In today's hyper competitive marketplace within the construction industry, marketing can make the difference between success and failure. In an interview with marketing expert Rick Crandall he said that:
The biggest mistake contractors make is not doing marketing, they don't pay attention to the details. The second biggest mistake is they don't focus enough on repeat business, which is a killer because that is the most valuable and easiest type of marketing.
Having read Crandall's book Marketing Your Services – For People Who Hate to Sell, I said to him, it's clear from your book that you believe the key to effective marketing is building relationships. Why is that so important to contractors?
His response was, "I'll quote Mark McCormick, who built a $100 million plus business in sports marketing around Arnold Palmer and then many other sports. He said something like, 'Other things being equal people do business with people they like, other things being not equal, they still do business with people they like.'"
TG Comment: The type of relationship we are talking about here is not a social relationship built around playing golf, giving away tickets to the big football game. Business relationships are built upon performance – doing what you say you will do, being transparent, and maintaining good communication even when things are not going as planned. If you do those things, clients will enjoy doing business with you and want to do more business with you.
Crandall explained, focus on your existing customers by doing a great job. This will help build a sound relationship that will generate repeat business. A challenge in construction is often clients only build one building, so Crandall's second best marketing approach is referrals. It's an inexpensive way to market because you have other people vouching for you. Of course, all clients are not created equal – some, in fact, are like a nightmare. Crandall points out that as your business grows from repeat clients and referrals you are able to be more selective in choosing your clients. This is a great value because usually the nightmare clients pay the least, are the most demanding, and create a ton of stress.
As I pointed out to Crandall, this sounds great, but what about the contractors that argue I get all my work by bidding, it is just a matter of price. So why are relationships important to them?
Crandall responded," First, because Ted Garrison says that you shouldn't be doing as much bid work, you should go for negotiated work. Second, you have to get accepted on the bid list." When you are doing a new kind of work, the customer does not always have to take the low bidder. Typically, they take the low qualified bidder. Unfortunately, if they do not know who the heck you are they are probably not going to take you, if they don't have to.
He further explained; you at least have to have enough of a relationship to be known. Second, even in non negotiated work, the people you work with if they like you will give you tips on other possible work that may even include negotiated work. Further, if you build a good working relationship with the client, when problems occur it is easier to resolve them. Often claims and litigation are a result of poor communication causing both parties to dislike each other. So instead of you making the money you deserve, the lawyers make all the money on the project. Often if there is a good relationship between the parties, problems get resolved with a minimum of conflict because of the earlier efforts in establishing a sound relationship.
TG Comment: Crandall's above scenario is illustrated by the following example. A road builder bid on a project and won the hard way – he was the low bidder. After receiving the contract they learned why they were the low bidder – they left stuff out of the bid. The president of the company told his guys, you need to go down to city hall and work with them in order to finish the project ahead of schedule so we can qualify for the early completion bonus and save our butts. They did just that. They worked with the city employees and established a great working relationship. The result was they finished the project ahead of schedule. But the shock was they made money despite leaving stuff out of the bid, because they job ran so smoothly. They then received the early completion bonus turning the project into a great financial success. The president then told me; the best was yet to come. He explained that other cities around the state began calli ng them and asking if they would design-build their next road so that they could take advantage of his fast schedule? The power of building strong working relationships with your clients based on performance can pay huge dividends.
I then mentioned to Crandall a problem that I often hear subcontractors complain about, namely that many GCs build barriers to prevent them from talking to the client. So I asked, how does a subcontractor build a relationship when he is not even allowed to talk to the client?
Crandall responded, "That could be a tough situation. He advised; it is important to remember that as a sub it is not just your job to do the work, but you need to make the general look good." If you make the general look good, especially in areas where the client makes favorable comments to the general, you will be able to enlist the general's help. In essence, building a relationship with the general as your prime customer will create an atmosphere where they want to help you.
Crandall also recommended that you establish an email newsletter to help build relationships and to keep your relationships going with the general and eventually the clients. In essence, if you are dependent on the general, then you make the general your friend, and they are going to let you through to the client, at least to some degree.
Next month's Garrison Report will continue this interview with Rick Crandall, so look for it.
TG Comment: If you liked the comments by Crandall and would like to learn more about his ideas, we are offering a special on his two books: Marketing Your Services – For People Who Hate to Sell and 1001 Ways to Market Your Services – Even If You Hate to Sell. To learn more got to: ow.ly/xhoCe
by TED GARRISON
Ted Garrison; president of Garrison Associates, is a catalyst for change. As a consultant, author and speaker; delivers his Construction 3.0 Strategies that offer breakthrough solutions for the construction industry by focusing on critical issues in leadership, project management, strategic thinking, strategic alliances and marketing. Contact Ted at 800-861-0874 or [email protected]. Further information can be found at www.TedGarrison.com.