Marketing: The 80/20 Rule

The environment of business is constantly changing, and businesses within this environment must also constantly evolve to sustain themselves. In this dynamic, businesses are either growing or dying.

A small percentage of owner/operators might feel their business is neither growing nor dying as there business has changed little over a long time and still maintaining a constant level of sales. The error in this thought is mistaking no change with a very slow death.

Traditionally, asphalt maintenance professionals have sought to grow their business, like any business, through the securing of new business sources. Companies might have their sales force make calls to property managers, public works divisions, universities, hospitals, public schools, general contractors, and other owner/managers of large driving or parking facilities. These "cold calls" often provide little benefit unless a firm has a pending project they are soliciting bids for. Contrary to popular belief, the best method for securing additional contracts is not seeking new contacts but is to focus on your existing customers and develop that relationship.

In the 1800s there was a famous economist named Pareto, who developed what is now known as Pareto's Law, or the 80/20 rule. This rule states that 80% of something will be derived from a 20% source. For example, 80% of your employee problems will come from 20% of your employees, 80% of your customer problems will come from 20% of your customers, and finally 80% of your total business comes from about 20% of your customers. Now ask yourself a question: If 20% of your customers account for 80% of your business, wouldn't you be better off and more successful securing additional business from these key customers, instead of trying to recruit additional firms to make up the minority of your business?

The directive then is to change your business process to focus on developing your relationship and business with your key customers and reduce your efforts on trying to find new customers. How can you develop your relationship with your key customers? Marrying a son or daughter to the owner of the other business probably hasn't been an option since the Declaration of Independence and Bill or Rights, but there are other methods.

By improving the flow of information and providing transparency into your business, your key customers will become aware of your cost structure and they might feel more comfortable providing quick quotes to their customers with the understanding that you would be the subcontractor.

Create a company newsletter, which you distribute to these 20% key customers. This newsletter not only contains articles on the importance and advantages of preventative maintenance, but it can also showcase your firm's professionalism through highlighting key employees and their professional experience, showcase recent high-quality work, and provide an introduction to new employees, especially your sales staff. (When a customer is contacted by a person whose dossier and picture they have already seen, that customer will be more likely to feel a connection and speak openly with that person.)

Creation of your company web site will not be the next million-dollar tech buzz idea, but there is a significant switch in e-commerce to supporting sales — not necessarily making sales. Your company's website could contain information that indicates what and why your are in the pavement maintenance business, and why your firm is professional and quality oriented.

A web site will provide a non-threatening, zero pressure sales opportunity. It will also distinguish you from your competitors. Websites are also very inexpensive, ranging from free to about the cost of a monthly cell phone bill.

In addition to improving your communication and relationship with existing customers, you can expand your business by investing in your sales force through training.

Jared Everett, CPFM, is owner of Everett Professional Services LLC, and director of parking and transportation services at Boise State University. He also has worked as director of sales and marketing for an asphalt maintenance firm. Steve Cordon, CPFM, is assistant director of parking and transportation services, Boise State University. He has also worked as a buyer and project manager of asphalt maintenance services.

Work your existing customers

To learn how to get more sales from existing customers attend Jared Everett's seminar, "Strengthen Your Sales & Customer Service Skills" Feb. 5 at National Pavement Expo in Atlanta. Everett will discuss the latest research on "Top 10 Mistakes" bidders make when responding to an RFP and "Top 10 Items" buyers like to see in an RFP.

Other NPE sessions focused on improving sales and marketing include: "Killer" Marketing for Contractors, Jeff Stokes, Pinnacle Performance Group, Feb. 2; Selling "Excellence" in the Pavement Maintenance Industry, Brad Humphrey, Pinnacle Performance Group, Feb. 2; Marketing for the Long Run, Don Turner, Parking Renovations, Feb. 3; Gotcha! Attitude Is Everything in Sales, Guy Gruenberg, Rose Paving, Feb. 3; and more.

For descriptions and to register visit www.pavementonline.com.

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