A Contractors Guide

A Contractors Guide

What Are Successful Contractors Doing Differently?

You may be frustrated that you competitors seem to get better jobs than you.

Maybe they outbid you on the last big job you were going for.  Maybe they didn’t outbid you, but they somehow differentiated their business from the competition in such a way that made them the clear favorite.

What are you to do about this?

The thing is, it’s not that this successful construction firm has more experience, better equipment, or a harder working team than you.

It’s not that they have an unfair advantage is in some way.

The reason is most likely that they have a strategic plan to attract more of their ideal customers and projects.

How do they do this?

They have a system of generating qualified leads, converting those leads into customers, and treating those customers the right way so they refer more business.

Quite simply, they have a plan.  They stick to the plan and execute it on a regular basis.

This is the only way to consistently generate high quality leads to a business.

You may be the best builder in the county, but if you don’t market your business effectively and engage with your market regularly, people aren’t going to know about you.

You see, marketing your business isn’t easy, but it’s simple.

It’s not rocket science, but it does take some planning and execution.

The best part about it all?

Not many of your competitors are marketing their businesses strategically.  Therein lies the biggest opportunity for you. The opportunity to blow the doors open and treat your prospects and your clients right.

If you want to get into the game, and more importantly, become the leader in your industry, you need to start marketing your business strategically.  The bad news is that you’re going to have to do things you’ve never done before.  You’ll have to work smarter than you ever have before.

But the good news is that marketing is, for the most part, scientific.  If you build the formula with the right ingredients, and you stick with it consistently and continually improve, you will end up with positive results.

Of course there is never a guarantee in this business.  Heck, are there any guarantees in life?  The only guarantee for successful contractors is that when you follow a defined process, you have a much better chance of success than if you had no plan at all.

Position Your Construction Business for Success and Never Look Back

A Positioning Statement or a Unique Selling Proposition (USP) is your 10-second elevator pitch that informs your prospects what you do, how you’re different, and how they and/or their business can benefit by working with you.

There are many frameworks out there that can help construct a positioning statement for your construction business.  Below I have included one of them and have developed a positioning statement for my company based on this framework.

In general, there are a few goals of a positioning statement:

  1. Describe what you do clearly in 10 seconds or less
  2. Describe who your target market is (and imply who it is not)
  3. Let your prospect (or person to whom you are speaking) know how your products or services can benefit them
  4. Answers the ‘What’s In It For Me?’ (WIIFM) question – your prospect should not only know what you do, but more importantly, know how they can benefit from what you do
  5. Differentiate your business from your competition
    1. What can you say that no one else can?
    2. Don’t sound like every other web design firm/financial planner/mortgage adviser/etc.

When constructed correctly, the positioning statement accomplishes the following:

  1. Demonstrates that you are a smart, confident person
  2. Demonstrates that you respect peoples’ time – because you take 10 seconds to explain what you do, not 10 minutes
  3. Immediately establishes that you are not like all of your competitors
  4. Communicates that you do not work with just anyone.  You have a clear vision for your ideal customer.
  5. Starts to build trusted adviser status with your prospects
  6. Help you uncover your prospects’ business and/or personal problems
  7. Relates your understanding to the prospects’ pain
  8. Gets your prospect to talk and ask questions

Why is this important?

  1. You attract more of your ideal customers, while minimizing the time you spend with non-ideal customers
  2. Because you differentiate yourself from your competition, you minimize the chances that, when it comes time to propose your services to your prospect, you will have to compete on price alone.
  3. Truly being customer-focused and being a problem solver for your customers is a characteristic of most successful businesses.

How to Build Trust as a Contractor

As a contractor, it’s vital to build trust between yourself and your potential – or current! – client. After all, a client that doesn’t trust you, then they’re not going to be happy with your service, and they’re not going to be likely to return to you when they need future work done.

But how can you build trust with your clients? What can you do to make sure that your company is trustworthy and that your customers will recommend you to other people needing work done in your field? If you follow our helpful tips, you’ll be able to build trust with your customers and keep it, so that your clients are happy and satisfied with your work and will recommend you to future clients as well!

1: Start with your website.

As many clients use your online presence to determine whether or not to even reach out to you in the first place, it’s imperative that you have a site that generates trust from the get-go. Aside from having a mobile-friendly design that accommodates customers browsing on their phones or tablets, there are a few things you can do to begin cultivating an atmosphere of trust:

  • Get testimonials from prior customers – few things are more convincing of your ability to do what you say you can do than positive testimonials from satisfied customers. Whether you have these on your website or social media profiles, be sure to include several – especially if you can do a variety of services (for example, you handle new home construction, remodeling projects, and commercial renovations). You could also expand a few of these into full-blown case studies, discussing what the customer was looking for, how you handled their request and including their testimonial at the end.
  • Have a gallery of completed projects – another good way to show your skills is to include a gallery of completed projects on your website. Show before and after pictures that display the beautiful work you’ve done so that potential clients can get a vision of what you can do for them!
  • Clearly display your contact information – it raises a potential customer’s red flag if they have to go hunting for your contact information, and makes it less likely they’ll reach out to you. Make sure all your information is clearly displayed, and provide your potential client with multiple ways to contact you – for example, you can display your phone number and office address, as well as let them fill out a form for more information.

It’s critical to make sure your online marketing is constantly building your trustworthiness. Other options, like writing blogs, updating your social media, and sending out newsletters, can also bolster your appearance of an experienced, trustworthy contractor.

2: Don’t bite off more than you can chew.

We know that sometimes it can be tempting to accept every job you come across, or reassure your customer that you can handle absolutely anything they’re looking for – but that’s not always possible. You are the best judge of what you can (and cannot) deliver, and setting out practical expectations that your client is happy with will save both you and your customer time and money in the long run. Plus, it establishes you as the expert you are, which means your customer is more likely to choose you in the future.

3: Be reliable.

If a client is depending on you for residential, commercial, or industrial contracting work, it’s vital to make sure that they can depend on you. Be on-time to all agreed meetings and make sure that things are going according to plan – and if they aren’t, be immediately communicative with your customer. The best way to prevent misunderstandings is to include your customers in the game plan, keeping them abreast of when and how their project will be completed and letting them know about any potential problems that you may encounter during their project. That way, if something does happen, your customer is more likely to trust you to handle it and will be less stressed in the long run.

4: Be yourself.

We know this seems like a silly tip – everyone’s always themselves, right? But what we mean by this is to make sure you’re not putting on a front for your customer. Of course, you want to be professional, but remember, you’re dealing with people who are putting their home or business in your hands. Not every conversation has to be a sales pitch, and you don’t even have to do most of the talking.

Here’s an example: say you have a customer coming to you for a whole-home renovation. He mentions that he has a wife and a baby on the way. That’s a great point to display some active listening skills – ask him if the home design needs any special accommodations for the new baby, or if his wife needs to have a room on the ground floor. In subsequent meetings, ask him how his family is doing. Show that you care about your client as a person, not just a job, and they’re more likely to trust you to do your job correctly and well.

5: Work smarter, not harder.

The fine touches of a job can be the thing that determines whether or not your client is going to recommend you to another customer. As they say, “the devil is in the details,” and that’s true whether you’re a small contractor looking to make a name for yourself or a well-established team that wants to expand. Little details can make a customer think far more positively of you. Things, like presenting a professional written estimate, showing up on time, collecting receipts for materials and workmanship and providing them when requested, and cleaning up a workspace after a job, can drastically increase your customer’s favorable opinion of you. In short, treat your customer and their space with respect and be honest and up-front with them, and you’ll gain a reputation as a trustworthy contractor in no time.

Building and maintaining trust is incredibly important when you want to keep your business running, expand into new work, or just reach out to previous customers.

What Is A New Customer Worth To You?

A metric that high level business owners track fanatically is Cost per Customer Acquisition (CPA).  In other words, on average, what does it cost to acquire a new customer or client for your business?

99% of business owners don’t know the answer to this question, and that’s fine.

For the 1% of business owners who are serious about taking their businesses to the next level, calculating their CPA is a foundational step.

Why is that?

Once you calculate your CPA, you can develop a new customer acquisition program, or marketing program, to attract more of your ideal clients and effectively grow your business.

For some businesses, it’s nothing more than a numbers game.

So how do you begin to calculate CPA?

The first step is to calculate exactly what a new customer or client is worth to your business.

Most builders and contractors provide a one-time service to their clients, so calculating your average client value is simple – just average the net profit of each project to come up with your number.  For example, if your average project brings in $100,000 in revenue and your net profit is 15%, your average net profit is $15,000.  At the risk of sounding crude, each new client is worth $15,000, on average, to your business.

For businesses that provide a repeat product or service to their clients, such as landscape or building maintenance, there are a couple additional steps:

  1. Calculate the average per-project net profit
  2. Multiply that by the number of times you will repeat that product or service for the client
  3. Factor in the time value of money (if you want to get sophisticated)

For example, if you provide building maintenance on a monthly basis to apartment buildings and your average contract length is 2 years, you will repeat your service 24 times during the length of that contract.  If you charge $2,500/month and your net profit is 25%, your monthly profit is $625.  Multiply $625 x 24 months, and that contract is worth $15,000 to you.

In each example, the value of a new client or customer (also referred to as client lifetime value, or LTV) is $15,000.

Now that you understand that, you can begin to calculate or estimate what you can afford to spend on acquiring each new customer.

Would you spend $1,000 to acquire a client that is will bring you $15,000 in profit?  How about $5,000?  Or $10,000?

Only you as the business owner will know that answer.

And I’m not talking about cost per lead here.  I’m talking about the cost to actually get a signed contract with a new customer.

How Do You Calculate Your Max Cost of a Lead?

If you want to calculate cost per lead, you will have to figure out your conversion rate.  Your conversion rate is the rate at which you convert leads into customers.  For some businesses, it’s 10%.  For some, it’s 80%.

Example:  If 1 out of every 5 leads that you get turns into a customer, your conversion rate is 20%.  If you previously determined that you are comfortable spending $5,000 to acquire a new customer, you can afford to spend $1,000 per lead.

This is why I am dumbfounded when contractors say they have nothing in the budget for lead generation or marketing, until they begin to see how everything fits together.

I know a high-end roofing contractor who is willing to spend up to $15,000 for a new customer! As long as his roofing website is generating leads, it’s worth it.

Once you understand this basic concept, you can begin to develop a marketing campaign to attract more of your ideal clients.  You can sleep well at night knowing that you’re working the numbers, and that as long as you work smart and consistently market to your ideal clients, the numbers will take care of themselves.

But wait, before I let you go, there is one HUGE thing to note here.  Much of what you do in terms of marketing or lead generation may cost you nothing in out-of-pocket, but you need to factor in your TIME.  Your time, or your staff’s time, is worth a lot.  As business owners, we sometimes forget that.  But we need to factor in the value of our time as a cost in everything we do.

7 Questions To Ask Your Customer

As a contractor, you know that your client — or potential client — will have plenty of questions for you. They’ll likely ask you about your qualifications, your warranties, what your communication is like, and possibly even what kind of documentation they’ll receive when the job is complete.

But did you know it’s just as important for you to come armed with your own list of questions?

Whether you run a larger business or you’re a solo contractor, you want to make sure that every job you do will be rewarding and profitable, and won’t end up being a waste of your time and money. So here are 7 questions we suggest you ask any new client.

1: What sort of schedule do you have?

Whether you’re updating a kitchen or fixing their plumbing, every customer’s needs and schedule are going to be different. You want to establish their schedule and yours up-front, so you know what days and hours you’re working.

A part of this includes asking them if there are any special occasions or times you need to be out of the house — for example, if they have kids that come home after school and they don’t want you to be working while their children are home. Getting all the details hammered out will ensure you don’t have any surprise scheduling roadblocks, and will help you get your calendar established so that you can decide whether or not you can handle multiple jobs at a time.

2: Do you have any material specifications?

Does your customer want real marble for their countertops? Do they only want to use Kenmore appliances or Moen fixtures? Knowing that up-front will help you give a more accurate estimate and will also give you an idea of how long it will take to get supplies. Plus, if your customer is asking for materials that may be impractical for their renovation, it could give you a chance to show off your expertise in the field…and save them some money in the process.

3: What are you looking for in a contractor?

This question doesn’t apply specifically to your job, but can help you get a feel for what your client wants out of you and your company. If they’ve had a renovation experience before that didn’t go well, for example, they may be more dead-set on finding an experienced, family-owned business. You may work with someone who doesn’t want you to use subcontractors, or who is dedicated to maintaining the cleanliness of their home. Knowing what they’re looking for in you helps you tailor your service to their needs, which makes it more likely that the project will be successful and you’ll get a good review at the end.

4: Who will be my main point of contact throughout this job?

Sometimes, the person you speak to initially won’t be the person you’re communicating with throughout the project. For example, in a married couple, the husband might tell you exactly what he wants his basement remodel to look like, but leave scheduling and financial details to his wife. Knowing who you’re supposed to be communicating with will help you avoid confusion and delays on your project, and will keep things moving smoothly throughout the construction process. Plus, your customers will be pleased with your attention to detail.

5: Can you give me some details about access?

Whether you’re working in someone’s home or on a commercial construction site, the rules about accessing the property are important to know. If you’re working in a gated community, for instance, you may have to sign in at a security guard’s booth before being allowed in. If you’re working on a commercial property, there may only be certain hours you’re allowed to access the build site. Again, this helps you build trust with your client — being thorough and knowledgeable about the construction and contractor process shows that you have experience and are attentive to their needs.

6: How was our service?

This seems like a no-brainer, but it’s very important. When you’ve finished with a job, make sure you do a final walk-through with your customer to ensure that they’re pleased with your work. Not only will this allow you to make any final touch-ups or repairs on-site, saving you travel time and money, it will give you a defense if your customer leaves you a negative review after telling you they were satisfied with your work. It gives you the chance to reply to a negative comment and let them — and anyone reading the comment — that they had told you they were pleased with your service, and also gives you a chance to impress potential future clients by magnanimously asking if you can fix their problem despite them saying that everything looked great.

7: Can we get your email/can we leave you a card with some links?

People are very wary of spam, these days, but if you’re running an online marketing campaign, it’s important to try to get satisfied clients both to join your email list and to leave you positive reviews online. Not only do positive reviews on Yelp, Facebook, Angie’s List, etc. help improve your visibility, Google also seems to show ranking preference to those businesses that have strong Google Plus reviews and reviews from other online sites. And while Yelp says you shouldn’t even ask for reviews, it makes it convenient for customers who do leave reviews if you provide a link to your Yelp page or send them an email with links to the different places they can leave you a positive review if they want to.

Assure your customer that you won’t be sending them any spam and that getting their email will just give them the chance to receive coupons, special offers, or whatever perks you can consider. Not every customer will let you have their email, and that’s fine, but the point is to ask. Any emails you get helps you improve your marketing and broaden your target audience.

Book Review: The E-Myth Contractor

The E-Myth Contractor is a book worth reading for any contractor.

As small business owners, all too often, we find ourselves caught in the trenches.

Doing the most menial of tasks.

Swinging a hammer.

Grouting a bathtub.

Spending time doing those little things ourselves instead of focusing on what’s really important – selling and marketing.

If you’re like most small business owners, you started your business to build something bigger than yourself.

To be your own boss.

To manage a team of people who do the everyday tasks, while you can focus on the bigger picture – and have more time for yourself and for your family.

It’s a nice vision, and a very realistic one.

But it takes being intentional about your business and building it in such a way that it works apart from you, not because of you.

Otherwise, what we’ve created for ourselves is a job, not a business.

If you’re looking for a framework, a guide, on building your business that truly sets you free, I recommend reading the short book The E-Myth Contractor.

Here are some quick gold nuggets that I pulled out of the book:

  • In order to be a successful business owner, you need to get beyond being the best technician in your business.
  • You need to focus more on the business of contracting than the work of contracting.
  • How you think about your business is more important than how hard you work in it.
  • Profit created intentionally, rather than by accident, is replicable again and again.
  • A contractor lacking both a business vision and the words to articulate it is simply a guy who goes to work every day.

I really can’t think of anyone in an ownership or management position of a contracting business that would not benefit from reading this book.  The Amazon reviews are not so great, and I’m not really sure why.  For once, I’m glad I ignored them.

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