The Contractor’s Best Friend /04-10-2013/ How to Get New Revenue from Old Customers

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Marketing teaches us that it takes less money to maintain a customer than it does to develop a new customer.   While this seems to make sense for businesses that produce or sell “perishable” products like food, clothes, maybe even cars, I always found it rather difficult to apply this thinking to construction. Boy was I wrong!

In more than 25 years in the construction industry, both as a contractor and consultant, I have realized time and time again the reality of increasing business from my number one “prospect”…my current customer. Yet I continue to get requests from contractors on how to grow their revenues through developing new and creative business development strategies to capture new customers.

Now, we certainly need to maintain an effort to develop new customers BUT we can’t miss the opportunity to increase our revenue and our profit with those customers who we have performed work for in the past. Let me share a few techniques and approaches that may help you raise your revenue this year by going back to a proven “honey hole.”

1. Gain the Vision of Your Customer

Getting a clear picture from your customers about what their building or project objectives are should be an effort made during the selling phases leading up to the first sale. If the project is commercial, will there be additional concrete needs? What are the expansion projections? If the job is for a residential customer, will the customer be looking at additional add-ons or improvements in the future? Don’t be timid when it comes to identifying opportunities that your customer may be looking at in the future. If you don’t ask such questions the customer may mistakenly assume you really aren’t that interested in more work.

2. Seek to “Partner” on the Development & Budgeting Effort

Nothing ties a contractor to a customer better than having been part of the actual development phase of the project. Whether you can assist the customer to develop a more inviting patio design or you can provide a more efficient method to put the columns in place, being part of the development of any project gains you greater respect and long-term opportunities. Likewise, working as the financial consultant on developing a practical budget with your customer allows you to get close to the real emotional side of paying for the project. Once you enter the “inner sanctum” of the customer’s financial world there is little else that they will be shy about discussing with you.

3. Personalize Your Follow-up and Stay in Touch with Customers

This combination of efforts continues to be the leading reason why more contractors fail to get more work from the same customer. Follow-up efforts to contact the customer about work that is in process and to see how he is doing and what he is thinking should be part of your client relation strategy. If the customer shares his desire for additional work in the future, the follow-up effort gives you license to call or e-mail him on a consistent basis to keep your name and desire in front of them. Even if you have sales people who made the sale it is important that you contact the customers. Often, an owner brings even greater interest and intensity to the relationship. Many contractors will send out generic thank-you cards and letters, perhaps even putting new customers on their newsletter receiving list. While these efforts keep your name out there they are not of the personal nature that brings greater “likeability” to you and your company. Touch your customers…personally.

4. Host Customers for Your Company’s “State of the Union”

Once a year you should host a breakfast or luncheon where you invite some of your better customers to share with them your firm’s direction and commitment to your customers. This is a good time to invite your customers to share their needs and expectations about where they are going. I’ve facilitated many of these luncheons, often called “Lunch and Learns,” for contractors across the United States and the response is always very positive. You can always hold more than one of these luncheons a year and simply better segregate the customers you want there. The customers actually enjoy the luncheon since they will often fall into conversations with other customers who have also enjoyed your company’s work results.

5. Provide an Incentive to Repeat Customers

Certainly, many customers appreciate an incentive from a contractor who they have given work to in the past. An incentive might be a percentage discount on upcoming work to be performed, a “pass” on a deposit that is often required of new customers, or a higher priority in scheduling upcoming work. While the financial incentive might be the hook with customers whom you have just completed one or two projects the long-term customer may simply appreciate knowing that you will move their job up a little sooner on your schedule when possible.

6. Continue to Provide Before & After Photos

One mistake contractors can make is to discontinue giving past customers photos of their projects. This is a subtle way of telling the customer that you don’t have to work that hard to keep their business or that you might be taking their business for granted. It is just as important to maintain the same energy and sales effort with customers that you have done five or 15 projects for as it is with the brand new customer who you are trying hard to impress. Any “smart” phone has a built-in camera so there really isn’t an excuse to providing such positive reminders for the customer about you and your firm’s professional efforts.

7. Ask Customers for Referrals

This networking technique is especially important for contractors who work with residential customers. While the homeowners who needed a driveway or patio poured and finished might not own other homes or buildings they very often have other friends and relatives who trust their judgment to use you for their concrete needs. Asking your customers for referrals is really part of “Sales 101” for sales and estimators but is often neglected. Too bad because for those sales professionals who do ask for referrals every time they sell a job…they can increase their revenue 40%-60%! This technique is a great way to grow your sales through turning your existing customers into sales people and door openers for your company.

8. Introduce Your Customer to Other Building “Partners”

This technique may be more doable with commercial clients but there is a growing number of building owners who are looking to further their investments and ownership of buildings by looking for partners who might share some of the financial and management risks. The conduit common to such an arrangement could very easily be you! This gets back to the need to understand what your customer’s vision is for their own company growth and their resource situation. By keeping an open ear you might just hear something that could allow you to play “broker” between two potential partners that would only naturally look at you to do the construction portion that you specialize in providing.

9. Do Quality Work!

One thing is certain: If you do not perform quality work for your existing customers you fail to get additional work. All the greatest marketing and customer-service tricks in the world cannot make up for poor quality. You can increase the likelihood of driving up revenues from existing customers by doing a great quality job the first time. If you and your work crews are not 100% fanatics about performing quality then you would be best served by getting this part of your company fixed first. Another way to leverage quality for your sales benefit is to have your customers visit and tour your work sites. When your workers know that a project’s customer will be reviewing their work, employees will often respond by paying just a little bit more attention to their own work practices.

10. Just Ask for It

Do you really want to increase revenues from your existing customer base? There is only one thing that will do this in the end and that is to just ask for the business. Even the customer with whom you have had a great relationship wants to be asked. No one likes to be taken for granted, even your most loyal customer. When you are having that morning cup of coffee with a long-term customer and they talk about that new construction job they want to get started on in the next year, don’t assume that they already have your name written in as their contractor of choice. Ask them for the work and let them know that you want their work.

Increasing your revenues can certainly be done without a lot of extra marketing and advertising costs. Treating your current customers well and taking a sincere interest in their future will open many doors to repeat work. Sure it may cost you a dinner a few times a year, maybe even a round of golf or some tickets to the ball game but this is still small potatoes compared to digging and scratching everywhere possible to find new business.

If you are doing some of the items listed above then go back and measure how successful any technique has been to increasing your revenues. Can you see a direct correlation? If not, perhaps you may need to rethink and adjust the effort to capture more opportunities to win additional business. It is possible to realize new revenues from old customers but it will take working many of the ten techniques and approaches shared here. Go back to your “old” customers and consider renewing your commitment to their future success.

Brad Humphrey  

© 2013 Brad Humphrey, Pinnacle Development Group/The Contractor’s Best Friend™

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