Define Your Best Construction Customer, And Sell To the Right Ones
You’ve got all the headaches when it comes to lead generation, marketing and sales, closing prospects and generating quality referrals.
Which one is Bugging the Heck out of You?
Are you spending too much per month on advertising and marketing to generate leads, without getting the return you expect? Maybe you’re closing less than 50% of your sales calls. Have you lost jobs to bozo competitors and hackers?
It’s always tempting to sell to the masses, but if you don’t define your best construction customer, it will cost you. It will cost you time as you spin your wheels trying to get sales traction with people who are never going to hire you. It will cost you money when you work for the wrong customers who bleed you dry. And, it will cost you business momentum as the wrong customers take your focus away from the right customers.
Your best construction customer comes at a lower price tag than just any customer, because they fit your business. They fit the sector you build in, they fit the geography where you get the best efficiencies and they fit the project size you prefer. Like a good partner, your best customer complements you and your business.
By not identifying one primary customer, companies that consider themselves “customer focused” soon become anything but. – Robert Simons, professor of business administration at Harvard Business School.
Super Sales, or Profitable Growth?
Any construction firm, no matter what size, faces problems when not recognizing their best customers. And, often the problem of defining your best customer arises just as your company is starting to grow. Frank V. Cespedes, James P. Dougherty and Ben S. Skinner III writing in the Sloan Management Review, say that when a company is on a growth curve, and it hasn’t defined its best customers, the sales process becomes “a function of individual salespeople’s heroic efforts in the field,” instead of building a “scalable platform for profitable growth.”
What Do Your Customers Cost You?
Each of your construction customers comes with a price tag. It costs you money, time and resources to do business with them. Some cost way more than others because they are indecisive, want something for nothing, or view the construction process as a competition where they have to be the winner.
These customer types can very quickly sink your sales and operations efforts because they drain your resources. Interestingly, the “wrong” customers will even force you into a sales scenario where you are always trying to outsell the competition. The more your sales process becomes a competition between your firm and its competitors, the less attention you can give to attracting your best construction customers. Cespedes, Dougherty and Skinner say that making competition your marketplace mantra can undermine your efforts to create and maintain relationships with the best customers for your business.
Define Your Best Construction Customer
This is simple to start with. Who do you love doing business with? Somewhere among all those customers you’ve worked with, names and faces will come to mind. If you’re just starting out, then think about your own past purchases where you felt good as you walked away. What was it about the transaction and the people involved in the transaction that made you feel that way? With those experiences in mind, list the traits you think would define your best construction customer.
Sure, most people prefer to deal with a friendly person, but there are degrees of friendliness. Some people become your friend and you can’t get away from them, while others offer highly conditional friendship. Some people are helpful, while others are accommodating. When you understand the personality types you like to work with, you will see those opportunities more quickly. The traits you list should include more than just personal traits. If your business is in a stage where cash flow is critical, then your best customer might be one that will advance money for materials, or pay weekly for work put in place.
Do What You Like to Do
But, it’s not just customers and their checkbooks that you have to deal with. You also have to deal with the types of projects they bring with them. So, you need to list attributes that relate to geography, type of construction and project size. Think of all the aspects that are important to you in a customer, and in the kind of construction work you either like, or are looking for. Then narrow it down.
Unless you are in survival mode and have to take whatever you can get, taking on projects where you have little experience will cause you more harm than good. Think about project size and where projects are located. You might specify that you want all projects within 50 miles of your office. But, what if there is a high density area within 50 miles? If you can’t stand working in tight places then you’ll want to be clear about that in your list of traits.
Use Your Data To Refine Results
If you’ve been in business for a few years you can also use your collected data and information to further help define your best construction customer. Review your records of past customers and rank them according to how closely they match your ideal customer. Look at the trends. Are the ones ranked closest to your ideal in a particular geography? Do they fit into a particular project type, or have a particular delivery method? Do you find that more of your ideal customers are private parties, or corporate builders?
What about profitability? Do more of your ideal customers provide greater profitability? Or, is the profitability lower, while another aspect of the project that you value more is higher? This step will help to very clearly define your best construction customer. And, believe it or not, as you begin screening projects and prospects you will find yourself sorting opportunities more quickly. And, the ones you start to pursue will more closely match your best customer.
Here Are The Rewards
No matter how long you’ve been in business you can immediately use the knowledge you’ve gained in defining your best customer. It can guide your advertising efforts and serve as the structure for your sales and marketing activities. You will quickly be able to decide which referrals to go after, and you can just as quickly spot those that offer greater risk. Perhaps more importantly, you will find new efficiencies in your marketing efforts while lowering project risk and increasing positive project outcomes.
4 Marketing Review Tactics
- Ask every client why they hired you. You’ll get insights about the types of customers your business appeals to, so you can target the market more effectively.
- Ask every client for referrals. You might also add incentives like discounts on future work, or a finder’s fee pegged to the value of work referred.
- Be organized when following up. Try to find out why prospects didn’t choose you. You can use that information to refine your marketing, estimating and proposals.
- Review your marketing and sales efforts every month. Think about making them more effective, and about keeping them aligned with business growth and direction.
By selling to anyone willing to pay a certain price, though, companies fragment their resources and make further growth difficult. As customers use the product, the company modifies the offering and processes associated with making and selling it, typically in contradictory directions uncovered by this selling activity. – Frank V. Cespedes, James P. Dougherty and Ben S. Skinner III writing in MIT Sloan Management Review.