Marketing Strategies for Today's Turnkey Contractor

By Alan W. Martin | Oct 15, 2006
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Before we can market ourselves, we have to establish a base line. That will require us to develop an understanding of what we are marketing and, above all, who we are. Many contractors identify themselves as being in the electrical business or in the construction trade business. Those descriptions are too narrow. We are in the service business. The history of marketing is filled with organizations that have misidentified their businesses.

Harvard Business School marketing professor Theodore Levitt wrote one of the best articles on the subject. His “Marketing Myopia” describes the failure of many executives to recognize the broad scope of their businesses, thereby endangering future growth. In the classic Harvard Business Review article published more than 50 years ago, Levitt cited examples in many service industries, such as dry cleaning, electric utilities, movies and the railroads. For instance, he wrote, “The railroads did not stop growing because the need for passenger and freight transportation declined ... they let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were product-oriented instead of customer-oriented.”

Because of the technical nature of our business and the fact that most of the contractor founders were craftspeople, it would stand to reason that our organizations are product-oriented. But the reality is that we are in the service business. Once the reality of that statement is understood, then the direction of the marketing effort can start to move forward.

Servicing our customers drives us to become marketing oriented. Marketing-oriented organizations listen to their customers’ wants and needs. They want to establish a close relationship to the end-user. A technical-oriented organization is content with bidding a contract through a middleman (e.g., the general contractor) and has little involvement with the end-user. Even though this situation is an obstacle that we mistakenly believe we can’t avoid, we respond by doing nothing; we just accept it. Products—service is a product—don’t market or sell by themselves. If we have a product that no one else has, or there is no competition, perhaps our need for marketing or this article would not be necessary. But we all know that’s not true. That is why American industry spends more than $10 billion a year on sales training.

Because electrical contractors are still product-oriented, some contractors hardly plan at all, and others simply extend one year’s budget plan into the next year. Progressive firms are beginning to realize that this doesn’t work in our fast-changing markets.

Customer-oriented strategy planning is becoming more important in many companies. Contractors are paying more attention to changes in the market, mostly because the customers are demanding versatility. Contractors must constantly evaluate their strategies to be sure they’re not being left in the dust by competitors who are finding ways to reach the end-user.

It may sound crazy for contractors to think of changing a strategy that they believe is working well, one that was established by previous generations, or to just accept that it is the way the industry operates. But what those contractors fail to see or plan for is market change, which occurs with more sophisticated customers and stronger competition.

We cannot be afraid of change, and we can no longer adhere to the ideas that “if it’s not broke, don’t fix it.” This is the worst adage ever applied to business. That phrase has created apathy, stagnation and a lack of creativity and growth. Of course, we can continue to wait until the problems become completely obvious to do something about it. At the point where customers move on and profits disappear, it just may be too late. Contractors who take the lead in finding innovative new markets and new approaches have a competitive advantage

How do we get to market our diversity as a turnkey, design/build contractor to our target customers? By marketing planning!

First, you must know the difference between marketing and sales; they are two different disciplines. Marketing is more of a science, while sales is more an art form. The commonality between them is the end-user’s wants and needs. Therefore, analyzing your customers or target market should be done before developing a marketing plan or strategy.

What do you need to know upfront?

1. What’s your target market: Customers, area, type of organization and contacts? The more detailed, the better.

2. How will you reach these markets: By direct contact telephone or face-to-face, mailers, e-mail, or advertising? What kind of advertising media: Cable TV, radio, newspaper, or trade or periodical magazine? What human resources will you use to contact customers: estimator, secretary, management or salespeople?

3. What will your product line entail (besides the basics, such as electrical, residential, commercial, etc.): Voice/data/video, security systems, industrial controls, maintenance/service/repair, design/build, engineering? Who will be your supplier, and can you have a direct relationship with a manufacturer or must you purchase all you material from a distributor?

4. How much of the budget can be allocated: 50 percent, 30 percent or 10 percent of sales for advertising, promotional events, material and human resources.

Creating your message

To perceive who you are and, moreover, distinguish you from the competition, customers require explaining your organization’s message. Do not assume that customers know your company or what you can do for them. If you don’t tell them, they will not know. Of course, you can allow your competitors to do it for you. How well do you think that will work out?

Develop a well-designed piece of printed literature as the first step in getting your message out. It could be in the form of a brochure, magazine, newsletter or Web site. An effective literature piece outlines in detail the story of your organization—its history, diversity in the product lines, what services you provide, your mission statement (which explains why the organization exists), and satisfied high profile customer testimonials. The literature’s design should have eye-catching cover photos.

In developing literature with contractors, I have found that many contain work-in-progress photographs or job sites where construction is still in a raw state. Because contractors are product-oriented, there is a belief that customers are impressed by a work that is unfinished, which is why it shows up in the presentation. However, most customers want to see the end result—what you can do for them. They may find it interesting that you can place wire in a conduit during construction, but what they really want to know is that their lights and computer are going to work when the building is finished. Showing the end results of a finished building with lights and computers will entice them.

In seminars, I tell the story of the manufacturer who sold 1 million ¾ in. drill bits and proclaims that not one person wanted them. “What they really wanted is the ¾-inch hole,” he said. The result is what matters.

The literature must present the image of professionalism, success, capability, competence and reliability. It should tell your organization’s story and why you exist. Your literature must continue to tell the message of why you deserve the project long after you have verbally told your story. Most customers do not make decisions in a vacuum or by themselves. They have others who will also review your proposal or bid. In most cases, they will only know you and your organization by your written proposal and your literature.

And, finally, when you complete your literature, be sure to put it in front of your current and potential customers at every chance you get. Bring it with you for presentations, send it out, leave it with your design/build partners. This piece will get you exposure, name recognition and, of course, future profit.

Going to the media

There are many other ways to reach customers. Different media can provide the opportunity to reach a target customer and increase your image and name recognition. The methods depend on your goals and what you are willing to spend from your budget. For the purpose of this article, we will dismiss television and radio; however local cable TV is an alternative.

1. Many people find business-to-business vendors and suppliers through telephone directory listings. Having multiple listings under different headings may be beneficial. Directories are a good way to reach a local target market.

2. Trade magazines or local publications give an opportunity for target marketing and name recognition. Depending on the magazine, the cost for production and development will vary. [Some magazines, including this one, accept story ideas from contractors; you can e-mail or send the editor details about your projects and contact information for free].

3. Telemarketing, direct mail or the Internet will usually yield limited success. Telemarketing gives you direct contact to a target customer contact and can be a source of information and/or for obtaining an appointment. Direct mail will yield only a 1 to 3 percent return of a mailing. However, the responding customer will have a high degree of interest in your product. The Internet is still regarded as new media, especially for those of a more mature age, and they may still be in charge of their organization’s purchases. But as the younger generation takes control, this medium will grow.

4. Face-to-face and local trade shows are one of your best ways to promote your organization and your product. Customers still like to interview the organization and the people to whom they are entrusting their project and careers. Secure a booth at the trade show or walk the aisles, armed with your business cards, your literature and a welcoming attitude.

5. The best media to get you the opportunities and success is from your customer’s word of mouth. I recommend that part of your efforts in marketing and sales be directed to retaining your current customer base. It costs you six times more money to seek new customers than to retain the old ones.

Over the years, electrical contractors have not given enough attention to marketing and sales efforts. Traditionally, these have been based on relationships established over a long period of time. But things are now different and we need to catch up. We can’t afford to market our organization as electrical contractors only and limit our markets. We need to send a message to our customers that our organizations have the professionalism and expertise with a variety of capabilities. We owe that to our customers, organization and the future of our industry.   EC

MARTIN is a business consultant for Alan Martin & Assoc., a consultant for SBA, a speaker and adjunct instructor with NECA-MEI. Based in Morris Plains, N.J., he can be reached at 973.540.1298 or [email protected].





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