakdown of Profit
I worked with him to review the profit margins from the financial statement. We discovered that the larger remodeling projects were time consuming and had a minimal profit that ranged from zero to 5%. The project’s original sale looked great on paper. A $30,000 sale is exciting, but true test of success is the profit margin at the end of the project—a margin that should be set at the beginning. Dedicating a month to a large project with zero or minimal profit is not worth those 30 days.
The revenue from home improvement projects such as windows, siding, roofing and sunrooms, were more profitable and easier to accomplish, but they were not the focus of the business. The company’s employees spent the majority of their time on the large projects.
The Dilemma
The owner knew he had to make a decision about the future direction of the business and place profitability before growth. Could he survive without the revenue from the larger projects? Removing the unprofitable projects and focusing on the ideal projects, or sweet spot of the businesses target projects instead, may mean loosing revenue, but removing the projects that are causing lost time, energy and profit dollars, means more time focusing on the ideal projects and what makes the most profit. The answer may have seemed clearer in the financial statement because it provided more accurate information. If 70% of your projects have a net profit of 15% to 25%, and the other 30% revenue is at 0-5% profit, losing or dropping the unprofitable 30% will result in lost revenue or a decrease in sales. Is that a bad situation? No! Now, the personnel can be more focused, maybe overhead will lower and your business will be more productive to produce the profitable projects.
The Decision
The owner decided to narrow the company’s focus to its most profitable projects—the home improvement work. Not only were the projects more profitable, the staff was better able to create a positive experience for customers, which is another positive outcome. The team updated the pricing on these projects to increase the profit margin by 3%. With this focus on home improvements, the company’s marketing message also became clearer and it was able to target ideal clients and enhance the experience of these ideal clients.
The Future
The owner discovered that he could increase profitability without initially increasing sales. However, in the six months since the change, the company has seen an increase in both sales revenue and profit. The business now accepts smaller and more selective remodeling projects. With the increase in profit percentages and a clearer approach, the company does not waste time on sales that don’t lead to profit.
