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When it comes to running a business, the owner or manager must pay close attention to five separate, but integrated, functions. These are the production of whatever the business does; the legal or contractual aspects of doing business; the human factor role (getting and keeping qualified, motivated, productive workers); the accounting and financial affairs needed for banking and tax responsibilities to ensure positive cash flow; and getting business, or marketing.
The first four functions come with mandatory and legislated ways of doing things. Not so with marketing. Except for federal antitrust laws that prohibit actions in restraint of trade, the options are wide open.
With no prescriptions or guidelines, such as the National Electrical Code (NEC), it is not surprising that marketing is possibly the least understood and most neglected aspect of private company management.
Most electrical contractors pay little attention to marketing. Ask for a definition and you will receive many different responses.
To be successful in the marketing aspect of business, you must first create something worth buying and then convince customers to buy what you have created.
Classic theory says marketing consists of four Ps—product, price, place and promotion. Let’s look at them one at a time.
Owners usually do not buy pipe, wire, fixtures and devices. The product of electrical contracting is not what you install, but the benefit of having electricity in buildings; buildings would be dark, cold, hot and dumb structures without it.
In electrical contracting, the product is not tangible, it is a service. How electricity gets to the receptacle or application device is of little concern to the buyer. What is desired most is reliable, safe and effective performance, which buyers want delivered with no hassles and in a time frame that fits their operational schedules.
In addition to power distribution wiring, there are specialized applications of lighting, automation controls, safety and security, communications and on-site generation to consider. If your company does not already offer these services and you wish to expand your offerings, you must look at the foreseeable demand and likely competition to select which ones you will provide.
It will be necessary to have qualified and efficient suppliers, not to mention motivated and productive installers.
You probably have some kind of track record that helps to make the selection, either in the company currently or in your previous career positions.
In new building construction, it is likely that the owner’s design consultants will document what is wanted in plans and specs, so you must be able to respond effectively to a variety of requests for bids or be prepared to let the job go to a competitor. In service and remodeling work, you may have more influence on what is needed and, therefore, be in a better position to avoid unbearable risks. You have some options.
Pricing a project is part science, part art and part gambling. The price includes estimated material and labor costs, profit, and general and project overhead, all factored by risk. Much new work is obtained by bidding to plans and specs in competition with several or many other firms. The work is often awarded to the lowest responsive responsible bidder, but not always.
Sometimes there could be other factors that rule. They usually are involved with reducing the risk of uncertainties the buyer would rather avoid. There is a growing trend for owners to buy a single contract for design-build from a single prime contractor.
If you have a well-known reputation or a personal relationship with the prime, sometimes your help in getting the job will be more than enough to ensure selection of your company during the proposal stage. Sometimes you can submit alternative product ideas that could save the owner money and get you the job, even though the original plans are modified.
Both bid shopping by the prime and bid peddling by the trade contractors are considered to be unethical and should be avoided. Unfortunately, some buyers have been experimenting with reverse auctions over the Internet to drive down prices. That is a most virulent form of bid shopping and should be avoided because no one wins. If you stop playing the game, it will go away.
Buildings are not movable objects, so how location fits in may not seem self-evident. However, there are location trends for marketing in every business jurisdiction. One must consider the efficiencies of travel and material-delivery logistics in addition to geographic shifts in economic development. As trends develop, it may be advisable to shift locations to be ahead of the competition.
One wise marketer explained his success by saying, “I watch where my customers are headed and I run around and get in front of them.” If you are unable or unwilling to follow location trends, competitors may find your absence to their liking. Some types of work are inherently transient, like power line construction or wind generators, so weighing the benefits against burdens in location is an important factor to consider.
Another trick is to follow the money. Developers usually lead construction by several years, so closely following plans for development in your area could be a useful weekend hobby.
You are familiar with pricing promotion—it is all over your grocery store, television, Internet Web pages and plastered throughout your newspaper. “Buy one, get one free,” discounts and rebates are common tactics used to promote one brand over another. If you ever have been stuck behind a shopper with a handful of discount coupons at the cash register, you know all about pricing promotions.
But how can electrical contractors apply a pricing promotion? It’s difficult to do, unless you can change the shape of the deal. Mixing and matching ideas and offering special services could help your firm stand apart from its competitors.
That tactic is called “positioning.” It also helps if you can position your service with some advantages to the buyer unique to your firm. On-call service operators, maintenance contracts, certified installer qualifications, above average guarantees, the ANSI-approved National Electrical Installation Standards published by National Electrical Contractors Association, special off-hours rates, things of that nature. This is the area where your personal creativity could be a deciding factor.
But promotion also involves getting the word out about your company. Sending out press releases when your company has a new service offering or when you receive an award is a good way to let the industry know you are there.
You want your potential customers to know about you, because when they need an electrical contractor, they will remember your company. Recall the phrase, “out of sight, out of mind.” If customers are not aware of you, you won’t get the business.
Getting the sale
Now that we have the elements of marketing in place, it remains to complete the other side of the coin—getting people to buy it. I want to focus on the “funnel strategy.” Imagine a common funnel, with sales prospects coming in at the top and profitable customers coming out the bottom. This is not a common strategy in the contracting industry, so a little could put you far ahead. It works in six steps:
1. Increase the size of your funnel. Most managers know a comfortable set of prospects almost like friends. The set is probably only a small fraction of the total number of potential customers in the area. Continually identifying and adding new prospects to your list is a must-do item that is often overlooked until too late for a needed correction.
2. Weed out unprofitable prospects. You know what a profitable customer looks like. It is futile to pound on a wall trying to turn it into a door. Set limits on the quality of your customers and do not be reluctant to make some ruthless decisions to reduce unprofitable deals.
3. Persuade undecided prospects more effectively. Learn some sales tactics to help your prospects get over their reluctance to close and come to a decision. Pay attention to professional sales people in clothing stores or at an auto dealership. Uncover the causes of resistance and ask for the order more often and more persuasively. When you complete a challenging job, send a brief description of problems solved to your best prospects, hopefully with an endorsement from the satisfied customer.
4. Find better prospects. Spend more time going to places where profitable prospects hang out. Consider using some professional communications help to get your message upgraded in quality of appearance and visual impact.
5. Increase the speed through your funnel. Use more efficient ways to move prospects through your funnel. Contact them more often using automated scheduling or software contact managers. Use available communications media efficiently to reach your prospects. This could help ensure that your name will be there when opportunity knocks.
6. Replenish your funnel continually. People come and go. Projects begin and end. Be on the alert for moves and adds to your prospect list. Never let it fall below a threshold needed to keep up your flow of estimates, bids and quotes.
Also, consider using Web sites and e-mail marketing. Electronic media may or may not be ideal to your firm’s needs, but if you create a Web site, make sure it downloads quickly and is easily navigated. Use attractive colors and be sure copy is large and readable.
Avoid dense copy. Keep the message on track and updated often. Check out some competitor Web sites to see which types you prefer. Do not let a Web site designer get carried away with expensive graphics or animations and sound that add little but cost to your needs.
A poor Web site is worse than none. Get personal with e-mails that are linked to your Web page. E-mail news about your project completions may draw some resistant buyers closer, and bigger projects may even get press attention, netting more business.
Finally, recall the old adage, “What you are doing speaks so loudly, I can’t hear what you are saying.” Your professional reputation may be the strongest marketing tool of all. EC
TAGLIAFERRE is proprietor of C-E-C Group. He may be reached at 703.321.9268 or [email protected].