First off, really get to know your prospect. Understand their needs, wants and top priorities. The industry is what you know best – you can relate to homeowners and really level with them. The better you understand the clients, the better your suggestions for their living space will be.

I had my house painted recently and the bid came in 60% lower than the other bids. I took the bait because it’s human nature to want to save money. I’m not experienced in house painting, so I didn’t know what kinds of questions to ask to ensure the job was done right – and on time.

Here’s what I got for that low-ball bid:

It took him 2 months to paint the interior rooms of my 1,700 square-foot house. He used low-quality paint so he had to paint multiple coats, which cost more money. He over-sprayed my windows and window frames and didn’t clean it up. He also over-sprayed my ceilings, which meant I had to paint the ceilings as well. He removed all smoke detectors, phone plates, electrical outlets and vents, but didn’t reconnect any of it after the job was done. I’m still sorting through nuts and bolts trying to figure out what goes where and I’m left with wires hanging out of the walls where light fixtures were removed but never replaced.

Now that I’ve been burned, I’ve learned. Now I know the right questions to ask – a little too late. Had one of the higher-bidding contractors taken the time to really understand my needs, I most likely would have trusted them more with the job. What I valued was neatly painted walls, a one-week job, and all fixtures replaced at the end. They then would have had the opportunity to help me understand that based on my values, that level of service would cost more money.

These are the types of questions you can ask to help a potential client better understand the process, problems they could run into, and what outcomes would be unacceptable. Though my questions are paint-related, any contractor can tweak them to fit their niche:

• Do you have any time constraints? Are you concerned about the length of time it will take to complete the job?
• Are you concerned abou the quality of paint (how it looks on your walls and the lifespan of the product) your contractor uses?
• Do you value neatness of work?
• Are you concerned about over-spraying?
• Is it important that your contractor remove fixtures rather than tape around them?
• If light fixtures are removed, is it important that your contractor reconnect the wiring and fixtures so you can actually enjoy your newly painted walls?
• Is it important that your contractor has lien and liability protection?

These are but a few questions you can ask to understand what the homeowner values. Once you have this information, ask them how the low bidder will meet their needs and deliver the quality of service they value.

Suggest to your prospect that they go back to the other bidder with a list of expectations to be included in the signed contract.

Just by showing that you care and taking the time to understand their needs will most likely land you the job. It will get them thinking because you’re teaching them things to think about – remember, you’re the expert, not them. They don’t know what questions to ask or what sort of problems can arise.

If they don’t hire you right on the spot, they’ll most likely hire you after the lower-bid contractor refuses to put into writing any references about guaranteed satisfaction or job time-lines.

When you play smarter and really get to know your prospects by asking key questions, you’ll start taking away more business from low-bidding competitors.

Besides the quality of work, what separates great contractors from so-so contractors is attitude. The difference between like and love is referrals.

Surrounded by contractors – who will I refer?

Paint contractor – I told him I wanted the entire house painted except for the ceilings. He gave me a flat-rate quote, including paint. He didn’t have a checklist and he didn’t ask me any questions, except for how many colors I wanted. I told him he had two weeks to get the job done because I had bathroom contractors lined up for the following week and hardwood floor installation after that.

Results:

• He took a week to prep.
• He gets to the job site every day around 2:00 p.m. and paints until around 6:00 p.m.
• He rinses painting equipment in my kitchen sink and leaves paint all over the sink and counter. He also rinses equipment on the ground cover in my front yard, leaving paint everywhere.
• In the middle of the job, he left to go work on another house for three days.
• When I saw that he hadn’t sprayed the closets, I asked about it. His response? “You never said anything about painting closets.” Frustrated, I replied, “I told you I wanted the entire house painted.” This is why checklists are a good thing. Communication stunk.
• He’s taken over three weeks and the job is still not done. Now he and the bathroom contractors are bumping into each other. The walls are sprayed, but the touch-up work is not finished.
• He accidentally over-sprayed onto the ceilings in every room.
• He painted over the over-sprayed spots with white satin (my ceiling finish is flat) and the whites don’t match at all. So now, we’re looking at having to paint entire ceilings.
• He asked for an additional $300 because according to him, “At this rate, I’m only making $17 per hour,” and I said, “If you didn’t over-spray and you worked faster, you’d be making $40 per hour.”

Will I refer him? No. No. No. 

General contractor – I gave him a checklist of about twenty items I wanted fixed, changed, taken down or added.

• I wanted three posts that housed outdoor lighting removed and electrical cut. He took the posts out and killed the electrical, but left long electrical cords sticking out of the ground. I felt it was sloppy work because he didn’t cut the wires to ground level.
• He keeps telling me that he’s going to make a cover for my fuse box. But he’s already been paid through escrow for this little job and hasn’t fixed the problem yet. It’s been over a month.
• He charged $25 per light fixture to hang exterior lights (on existing boxes) on both sides of my driveway. Since I plan on changing all of my light fixtures inside and out, as well as adding fans, I learned how to do it myself.

Will I refer him? Yes, because he is available for lots of little odd jobs, but I’ll tell my friend that sometimes he doesn’t complete work and that you have to stay on him. I suppose that for the most part, he was a decent contractor.

Bathroom contractors – they asked detailed questions about every aspect of the job and advised me on different solutions. They gave me a flat rate and wrote down all the work that would be done for that rate.

• They show up early in the morning and work hard until 5:00 or 6:00 p.m. every day.
• They call every afternoon to give me updates and their plans for the next day.
• They used their own backer board because they had extra in their trailer at no extra charge.
• They used their own cement at no charge.
• When they tore out the tub, there was a big hole in the sub floor and a missing or damaged joist. They used their own plywood that they had in a shed to fix the sub floor and then fixed the joist for free. One of the contractors had to lie in the crawl space in mud (from the dripping tub when they moved the pipes) and work on his back and they didn’t charge me for labor or materials.
• One of the contractors is an electrical contractor whose advice was badly needed one day. I was disconnecting a light fixture (from a soffit in the family room addition) in order to attach my new fixture. Upon pulling the fixture from the wall, I noticed that the wire looked like an extension cord instead of electrical wires. He said he’d climb through the attic, check it out and fix the wiring if he could get to it. The next day, when I walked into the house, the new light was attached, again at no charge.
• They went shopping with me to help with the vanity dimensions and tile ideas.

The bathroom is still under construction. All that’s left is the tile grout and shower door installation. I took them to lunch yesterday and told them how much I appreciated their hard work and thanked them for the “no charge” work. Their response? “It all comes back full circle.”

Will I refer them? Absolutely. In a heartbeat. No question about it.

Are you getting enough referrals?

That means that contractor-seeking homeowners are likely bombarded with lines like, “We do quality work” or “I have years of experience” or “I am honest, I work for you!” Nowadays it takes more than a smile and a handshake to get work. It takes some creative selling. So the question becomes: What is your unique selling proposition? Your USP?

The USP is not new to marketing. Today a number of businesses and corporations search for and use their USP to the fullest extent. And in a highly competitive market it is vital that you realize and utilize your company’s unique selling point. A recent post from Qualified Remodeler offered some good advice for contractors seeking out their own USP.

That advice includes something that many of you are likely already doing — contacting past clients. But instead of contacting them simply to maintain a relationship and check on past work (an increasingly important approach in its own right), you can use them as a marketing research tool. Surely there is some reason that those past clients chose you in the first place; something about your company that somehow appealed to them more than your competition.

So the deal is to call some of your favorite, most successful clients past, of course check up on the finished project and offer any assistance needed, but also schedule a rendezvous (i.e., dinner, lunch, etc.) where you can probe them as to why they hired you. As Qualified Remodeler suggests, do this with about five of your favorite clients and look for a theme to arise, the odds are good that you will find one. This may very well by your company USP.

Of course you can also search within. Your competitive bids and quality of work will speak for themselves. Is there anything else you have to offer? Perhaps some specialized skill that you can capitalize on? It could be a unique work method that ensures fast work without sacrificing quality. In what ways are you inventive? How do you go about your work differently than the competition?

Your unique selling proposition lies below the surface and only you can know it. It may seem a bit difficult to come by at first, but once you’ve grasped it, it will be as easy as A-B-C. Just don’t forget to include past clients in the search. They will be your most informative and valuable resources during your search. Surely it is past clients who can best reveal exactly what it is about you that will appeal to future clients.

Low bidding is not without its pitfalls, however, and it is vital that no contractor bid lower than his or her means allow, especially within the realm of remodeling.

Pitfall #1: Losing Potential

Low bidding can easily lead to taking a loss. A contractor, in the oft mad drive for work, might look at a job — quickly measuring up the job and the homeowner — and feel confident enough to bid lower than normal for the work. The general gamble here is that the job will run smoothly and according to plan, despite experience of the opposite. We often counsel homeowners to be prepared for just about anything when “opening up” their home. In this case, the same advice is useful for remodelers seeking to outbid the next guy — simply having work does not necessarily spell success.

Pitfall #2: Labor and Manpower

Labor is another key issue. You, the contractor, are responsible for paying your employees, whether the job is over budget or not. Low bidding combined with unforeseen circumstances can spell disaster for your job, finances, reputation, and that all-important relationship with employees. Furthermore, should circumstances send the job behind schedule, you won’t have the resource to recruit the manpower to get it done in a reasonable amount of time.

Pitfall #3: Reputation

Reputation. Low bidding is often looked sternly upon by other contractors and trades within the community. It may seem like the short road to ongoing work, but in the long run it can be more damaging than helpful. In tough economic times all contractors are forced to lower their bids, there is no denying that; we all have mouths to feed, and that includes homeowners. But on top of all the other risks involved in low bidding, which can also hurt your reputation, tarnishing the company name is not one to ignore.

Pitfall #4: The Gamble

The basic summation of the pitfalls of low bidding is that it is a gamble, and a risky one. I imagine there are several contractors throughout the construction world for whom this practice has been successful, but I would venture that these are few and far between. I personally have seen low bidding become the downfall of two separate contractors, one to the tune of millions of dollars in losses and owed debts.

Again, at this time we all have to sacrifice, homeowner and contractor alike, but be wary of the pitfalls of low bidding. This, unfortunately, is no 4-bit video game.

For some time we’ve been keeping an eye on Jonathan Sweet and his remodeling blog, The Sweet Spot. As senior editor for Professional Remodeler, Sweet keeps a close eye on the state of remodeling these days. And he does good work in disseminating not only his opinion of the times and trends, but solid information as well.

One recent post deals with the 14 most popular remodeler marketing tactics, as opposed to those remodelers are largely ignoring. The most popular tactic? Job/truck signs, while billboards and telemarketing tie for the least popular. It is an interesting and telling list, certainly worth a look.

Online referral services serve a number of purposes. For the contractor, it is essentially a new form of advertising — contractors typically pay to be included on the list. For the homeowner, online services help expedite the contractor-finding process by doing a lot of the legwork. That includes such laborious tasks as:

• License verification
• Background checks
• Referral verification (the service calls references themselves)
• Insurance verification

Many also provide feedback from previous customers and make getting free estimates from these contractors a simple form-filling process.

Add to that the fact that many services are free, and the appeal is not hard to realize. Still, as Remodeling Guy points out, that doesn’t necessarily make online referral services a foolproof option. While the verification services provided are useful, and probably effective in general, it would not be too difficult for a dishonest contractor to get around these obstacles.

That is why the online referral service should not free the homeowner from all research obligations. It is important to remember that many of these services make money off the contractors — a good reason to let some mediocrity slip through the cracks. Now, there are plenty of online services out there; the rise of the online referral service will inevitably spawn even more hungry entrepreneurs to the cause. Therefore, it becomes necessary to effectively research the researcher, for homeowners to spend a few hours looking into the referral services themselves.

So while online referral services are an ever more effective way to reach homeowners and potentially gain some serious business, they are unlikely to be as easy for contractors as paying a fee and reaping the benefits. Well-researched homeowners will still judge by personality, although being on their list (narrowed down by the online service) will certainly help the cause.

In addition, when it comes to researching the same advice applies to contractors looking to advertise within this rising trend. It would be unwise to place your bets with a service that has had a negative reaction around the web.

The concept is simple. Past clients are a familiar resource whom you’ve worked for in the past. Their repeat business or recommendation to a new client has a certain, predisposed measure of validity that is just not possible with strangers. Now, in 2003 when the original survey was taken, times were very different. The housing boom was coming into its own and contractors had more freedom to pick and choose projects.

Those times may have come and gone but the fundamentals of remodeling and lead generation remain, even though it may be contractors calling past clients to check in rather than the other way around. Yet despite the fact that homeowners are in the driver’s seat, you are still more likely to generate quality leads from past clients because both homeowners and contractors tend to trust the word of a friend or known client than a phone book or random ring of the phone.

Another interesting trend that came out of the 2003 survey and remains relevant today is the need for personal interaction. Most contractors surveyed stated that they put “gut reaction” and face-to-face conversation on a higher pedestal than any number on a lead sheet. The lead sheet may itself lead to the interview, but it would always be the interview that took precedent.

Again, now that the tables are turned and it is often the contractor doing the hunting, the same rules apply. Better leads come from past clients and should be prioritized. Homeowners running through the phone book or search engine are essentially window shopping. That is not to say that every lead isn’t important — there is a contractor for every job regardless of lead origin — but the odds are much better when familiarity is involved, not to mention contact onsite.

The point of all this being that keeping in touch with past clients is an excellent idea. The remodeling season is soon forthcoming, the stimulus package is pouring plenty of money into weatherizing and home repair, and every quality lead starts with the mention of your name…now may be a good time to make sure past clients remember it.

• 31% visit a search engine, searching without a specific brand or business in mind
• 30% look up a business in print in the phone book
• 19% use Internet directories
• 11% look at local search sites like Google Maps (driving directions)
• 3% get their information from a newspaper or magazine

Sure the phone book still ranks second among avenues for prospective customers, but taken in total barely one-third actually use print media to find businesses anymore. And you can feel confident that these numbers will continue to decrease. The phone book of the future will be uploaded, not left on your doorstep.

Source: Small Business Trends

Your marketing expenses are probably the biggest variable you can control. Those advertising dollars could directly determine the amount of your profitability. Controlling your marketing is how can you stop wasting money and keep more it!

Now by “control,” I certainly am not advocating unnecessarily limiting your marketing spending; rather, I’m saying — spend wisely.

“How do I spend wisely?” you ask. By knowing absolutely, without question or assumption, what marketing programs or channels are the most to least effective, and eliminating the least effective ones. You can re-direct your marketing resources in those areas that are the most profitable.

Tracking is the answer to knowing what sources are working (or not) for your company, whether they are offers, lists, creative, or channel specific. Which call-center agents or event/show promoters are the most or least effective? Not just the ones that produce the most leads . . . but more importantly, which ones convert those leads/inquiries into the most appointments? And which ones ultimately result in installed business?

If you can’t identify which marketing channels or individual efforts or “tests,” are the most cost-effective, you cannot accurately focus more resources on the “winners,” and thus, increase leads, revenues, and bottom-line profitability! (NOTE: “Valid Testing Methodology” is the topic of our next article.)

For an example, let’s say you’re spending $35,000 this week. $5,000 each on solo Direct Mail and Co-ops, 2 radio stations, and 3 TV stations. Your overall Gross Sales were $350,000; therefore, your Ad Ratio (cost of marketing / Gross Revenue) is 10% (or whatever your “allowable” range is). Your advertising was cost effective for your organization. Congratulations!

Without tracking all you have is the summary of your cost of marketing and its effectiveness.

With tracking, you discover that:

• There were no leads or sales from 2 of your TV Stations! That’s $10,000 down.
• The other station brought in $75,000 (6.67% G/Ad Ratio). One radio station brought in twice as many leads but no sales; however, the second station brought in $50,000 (10 % G/Ad Ratio).
• The solo Direct Mail represented $100,000 (5% G/Ad Ratio) in Gross Revenue while the Co-ops were $125,000 (4% G/Ad Ratio). But the mail’s cost was twice as much.
• Both Direct Mail and Co-ops’ performance was outstanding, the Co-ops brought in additional branding awareness for your company because of the increased household coverage.

Do you see how, going forward, you could re-direct your resources based on factual knowledge?

Tracking can be as simple as having a different “extension” on each different ad if you’ve only one phone number. Simply provide a spreadsheet with the “extensions” in use and their corresponding source; ask your agents to keep track of the calls they receive asking for a particular extension. Although with human error it’s not fool-proof, but leaps and bounds ahead of not knowing at all. Of course, tracking from the raw lead or inquiry to appointment and then to sales is a little more difficult.

You could use an outside source such as Who’s Calling or Ring Central to provide 3rd party separate “800” numbers for each of your ads. But again, it would be your internal staff’s responsibility to be able to track those leads through the process to Gross or Net Sales.

Or tracking can be more sophisticated with a different Validation Code being assigned to the following components, depending on the lead tracking software you’re using.

• Week of
• Source or channel
• Creative
• Offer
• Specific list segment, broadcast station, internet ad, etc.

With the proper software, you can also track the hours, salary, and productivity of your call-center agents, event/show promoters and Sales Representatives (even how effective they are per lead source).

By far the most comprehensive and cost-effective lead, sales, agent/promoter software is LeadPerfection. LeadPerfection is a totally enterprise-wide scalable system from marketing to sales to production and finally, accounting. The system is as easy to use as the Internet and provides easily read productivity reports for each department. (NOTE: While I recommend LeadPerfection, I am not affiliated with this company in any way, nor do I receive any compensation from them. After research of the 3 leading tracking companies, my clients and I have found it to simply be the best.)

Accurate tracking of your marketing channels, creative, list or offer tests, etc. is critical to improving your company’s customer acquisition process. Imagine the effect on your year’s end profitability if you could spend the same amount of dollars but increase your leads and revenues? You and your business will both grow.

– John Clements is a Direct Response/Lead Generation Marketing consultant. He can be reached at JClements@ClementsMktgGroup.com or 631-981-1994. www.ClementsMktgGroup.com