Obtaining sales in the construction industry, at least for big dollars, is a slow and complex challenge. Large businesses know that their customers don't rashly decide to build a hospital and plunge ahead with a $750 million order. As a result, large construction companies go through an extensive bid process which includes RFP deadlines, presentation meetings, assigned site visits and more.
The sales process can seem to move slowly, leaving companies to wonder if they are making progress. Contrast that picture with smaller companies who are often being treated like they are a commodity because they are viewed as being the same as their competitors. Thus, even though most companies provide good service, good quality and good prices, if buyers view them as a commodity, then price drives the buying decision. When the customers view all providers in the same way they may start using a bid process to find the low price. So unlike large companies who are asked to bid to determine skills and price, a small company many be asked to bid because of price alone. To prevent this from happening contractors will benefit from developing a sales plan to differentiate themselves from the competition.
Sales and marketing plans are designed to ensure your company is called first for work and that customers keep coming back to your firm. The sales plan helps you cover your monthly overhead and prevents you from wondering what the next project will be after current work winds down.
A sales plan, which is usually part of the marketing or strategic plan, concentrates on strategies, objectives and tactics to find profitable opportunities or needs in the marketplace that will create more revenue for you by making your company stand out.
Your marketing plan is everything you do to promote your business from start to finish including handwritten notes or cards, magazine articles, code updates, job photos, advertising, new product information and job report cards. Marketing is also about making customers aware of what you do, how well you serve them, and why you are the best choice by creating the right perception of your company.
Use the following format to develop your sales plan:
- Start with a meeting to develop a sales plan. Bring your key people together with outside consultants and work together until you have established a format and know how to build the plan.
- Use the above group to develop a set of sales strategies. For example, consider how you price projects versus the competition. Decide whether you want to be a leader in price or follow the competition. Remember if you decide to be a low-priced provider your margins will be thin and you will be perceived as a commodity provider.
- Make sure you know your customers' needs so you can create sales opportunities that support your customers' focus for next year. For example, if a key account plans on developing specific office complexes, make sure you can address their needs so you become part of their outside resources, not just another contractor.
- Next, think about who will actually be on the sales team: estimators or estimators combined with others in your company. Strategies of this type will help you develop the rest of your plan including what duties you assign to each member of the team.
- Set up your sales objectives or targets. List revenues that you have purchase orders for and high potential orders to create from your backlog that you think will come through during the year. Next determine what your volume should be and the profit margins you want. This information will help you develop a budget for the year. Also add a list of new customers you want to bring on board. Next set clear targets such as $450,000 net profit per year or sales to be $800,000 per month and a profit of $50,000 on particular jobs. Set an additional goal to get at least three referrals from each completed job. Only with clear targets communicated to your senior people can you develop a plan to reach your sales.
- Build into your sales activities such as how often you will see your top customers during the year. Match these customers with your marketing by deciding what activities you will have for your contact. For example, face-to-face appointments versus mail, telephone, taking the customer to an event or a combination of these activities. Then decide how you will maintain contact with the rest of your customers and how you will attract new customers (including a list of their names and contact information).
The planning process gives you direction and also creates a built-in discipline that keeps you on track. It keeps your flow of work steady and predictable and it keeps you in control of your sales volume. Moreover, a sales plan will consistently deliver profitable work via loyal customers who contact you frequently.
Linda Hanson, CMC, is a certified management consultant and author of 10 Steps to Marketing Success. She writes, speaks and consults on marketing, management and customer service issues and can be contacted at www.llhenterprises.com. Sign up for her free newsletter The Superior Performance Report.