Stop Competing On Price
The best strategy in war is to win without a fight.” ~ Sun Tzu
When we go to the grocery store and there is nothing to differentiate one onion from another onion, the ONLY thing that we can differentiate it with is PRICE.
Because it’s a commodity.
Price then becomes the only deciding factor.
Competitors who are less astute will try to sell only on price, so they will try to beat you down by convincing your prospects that all contractors are the same; they just have different prices.
Thus, if you are not giving your prospects criteria for what makes you different, what makes you special, what makes you premium. Then the only thing they can come back to is price, turning you back into a commodity.
Remember, the services you deliver in your business are not the same as your competitor.
You MUST create the buying criteria for what sets you apart from anyone else. It is pretty powerful to develop this mindset. Everyone is trying to make you into an ordinary commodity and your job is to make sure that you stand out as extraordinary.
How do you do this? You don’t tell; you show. Do things your competitors are not. Demonstrate your professionalism at every turn and with every single interaction a prospect has with your company, from the way you answer the phone to the manner in which you show up for an estimate.
Here are some examples of differentiating your business from your competitors and establishing yourself as the clear leader in your industry, all of which can increase the rate at which you convert leads into clients. Many of these are small things, but when combined, have a positive effect on your business that is difficult to overstate.
- Have a modern, user friendly website with plenty of photos of your past work.
- Provide your prospects with helpful material on making the best decisions they possibly can, whether that means choosing you or not.
- Have a receptionist answer your phone instead of you.
- Institute a policy whereby you return all phone calls and email within 1 hour.
- Follow up every project phone call with a written summary of the points you discussed.
- Leave behind a binder of testimonials and references at each estimate.
- Follow up. Follow up. Follow up.
- Have professional letterhead and company branding.
- Dress cleanly and professionally when meeting with prospects and clients, ideally with your company logo wear.
- Have written processes and procedures for everything you do and share them with your prospects and clients.
- Send your customers and clients hand-written thank you cards.
Those are just a few examples of things that builders and contractors can do to differentiate themselves from the competition. When you bake these things into your culture and your unique culture is present in every interaction with your prospects and clients, you give your prospects criteria to make a decision on something other than price alone.
How Many Leads Do You Really Need?
Let’s use Jason as an example.
Jason is a custom home builder in the United States. He has been in business for 22 years, is getting older, and is looking to grow his business before he passes it on to his son, who has expressed an interest in working with his father.
Jason doesn’t just want to grow for growth’s sake (which many times can be a bad thing). He wants to be able to generate new business consistently and intentionally, and try to limit the up and down roller coaster that has always been present in his business. To achieve more consistency, one of the things he wants to do is larger projects, including estates, churches, and other local commercial work.
We sit down with Jason for his Goal Setting Session and put the following on paper:
- His current annual revenue is $5 Million
- His goal is to get to $10 Million in annual revenue
- He wants to achieve his goal within 2 years
Instead of merely determining to work harder and longer hours, Jason knows that he has to take a step back, analyze his business, and start to do things a little differently.
To determine what he needs to do to generate more jobs and double the size of his business in 2 years, we jump into the numbers. For the sake of this exercise, we are only going to look at revenue figures, not profit.
His current numbers look like this:
- $5 Million in annual revenue
- He builds 20 houses per year that bring his company an average of $250,000 in revenue each
- Out of every 5 home building quotes that he provides to homeowners, he gets awarded 2 of them. So his conversion rate of leads into customers is 40%.
- By doing the simple math, we see that Jason is providing 50 quotes per year to get 20 new home builds.
If Jason is looking to double his annual revenue to $10 Million, and does everything else the same, we can simply say that he will have to double the number of quotes he provides to 100 per year. So he would get 100 leads and convert 40 of them into paying customers. At $250,000 per house x 40 houses, he will hit his goal of $10 Million in revenue.
So we can then begin to develop a plan for Jason to double his lead flow, and in theory, he will achieve his goal.
But Jason wants to start doing higher end homes. This won’t happen overnight, but we have 2 years to accomplish his goal.
Let’s say that Jason wants to start building $500,000 homes. To hit $10 Million in revenue, he will still only have to build 20 homes and still only generate 50 home quotes per year. But he needs to adjust his market position and his marketing efforts to attract more affluent homeowners.
So these would be two vastly different marketing plans – one involves doubling Jason’s lead flow and the other involves marketing to a new demographic. Neither one is better than the other; they’re just different.
Having this information is absolutely critical in order to develop a business growth strategy. Armed with this information, Jason can clearly see what he needs to do and he can tailor his schedule and his energy to executing the plan that we put into place.
Without a clear idea of where he wants to go and what he needs to get there, it is doubtful he will ever achieve his goals.
Put This Into Action
I will make the assumption that if you’re reading articles like this one, you are looking to improve or grow your business in some way. Get out a pen and a piece of paper and start sketching out some rough numbers. You might be surprised at how far you have to go, or you might be surprised that it’s not as difficult as it seems. Either way, starting with these numbers is foundational.
5 Reasons Why You Should Never Purchase Leads
1. It Damages Your Brand
First and foremost, bought leads can damage your brand, and that’s bad for your business in the long run. Whether you buy a list of emails, a collection of phone numbers, or hire a company to do the cold calling for you, this approach can cause serious damage to your business’s reputation. After all, do you want to be known as the contractor who clogs up people’s email inboxes with completely unsolicited messages or who calls people at home out of the blue? It won’t take long before you’ve gained the reputation of “the company who never stops calling,” which could make potential customers who have legitimate problems you can solve avoid you simply out of principle.
2. It’s Invasive
It’s just not worth it to buy leads and try to reach out to people who’ve never interacted with your business before and might not even be aware that you exist. This type of invasive marketing might net you a few leads, but you’ll also gain the ire of a lot of people who have no need for your services and didn’t want to be bothered to begin with. If you’re cold calling people, it’s pretty unlikely that they’ll be listening to your carefully crafted sales pitch – they are going to be wondering how you got their number and how to get you off the phone. If you wouldn’t want to be annoyed by random calls while you’re having dinner with your family, why would you think the people on the list you bought would want to be?
3. It Has Bad Response Rates
According to a study done by MailChimp, positive engagement falls off a cliff when the names on your mailing list come from purchased leads. Open rates are poor, at best, click-through rates are terrible, and general interaction with your emails is nowhere near what you would want it to be for something you spent your valuable marketing budget on. The only thing that goes up is complaints.
The same is true for cold calls. In general, cold calling only gets about a 2% success rate in getting an initial appointment with a potential customer. And that’s only after you’ve had to explain to the person on the other end who you are, what you do, and why they might need your services. That’s a HUGE investment of time and energy on your sales team’s part for a miniscule return on that investment.
4. It Might Provide Unreliable Information
When you purchase leads, you don’t know a lot about the quality of the information on that list. Information changes over time – people move, get different phone numbers, and so on. If you’re working with a company that uses simple web scraping techniques to gather information, you may be acting on outdated or inaccurate information. If it’s difficult to get engagement from a cold call when all your information is accurate, it is almost impossible to get conversions when you’re asking for the wrong person.This ties
This ties into damaging your company’s reputation: not only are you potentially annoying potential customers, you’re annoying people who aren’t who you thought they were. All your demographic information about the lead went out the window when you called expecting to speak to a retired couple looking to renovate their home now that their children have left the nest and instead reached an early 20s single mother.
5. There Are Better Alternatives
Why would you pay for leads when there are better alternatives? Purchased leads are part of the outbound marketing style. You’re pushing your sales message out there any way you can, through cold calls and email blasts, hoping someone – anyone – will listen and pay attention. It’s a literal shot in the dark, and it’s getting less effective all the time.
At the opposite end of the spectrum is inbound marketing. Inbound marketing is all about focusing your efforts into making sure that your website is a resource for potential customers. Your website should be easy to find through SEO and SEM best practices, visible through social media, and should answer your customer’s questions.
Get Better Website Leads
How many leads have you received from your website in the past 3 days?
We launched a new website for a remodeling contractor 4 days ago.
In the first 72 hours, their new website generated 12 fresh local leads for their services. See the full case study.
I say this not to brag (although it is rewarding to help our clients achieve early results like this), but to remind you of what is possible by focusing on the key asset that is your website.
It’s easy to dismiss a website as just an online brochure, especially if it’s never been a profitable marketing channel for you.
But the fact is that your market is looking for solutions online, and more people are researching and purchasing services online every day.
How Did We Achieve This Lead Flow So Quickly?
Today I will give you some of the reasons why this remodeler’s new website is generating solid lead flow so far.
- First, we spent at over 3 months building a strategic online marketing plan with this client. We share our planning process here.
- We made a detailed game plan, including an order of priorities and a timeframe for execution and expected results.
- We designed and built a brand new mobile responsive website, so his new site is optimized for viewing on all types of computers, tablets, and phones (which is important because over 30% of his website traffic is from mobile devices).
- The new website passes the 5-second test. It answers, in a matter of seconds: what the company does, where they do it, whom they serve, and how a potential client can contact them. (it’s surprising how few websites actually pass this test! Read more about the test.)
- The site has a strong unique selling proposition – we worked with the client to develop a value proposition that is unique from his direct competitors (what can you say that your competitors can’t?). Again you can do it for yourself using this article.
- The website doesn’t make people think. We did not use fancy or cute language. We made the site user-friendly and straight-forward to navigate.
- The site has strong branding throughout, which helps build trust.
- Speaking of trust, the site is loaded with social proof, including: reviews, photos of the company owner and team, photos of trucks and their office building, links to active social media profiles, logos for the various associations the company belongs to, and much more.
- The site has an abundance of relevant content about the company’s services and where they operate (over 60 pages of unique content).
- All of the technical elements are in place – meta data, interlinked pages, markup language, and the like.
More Involved Than You Thought?
Yes, there’s a LOT of work that goes into strategizing, designing, and building a lead-generating website. I’ve found that most business owners drastically underestimate the amount of time and energy it takes to generate leads from their websites. It doesn’t happen overnight, and it takes about 10X more effort that most people think, but it can work if done properly.
How Does Your Site Stack Up?
Do you have most or all of the above elements in place? If not, it may be a good time to revisit your online strategy to make sure you’re putting in an honest effort, especially if you’re frustrated with the lack of leads you’re getting from your site.