How It Should Be
In The Beginning
Three short years ago, I wrapped up my MBA studies and began my career in commercial construction. Initially, I was ‘bumfuzzled’ (a word I learned on the job). Taking the step from academic analysis of Fortune 500 companies, case studies, and business theory, down into the real world was a huge step. In fact, it was more of a tumble. How can companies succeed like this? I was constantly amazed. I was surrounded by seemingly successful companies who had no idea who comprised their target market. They had no formal business structure. They had no company handbooks. They had no procedure systems in place. And worst of all, they had no desire to. Again I say, how can companies succeed like this?!
Certainly the construction industry is a backwards industry in many regards, some of which are in fact quite admirable. But even such successful companies put far more faith in trades skills than mission statements. However in my short time in this industry, one thing has been most glaring. Construction companies do not understand marketing. It has been my experience that the purchaser of construction services has changed and the construction industry is lagging behind. I feel quite confidently that the companies who first recognize this transition will experience significant marketing success — even amidst the recession. The reason is simple — the marketplace is starved for this marketing message.
Methods of Acquiring New Business
Before we begin, allow me to give a brief overview of the two methods commercial construction companies traditionally use to acquire new business. First (and most popularly) is the bid method. This method includes an owner and architect presenting multiple construction companies with a completed set of construction plans. The companies each quote the cost of completing the project. Generally speaking, the lowest priced contractor is awarded the job. Second (and most desirable) is the design/build method. This method includes an owner partnering with an architect and a contractor, and the three-part team working together from the development of the construction plans to the completion of construction. Although this summary doesn’t adequately explain either method, if you are familiar with the industry, you probably already understand these fundamental functions.
The Bid Contractor
As I previously mentioned, the bid method has historically been the most popular. Why? Simple. Because it is easy. Why is it so easy? Because, as a contractor utilizing the bid method, you have the least requirements placed upon your marketing message. You see, when you sell services through the bid method, your services are commoditized. As we all know, commodities are differentiated by only one thing — price. In the mind of the owner, each contractor bidding the project will provide the same result — the structure the architect has designed. If you are a contractor and you primarily compete within the bid market, you are wasting your money on advertising. Nobody cares. You provide a commodity. In fact, you should probably avoid all advertising: truck logos, job signs, business cards, etc. Apart from simple, practical purposes, these things do not aid in the acquisition of bid projects. Not only that, but they increase overhead. Ideally, a bid market company would keep their business as lean as possible. This would allow the company to provide the cheapest possible commoditized product and subsequently be more competitive within the bid market. There they will find success.
Since the purpose of this article is to discuss marketing within the construction industry, it is here that we will part ways with the bid contractor. The remainder of this article will not apply to commodities, for reasons we have just discussed.
The Design/Build Contractor
The Construction Market Price vs. Benefit
Now we turn our attention to the contractor competing within the design/build market. The design/build contractor has two hurdles to overcome. First and foremost, they must build trust. Contractors, in general, have a reputation for being crooks. Without the accountability of 3, 4, or 5 other bids to compare against, an owner must trust a contractor to enter into a design/build partnership with them. Secondly, they must provide a service superior to a bid contractor. Because frankly, if the contractor does not provide an added benefit, the company’s offerings and the needs of the market will not align. In the long term, they will retreat to the bid market or fail.
So how should a contractor address these hurdles? Well, before we discuss this, we need to remember two very important lessons that contractors often ignore. First, facts are not enough. If your marketing message relies on nothing but facts, you have an underdeveloped message. “Even hard-headed business people end up buying the thing they want, not the thing they necessarily need,” said Seth Godin, author & marketing guru. “Great brands and projects are built on real value and a real advantage, but great marketers use this as a supporting column, not the entire foundation.” Second, psychological studies have proven that the purchase of experiences leads to greater long-term happiness than the purchase of material things.
So, let us now revisit our hurdles. How should a contractor tackle the trust hurdle? Traditionally, the contractor has had a marketing message such as, “You can trust me. I’m an honest man. I go to church. Ask anyone. I am a man of my word. Etc.” This message is generally conveyed through words and from the mouth of the contractor. So what good is it?! No contractor is going to tell you he is dishonest. Everyone has the same message and the message is a joke. A company is fooling itself if they think this is effective.
The most unbiased way to convey this message is through your company’s reputation. However, for the same reasons a reputation is powerful, it is difficult to manage. Why? Simple. A company cannot manufacture a reputation. The reputation is not the direct result of the company’s actions. The reputation is the byproduct of the company’s actions. The reputation does not exist within the company. It exists within the minds of the company’s customers and the customers provide accountability to accuracy of the message.
As a result of this degree of separation, it has been historically difficult to package and deliver to your prospective client. We have traditionally seen the best attempts of delivery through the medium of reference letters. But through the means of technology, something unfamiliar to the construction industry, we can take this a few steps further.
Let’s face it, text just doesn’t cut it anymore. In fact, I would be surprised if, at this point, anyone is still reading this article. We live in a digital age and if you are not using digital media in your marketing message, you better.
Most notably, you need a website. A construction project is a huge purchase for most owners. Given that our society relies heavily upon web-based research for large purchases, it is imperative you’re your company provide web-based marketing material. But as we have discussed, this should not stop at text. It should go beyond project photos as well. If you want your company set apart, you need interactive media to engage your prospective clients. Maybe you should consider: time-lapse videos of past projects, videos containing interviews of past clients, a blog with recent & relative information about your industry niche (and indirectly about your company), etc. As a marketing director within the industry, you should familiarize yourself with web-based and social marketing. They are the ‘word of mouth’ of 2009. I strongly believe that they are the immediate future of construction marketing and thus the key to overcoming the ‘trust’ hurdle.
Secondly, a contractor competing within the design/build market must provide a service superior to its bid market counterpart. For the contractor, difficultly lies here. The traditional contractor will quickly point to quality and expertise as the source of the superior service. The problem is, these characteristics are not easily quantified. An owner, who is not knee-deep in construction day to day, does not recognize or appreciate these added benefits. Due to the owner’s ignorance, the benefits are not valued and are thus worthless. A construction company who relies solely upon these un-quantifiable characteristics for its distinction in the marketplace will likely fail to convey a message of added benefit to the consumer and slide down the slippery slope to occupying space within the bid market as a commodity.
So what should be done in the stead? I would encourage you to look at the construction experience. As we have previously discussed, the purchase of experiences makes for a happy customer. Additionally, it is an inexpensive addition. For example, suppose you are a contractor who specializes in restaurants, what are you doing to aid your clients within the process? Maybe you should create strategic partnerships with other experts within the industry. Maybe you find a banker that does a large amount of restaurant lending, an attorney who specializes in restaurant law, or an architect that is a restaurant-designing genius. You should use your strategic partnerships with these professionals to create an experience. Call it a program, if you will. Your company is home to a 6-step program that makes restaurant construction a breeze. First, step-1: you perform a ‘Needs Analysis’ on your customer. Design some slick looking questionnaires that the customer will take home and fill out. Meet with the customer to review the results. Next, step-2: arrange a meeting to determine the feasibility of the project. Invite the banker, as well as the architect and the owner. They will come and contribute due to the prospect of new business. The four parties determine the who, what, when, where, & how of the project.
The process would continue as applicable, always being refined for maximum effectiveness for both the customer & the contractor. Soon, you become the restaurant building expert. You have a time-tested program that generates success (and the satisfied customers to prove it). Within this method, you have identified two important things. You have provided an experience to the customer. The benefits of this include a stronger relationship with the owner, a deeper understanding of your target market’s needs, a cost effective method of building expertise in the mind of the customer, and a value added service that is difficult to replicate. Additionally, although difficult, you have quantified the characteristics of quality & expertise. Congratulations.
In all of this, you have generated a unique message in the marketplace. You are marketing your construction services with a well-developed message, much like other advanced service industries. As abstract as it may seem, pay attention to the next infomercial you see. There are many similarities in the product they offer and the services you offer. Namely, you both offer something that is intangible. A contractor is not selling a building — something that can be touched or inspected. They are selling something that could be — something that looks very confusing on the blueprints. Likewise, the infomercial is selling something that can not be personally examined. You have to take their word for it. Sure you see pictures on the television, but how does it really work? “Well, let’s hear from some of our satisfied customers…”
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