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Building the Bottom Line

July 01, 2005
July/August 2005
This article originally appeared in the July/August 2005 issue of Home Energy Magazine.
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        Home performance contractors are often excellent mechanics and artists, ever driven to deliver a high-quality product, but they sometimes lack expertise in business management. No business can flourish without well thought-out systems for marketing, sales, and estimating, yet home performance contractors frequently overlook these three important systems. I have been coaching and advising contractors for 15 years on business management, and I have observed this phenomenon all too often. I can attest that when these systems perform well, a contractor may need more crews and an even greater devotion to management systems.The successful contractor will need to pay more attention to job cost accounting, training and personnel management, sales management, contact management, and more to handle the growth created by a steady flow of profitable business. When these systems don’t perform well, that same contractor may get stuck with jobs that drain away all of his or her time and energy, yet yield little or no profit.
        After a successful career as an awardwinning contractor (Remodeling magazine’s Big 50, Qualified Remodeler magazine’s Top 500), I saw my volume shrink by 70% in one month—never to recover—as a result of the oil crisis in the Rocky Mountain region in 1985. I got small fast, and did the work of several people for several years before deciding to look in other directions.As luck would have it, I was hired to write a book about what I had done. As a result of that, I was launched into the consulting and seminar business. My job consists of collecting bits of information from the hundreds of contractors I am in contact with each year, organizing the information, and spreading it around. When I speak, I know I am never the smartest guy in the room, but I’m one of few who have the opportunity to see and hear what works for contractors who deal with homeowners from coast to coast.
        Without marketing, a terrible thing happens: no sales.The words “marketing” and “sales” are not synonymous. Marketing is what gets the phone to ring; sales are what happen next. The contractor who finds him or herself with no leads may become desperate, perhaps taking work at prices lower than necessary to support his business, or following some other path inconsistent with developing a sustainable company. Marketing should be an ongoing system, continuously putting a company’s name in front of likely prospects. A marketing system doesn’t function well when it’s tied to an on-off switch. Like an air conditioning system that can maintain comfort when the thermostat is not being fiddled with continuously, but that has problems reaching the comfort level when the system has been shut down for some time, the marketing system typically doesn’t have a rapid or predictable response time. For building performance contractors, the marketing systems that seem to deliver the biggest bang for the buck, in approximate order of difficulty, are these:
        Job signs and truck signs. Job signs should be on a white background with a solid border stripe surrounding the message. In residential areas, the signs should be placed parallel to and near the street.Truck signs should be on the doors and tailgate. Consider putting signs on the roof if you work in areas with high-rise buildings.
        Ask for referrals.Word of mouth is among the best sources of leads, since the level of trust is usually high when someone gets your name from a trusted source.Trust is usually contagious.Many contractors offer coupons with incentives ranging from pizza delivery to $100 for a referral that converts to a job over a certain dollar threshold.
        Give it away to get it. Contact the real estate editor of your local newspaper or a radio personality and offer to test their home for free on the condition that they observe the test process and write a column about it or otherwise report on what they learned if they find the results as astounding as you predict (see “A Rater with Security Clearance,” HE Special Issue ’05, p. 17).
        Mine past customer lists. Repeat customers bring a higher level of trust when they return for more work. If you collected the correct contact info when you worked for them originally, you can send faxes and emails very inexpensively to announce seasonal specials. Be specific in your offer. It works better to name a specific product or service when you contact them. For example, offer a spring special on air conditioning tune-ups, including an inspection, filter change (with a year’s supply of filters), and a check on the coolant charge at the same time.
        Offer a maintenance contract to past clients. Include three or four visits to the home each year to check the gutters and downspouts, sump drains and pumps, motors and filters— everything mechanical and more.
        The advantage: This work is less urgent and easier to schedule, allowing you to fill in those slow days in the off season while keeping your name in front of the prospect. More successful contractors include a two-year service contract with every contract they sign and keep in contact regarding the customers’ wish list of products they couldn’t afford to install initially.
        Sign your work. Leave your company name and contact information on everything installed in the home.With permission, install a self-adhesive brochure on the inside of the kitchen cabinet door to the left of the sink.Consider a company brochure on one half and helpful household tips on the other.
        If you really want to deliver a personal service, consider offering a concierge service to clients with vacation homes in your area that they only visit at certain times of the year.Offer to fill the cabinets and refrigerator with items from a grocery list they fax to you before they arrive, and clean out the leftovers when they leave. Arrange for the bedding and towels to be laundered after each visit. Offer to inspect the home during each season to check its condition.
        Write letters.Write to contractors, home inspectors, realtors, and others who deal with homeowners and let them know that you can make them look like a superstar if they ever run into conditions that puzzle or concern them in a home.Write only as many letters as you can follow up on within a couple of days. Include a business card with a hole punched in it with each letter. Explain in the letter that the hole is to remind the prospect of what they are missing until they do business with you.
        Handbills and fliers. Place handbills explaining what you are doing in the neighborhood on the doors of ten houses across the street from every job and five doors on each side of the job. The handbills could be the “pardon our dust” kind of notice. Be sure to explain what you are doing to their neighbor’s home and why, along with lots of ways to contact you.You might hire the local Boy Scout troop to distribute handbills, after checking the local laws and customs.
        Insert a flier in every piece of mail that leaves your office. Almost everyone who opens your mail at the insurance agency, for example, is a homeowner.
        Press releases. Jay Exline, a contractor in Arizona, writes a press release every time he sneezes, it seems. He always includes a head shot—or photo—with his press releases, which explain everything from the training he has taken, to new hires, to new equipment that he has purchased. Jay’s clients perceive his company as being much larger than it is. Press releases cost nothing other than a little time and effort to type and mail.
        Radio show. It seems like a leap, but you might be surprised at how affordable it can be to buy an hour on your local radio station on Saturday morning (see “The Right Way Is Right,”HE Nov/Dec ’04, p. 40).You and a partner could simply talk about the fascinating things you saw in the homes you were in last week. That formula seems to spawn phone calls both to the show and to the answering machine at the office.
        Got too many leads right now? That’s like having too many tickets to this week’s lottery drawing. Don’t slow down your marketing system; enjoy the situation while you implement a system to screen the leads. Not all leads are created equal—but that’s a topic for my next Home Energy column.

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