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From the Remodeling Magazine Blog
There are two essential elements to focus on when you plan a business marketing strategy.
One is Educating your potential clients, and the second is to become creative by Reinventing your marketing. When you’re planning a marketing strategy, think of reinventing your company and being creative. Whoever said “if you keep doing the same thing expect the same results,” didn’t own a business. If you keep using the same marketing strategy and expecting the same results, the business world could pass you by. Methods that worked well in the past might not work now or in the future. To effectively market your business, you’ll need to re-invent your company.
When you educate your ideal customer and guide them through the buyer’s cycle of getting them to “know, like, and trust” you, you’ll make considerable progress towards earning the project. One of the purposes of your marketing process should be to provide clarity to your customers and clients–basically, walking a prospect through the process, which allows you to convert more prospects into clients. Creating a plan to lead clients through this process really forces you to create a marketing process and is the beginning stage of a true marketing system that helps your company convert leads to clients. It helps you take someone who shows an interest in your business and using that momentum to make them a client.
One step in the early stages of the buyer’s cycle is allowing the prospect a chance to get to know you and your team. Effective marketing is about getting in front of people with frequency, with their permission and providing great content and useful information. Ideally, this stage should be about education and building trust by sharing your expertise, and should involve the concept of permission marketing.
Permission marketing is the privilege of delivering a personal and relevant message to your ideal client. Your ideal client should expect and want this information.
Here is an example of permission marketing:
Develop a “white paper” of useful information your potential clients value. If you are a kitchen designer, would your customers be interested in an information packet called “The Best Modern Kitchen Designs?” If your ideal clients desire modern kitchens, take control of this niche by educating them on the topic. Create a form on your website that allows them to request this valuable information or “white paper” and receive it via e-mail, or by downloading a PDF from your website. This will make them feel as if they are receiving something of value. This is a great way to engage them and begin to lead them through the steps of the buyer’s cycle.
The information packet is just one idea to start potential clients on the path of the buyer’s cycle. Identify specific methods you use in your business to walk a prospect through the sales process and create a system that takes them from that “know, like, and trust” to buying, referrals and repeat business. Remodelers don’t have any difficulty thinking of systems for building a project, but they rarely develop one for marketing. Now, to reinvent your company, deliver this “white paper,” in a unique way or one that is different than your competition:
Not only have you provided excellent content, but you are positioning yourself as an expert in the subject in your potential clients eyes and networked with a tradesman, or a strategic partner in your field. Do you think if it’s valuable this potential customer will forward the link to friends? It’s easy to use a Flip Minot camera to take a video and upload it to YouTube or burn it to a DVD. Emotion and passion drive successful people in our business and it is that same emotion and passion that creates something that is unique and different. Find creative ways like this to deliver your message to prospects.
From the Remodeling Magazine Blog
Many times in sales meetings, a salesperson will say to me, “Teach me how to close.” He’ll tell me, “I couldn’t overcome that objection and I keep hearing the same objection over and over again.” Going over a strategy that will help the salesperson handle that objection and working through a solution is always a good idea, but did you ever think about the possibility of overcoming it before it even arises? That is the true solution. How do you do that? Here are a few points to consider:
No one likes to be sold. Everyone likes to buy. In today’s remodeling and home improvement market, it is more important than ever to understand that the moment a customer says “you’re hired” and becomes a client is based on emotion. The prospect makes the decision to become a client based on knowing, liking, and trusting you.
An educational sales process. An educational process that answers questions before they arise is ultimately the best path to reach your customer on an emotional level. When you make an effort to educate the client, you reach them before the objections have time to dwell in their minds. That translates to less effort and time on your part to convince them you are right for the job. If you try to convince a prospect towards the end of the sales process, their uncertainty at your closing will erode any “like and trust” they had in you.
Effective marketing increases your sales conversion ratio. Today’s marketing requires lots of content, lots of education, and lots of trust-building via sharing your expertise. Too many marketing messages focus on the company rather than the customer. So as you craft your marketing strategy and materials, keep the customer top of mind.
How do you do that? Most homeowners view remodeling as a commodity and feel that one company can provide the same results as another. To compound the situation, most remodeling businesses do not have a marketing plan or marketing materials that counteract that perception.
Some marketing phrases I’ve heard include: “You should buy from us, because we have quality and service”; “Buy from us as we have been in business for 25 years and are reliable”; “We are built from trust.” None of these statements give you a green light or a sales advantage.
These are all expectations and not a point of differentiation. How do you communicate to your community and prospective buyers that your business is different and can solve their problems or fulfill their needs? You need to focus on your unique selling point by communicating the answers to these questions:
Once you identify your unique selling point, use it in all of your marketing materials, sales presentations, and community outreach. If you convince the prospect that your company’s work is not a commodity, you’ll educate him or her into being a client.
Learn how to grow your remodeling business through construction education, remodeling classes and exhibit hall activities. Don’t miss your once-a-year opportunity to learn about new building products and build connections within the remodeling community. The Remodeling Show is sponsored by the National Association of Home Builders (NAHB), NAHB Remodelers and Remodeling Magazine.
Frustrated with the same old marketing approach and not getting results? No leads are coming in and you’re competing on price. Learn to separate yourself from your competitors! Differentiate and Dominate! Stop competing on Price! Learn new strategy that you can implement today!
• Differentiate your business from your competitors.
• Work with your Ideal Client and be more profitable.
• Establish a consistent lead generation system.
• Stop competing on price.
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.
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.
Open Your Books to Profit, continued…
I wanted to post this here on my personal blog to see if anyone had any questions they wanted to submit. Here is the link to the article
In last week’s bIog, I talked about the importance of open book management (OBM) and solicited questions from readers. I received two questions from a window replacement company that I’ve answered below.
Q: How do you recommend a business owner share with employees the urgency of a financial situation, without scaring employees or hurting morale? On the other hand, we do want them to feel secure in the future of the company.
A: To me, the purpose of open book management is threefold: I want to have accurate information to make decisions, I want to hold my employees accountable and maximize production, and I want to build a team effort that empowers employees to make decisions for the benefit of the team, business and our future. OBM, in order to be effective, isn’t about just showing numbers, it’s about involving employees to be part of the management and part of the team by empowering them to help make decisions that affect the future of the company. One reason many employees leave a business is because they don’t feel they are involved or their voices heard. They can feel insignificant.
If your business is losing money, as an employee, they would want to know why? They would also want to know what the plan is moving forward. I am sure you have a history of profitable years that can build confidence. Mapping out your plan and showing how you are dedicated to increasing profits can be your morale boost. Another way confidence booster is when an owner invests their own savings into the business to increase cash flow. It shows commitment.
Is there panic when they see a significant loss? If the situation is handled properly and you have a plan in place, then the team should be onboard and as committed as an owner. Keep the dedicated employees that thrive from OBM and replace the ones that aren’t the right fit. Build a culture of success and surround yourself with good people!
Q: We also want them to realize the importance of efficiency and the significance of every mis-ordered or lost dollar, yet at the same time we want to continue to make sure they spend “what it takes” to do a job right make our customers happy. What’s the happy medium?
A: If you have a history of financials on your business or have the financial set up to show a comparative from this year to last year, you should set some goals and benchmarks. For example, if the labor rate needs to be at 25% and material rate at 25%, which is a gross profit of 50%, then your pricing should be set accordingly. If the financial for the previous month comes in at 27% labor and 30% material, then its time to analyze it. I analyze the good times and the bad times to keep a good pulse on the scenario, but in this scenario, where do we start?
The labor and material rate is higher than expected. Is the pricing accurate to keep you at a 50% gross profit? Were there a few projects for the month that were undersold with a lower revenue number, thus making the labor and material percentage appear higher or were there numerous errors in the labor pay sheets due to lack of production managing the jobs improperly causing extra work?
Employees need to be held accountable to their benchmarks and this can only be done by reviewing the financials and maximizing the potential of OBM. The three elements to make OBM thrive are as follows for business owners- Monitor, motivate and hold them accountable.
When the company is profitable and the numbers are being managed right reward your employees with a bonus system. The goal should be “let’s do what we can to get back to the profitable days.”
Do you have questions about open book management? Submit your questions to me at tim@remodelbuddy.com.
