The Design Builder's Blog

Guest Blogger: Melanie Hodgdon is a Certified QuickBooks ProAdvisor who has been providing financial analysis and QuickBooks training for contractors since 1994. She’s the co-author of A Simple Guide to Turning a Profit as a Contractor.  Melanie and Shawn often coordinate their efforts when helping remodelers develop financial systems for their businesses so they serve the contractor, not just their accountant.

You Can Build A House, But Can You Build Financial Reports Too?

For many contractors, there’s a frustrating gap between what goes into their financial software and what comes out in the form of useful reports. After twenty years of helping contractors obtain and interpret useful reports, I find that the vast majority of my income comes from cleaning up, restructuring, and sometimes discarding and re-starting accounting files that simply aren’t doing their job.

What’s important to know?

The only reason to use financial software is to provide answers to questions. Who’s asking the questions? How about

• your production manager?
• your estimator?
• your sales team?
• your marketing department?
• your tax accountant?
• your CFO/partners/investors
• the bank you’re approaching for a credit line?
• the prospective buyer of your company

If you haven’t thought about these questions before you start, you may be doomed to relying on luck to get your answers.

Starting right

Nobody starts out by saying, “Hey, I’m going to buy software, invest a whole lot of time into entering information, and then hope that I get good results.” Yet, with the best of intentions, most contractors don’t get it right the first time. There are three basic elements that need to be in place before the results will justify the investment of time, energy, and dollars:

If you’re setting out to just “drive around” you don’t need a destination. But if you need to get somewhere, it’s important to know where the destination is relative to where you are. So if I want to drive from New York to California, I should be heading west, not south. It’s the same with your financials. If you don’t have a clear view of the destination (answers to your questions), getting there is left to chance. You must identify what you want to find out.

If you’re planning that trip from New York to California, the path you select will reflect your criteria, such as whether or not you are interested in the fastest route, the most scenic route, the cheapest route, etc. Accounting software varies in its user friendliness and flexibility. QuickBooks is highly flexible and very user friendly, which leads users to take inappropriate routes with a high degree of confidence! There are many ways to accomplish any given task. Making the right choice can be confusing, sort of like making the New York to California trip without the benefit of road signs (or GPS!). You must know the software.

Can you turn right on a red light in Iowa? Is the maximum speed limit in Kansas the same as that in Missouri? Is it mandatory to wear seat belts in Nevada? Do you have to turn on your lights if it’s raining in California? Just as you can get yourself into trouble while driving if you don’t know the law, you can get yourself in trouble in accounting if you don’t know the correct way to classify transactions. You must understand the basics of construction accounting.

The Bad News

The unfortunate truth is that most business owners come from the field. They started a business because they were convinced that they could do a better job (and make more money) than the company for which they worked. Unfortunately, many of the “improvements” they make are in the areas of production and customer relations; few have to do with the numbers side of things. Very, very few construction business owners come to the business with MBA or CPA after their names; most are more of the FEA (Field Experience Acquired) persuasion. And this sets the stage for unfortunate results on the office front. They don’t have the accounting background, they don’t know the software (which is often selected for them by their accountant or bookkeeper), and they haven’t stopped to plan ahead to determine what kinds of answers will help them steer their business towards a desired destination.

The Good News

Help is available! There are good, experienced, qualified resources out there who can either start you out right or help you adjust your course. The key is to look for consultants and trainers with experience in your industry and in your software of choice. Find out how many businesses similar to yours they have worked with. A construction expert who has only worked with development companies with revenue in excess of $20M may not be appropriate for a startup remodeling company with forecast revenue of $600K. Get references. Request a no obligation 15 minute phone call to get a feel for whether they will be a good fit for your business and you.

Final Word

If you aren’t getting the information you need, whether it’s answers about achieved margins, overhead costs, profit centers, or profitability of individual jobs, you owe it to your company and your own peace of mind to turn things around. If you’ve already started driving without a map, without knowing the traffic rules, and without helpful signage, STOP where you are. Don’t make things any worse. Get the help you need so the rest of your journey will be sure to bring you to your destination.

Guest Blogger:  Nicole Allen is the Social Media Manager at R2R Marketing where she is responsible for maintaining and executing a clearly defined social media strategy to increase brand equity and awareness for current clients.  She is also the group manager for “Home Improvement Industry Specialists” group on LinkedIn.   Nicole is an expert in Social Media Management and has a military background as an Aircrew Survival Equipmentman.

Clarification About LinkedIn Group Discussion Moderation From A Group Manager

As of January of 2013, LinkedIn has put in place a policy of placing anyone who has been “Blocked or Deleted” from one group into “moderation mode” across to ALL of the groups that they may belong to. This has been a highly controversial policy with much discussion about it around the group sites on LinkedIn. This policy called, “SWAM”- Site Wide Auto Moderation, is intended as an anti-spam measure. Unfortunately, many members have suffered the consequences through friendly fire.

How do you fix this? Good Luck!

There is no automatic appeal process- you can’t get it fixed by LinkedIn Customer Service- and you won’t be able to find out which group owner has blocked or deleted your postings. You are pretty much left on your own. My advice is to contact the owners of the groups that you are most interested on posting in, and asking them to change your permission to “allowed to post”.

As a group manager, I have set up my group in such a way that a new member to the group is automatically moderated for the first 2 days. This is to accomplish only ONE thing- that is to cut down on the spam the group is inundated with on a daily basis. Everyone wants to have a place to sell their wares and we understand this- There is a specific tab for you to do so. It’s called the “promotions” tab- use it.

As for some of you that have come to my group wondering why they are being moderated—please re-read the first two paragraphs. This should explain to you why this is happening. The most that I can do is remove the moderation for you manually and I will be more than willing to do this if you should ask.

Group moderation is sometimes a necessity.

To encourage a good flow of free speech, we must weed through the “look-at-me’s” so that it is easier to find that healthy discussion that LinkedIn groups were made for.

My personal policy is to NOT delete or not allow anyone’s comments or discussions that are in the spirit of the group. However, I have had to do this in the past. Comments that are derogatory or otherwise hurtful or inappropriate will end up in the recycle bin. It is not my job to tell anyone how to feel, what to post or when to be nice. I fully expect you, as grown adults to have enough decorum to be able to control yourself in a professional manner.

With that said, happy posting- and should you find yourself on the moderation list, chances are that you have been "SWAM-ed"!

Related articles:

Should You Participate In LinkedIn Discussions If They Are Moderated?

One Member’s Disappointing Experience With LinkedIn Group Moderation

Guest Blogger: Randal DeHart, co-founder of Business Consulting And Accounting in Lynnwood Washington is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. His experience as a Contractor, Project Management Professional and Construction Accountant allow him to see the world as the contractor and the accountant sees it. This dual understanding sets him apart from other accountants. Visit http://www.fasteasyaccounting.com/ to learn more.

One Member’s Disappointing Experience With LinkedIn Group Moderation

LinkedIn is one of my favorite places for networking and getting to know people on a business and personal level. For the first few years I rarely participated in any of the discussions and used it mainly as an online CRM to keep track of some of the people with whom we have built business relationships.

Lately, I have become involved in LinkedIn discussion groups and have discovered another source of informative and stimulating conversations.  However, there are situations when it is best to leave a group as that is the most respectful and kind thing to do, which brings me the subject of this article.

Shawn McCadden recently started a discussion in a LinkedIn group titled “Should You Participate In LinkedIn Discussions If They Are Moderated?” After reading all of the comments on this discussion I was surprised to learn some LinkedIn groups moderate all comments and only allow those which appear to be in agreement with the moderator. I understand some social media sites may need to control and censor comments but was surprised to find LinkedIn in that same category.

I wrote a comment and added it to Shawn’s discussion thanking him for bringing this issue to light and “posted” it, or so I thought. Subsequently I searched all of the other groups I was a member of in order to determine if any of my comments were ”pending” only to discover a few of them had put my comments in perpetual “pending“ status and left them there.

Most of the group discussions where I make comments everything is posted immediately. And all of the feedback has been positive including a health quantity of “Likes”.

Just to be thorough I checked the comment I thought was “posted” in Shawn’s discussion and found it was also in the “pending” section. I could only smile and wonder what had went wrong or if I had offended someone.

I sent messages to all the moderators asking if I had offended anyone or violated any rules so I could make amends and changes in order to get in compliance. Only one person had the courtesy to respond and now all my comments on that group show up immediately.

After waiting a few days to allow time for the other moderators to respond I deleted all of my “pending” comments and left all of the groups except the one with the discussion Shawn initiated because there are some very worthwhile postings and comments on it. My “Like” button appears to work on the discussions in this group so I will continue reading and signaling agreement and support with “Like”.

Having built a network of business and personal relationships that number in the thousands and spans the globe I understand the importance social graces and especially the importance of showing respect and kindness to friends and strangers alike. It is also just as important for us not to tolerate disrespect and a lack of common courtesy.

It is astounding how many times a kind gesture or recognizing someone by responding to a letter, note or email has led to some very profitable business for me and/or someone else in my network.

One of the keys to having a comfortable network that grows daily is that even though I may not agree with everyone on every subject I seek to understand another person’s point of view and find some common ground upon which we can agree and build a connection from there.

Like most power networkers I refer business back and forth without regard for what is in it for me because the Universe is always in balance and I have learned I cannot give more than I receive.

All comments and observations are always welcome.

Warm Regards,

Randal L. DeHart, PMP, QPA

10 Steps To Building A Successful Construction Company In The New Economy

For the last five years or so many construction business owners were operating their businesses in survival mode. With the economy improving and residential construction activity picking up many contractors will be looking to grow their businesses again.  If you are looking to grow your business here is my list of 10 steps contractors should take to make the switch from surviving to thriving. 

10 Steps to successfully growing your business

1. You can't do it all; no matter how much you try.  Find the right people with the right skills and personalities to be part of your team.
2. Hire and properly train employees before you already need them and their required skills up and running.  
3. You are not the Energizer Bunny!  Make sure you have a plan for recharging your batteries and keeping up the motivation you will need to make your dream business happen.
4. Work on your leadership skills and make sure you understand the difference between leadership and management.   Good employees want to be lead, not supervised.
5. Be careful about and watch your overhead expenses.   Many construction businesses failed during the recession because they could not cover the cost of the overhead they were committed to.
6. Know the costs of doing more business before you do more business so you can use the right markup to price your jobs profitably.
7. Before you actually increase your overhead costs test the marketplace you plan to work in to make sure you can sell at the increased pricing you'll need and can sell enough work at that price.   Consider if you are in the right market to do business but also if you have the right marketing and sales skills in place.
8. Be sure to price your work for the actual costs you will incur at the time you produce it.   Labor and many material costs are expected to go up dramatically before the end of the year.   If you like the idea of an extended backlog of work find a way to protect your planned profits from escalating costs.
9. Know your limits.  Do what you can yourself but get the professional help you need to do things right; to avoid costly mistakes, increase the likelihood of success and maximize the results for your all your efforts.
10. Revisit number one above.   Share your plan and your measurables with someone who can and you will allow to hold you accountable to following your plan and achieving your goals.  Make them part of your team.

One more thing; Make sure you are thinking about retirement

A recent study by the National Institute on Retirement Security found that the median retirement savings of households nearing retirement is just $12,000.   What would you think of a business owner, ready to retire, who only had $12K saved for retirement?  If you sell your work and services on price, consider that you are contributing to your customers' retirement funds at the expense of your own!

Money is made during the sale, not during production!

3 Ways Contractors Can Be Small But Smart

If you consider your business to be a smaller company, and prefer to stay that way, why try to copy or conform to the way larger companies do business? Instead, be different! Be small and smart!  Look for what the big guys can’t or won’t do or maybe what they can’t do as well as your company.  Here are three ways smaller construction and remodeling businesses can beat the big guys.

Provide a more personalized service, and then find the clients that want that kind of service.

Typically in larger firms most employees are specialist.  Each employee on the team will do just one part of the process, such as just the design or just the estimating. Because of this, clients working with larger businesses may never really get to know one employee very well. A smaller company has the possible advantage of having the same person sell, design, estimate, and help manage the project. Certain clients will be attracted to this type of relationship. To get in front of prospects who want this kind of service you need to market the advantages that come with it, otherwise prospects will assume you’re the same as the other companies they can work with.  Writing about how you do business and sharing stories about how and why your past customer benefited can help point interested prospects your way.  Doing so within your blog is a great way to get the message out.  

The people who represent your company should be ambassadors.

In many situations, your employees will have much more personal contact with clients than the business owner or manager. Attract and train good employees, then create or maintain an atmosphere that fosters a desirable company culture. People buy from people. A happy team of employees with great people skills, who believe in their company, will demonstrate that message through their actions and attitudes. If your ambassadors are thinking and acting as ambassadors, clients may be motivated to use your firm again and perhaps also refer you to new prospects. Many contractors share that those client types and their referrals will often request a specific employee or lead carpenter as a condition of doing business. Consider whether your clients are buying what you build, or maybe how your team builds it.

Get your prospects to help you identify and sell your difference

When you meet with a prospect, why not ask what they don’t like about working with the larger firms. Better yet, ask them what they think might be advantages of working with a smaller firm. If you are careful not to lead them to a predetermined conclusion, you might just find new ways to service them and attract similar prospects.

Try this next time you interview a prospect: Ask them why they think other prospects chose to work with your company rather than the big guys. Almost every time, their reason will be exactly what they are hoping you will do for them. Rather than give them a reason to say no by discussing other possible reasons, find out why they answered the way they did. Get the “why” behind the “what”, and then work with what you discover.

Something to ponder as you think about the future of your small but smart business

“Just because you’re following a well marked trail, it doesn’t mean whoever made it knew where they were going”

NARI Sends Out Call To Action To Members and Other Remodelers Regarding RRP

Recently I received an email from Bruce Case, chairperson of the NARI Government Affairs Committee.  In the message Bruce put out a call to action to get NARI Members to send a letter to their representatives in support of the recent amendments to the RRP Rule.   I asked Bruce if contractors other than NARI members could join in and help out.   He encouraged that support, so with his permission I am sharing this call to action with you.  I hope you will consider adding your voice to this call to action.  Feel free to share this with other contractors you know and encourage them to participate as well.

I have mailed letters to my MA representatives; I hope you will do the same.

Here is what Bruce and NARI is asking you to do

If you have not already done so, there is still time to send a letter.  Just follow the instructions below.

Copy the text from this letter onto your company letterhead.
Modify the letter to address your representative. To find your representative, type in your address to this Website.
Describe your company in the highlighted areas of the letter.
Print the letter and sign it.
Fax a copy to the representative's office, also found on this Website.
Fax or e-mail a copy of that letter to NARI National office, (847) 298-9225 or marketing@nari.org.

Background:  

U.S. Rep. Tim Murphy (R-Pa.) introduced H.R. 2093, the Lead Exposure Reduction Amendments Act of 2013. Similar to the Senate bill introduced in March, this bill would:

• Restore the opt-out provision to the EPA's Lead Renovation, Repair & Painting (LRRP) rule.
• Prohibit the EPA from expanding LRRP to commercial and public buildings.
• Provide an exemption for renovations after a natural disaster.
• Suspend LRRP if the EPA can't approve a commercially available test kit that meets the regulation's requirement. 

 Why it's important for all contractors to participate:  

• The introduction of this bill keeps the pressure on the EPA to enforce the current LRRP regulation.
• This bill keeps legislators focused on the EPA's struggle to implement the LRRP rule, which will prove important as the EPA examines extending LRRP to commercial construction.
• 92% of NARI members asked NARI to support legislation that reinstated the "opt-out" provision last year. 
• To date the EPA has fined only 36 firms under LRRP.
• Remodelers need a seat at the table with the EPA -- let's continue to put pressure on the EPA rather than being a "victim" to their regulations and lax enforcement.

 "We must hang together, or surely we shall hang separately"

Benjamin Franklin

Guest Blogger: Chuck Green is a Big 50 remodeler who returned to video production, winning a New England Emmy® Award in 2012. Chuck and Shawn have worked together on several video productions including a series of RRP videos for Remodeling magazine.  Check out Chuck’s work at www.PerpetualMotionMedia.com   He can be reached at: CG@PerpetualMotionMedia.com

6 Creative Ways You Can Use Videos On Your Contractor Website

The trend of including video on websites is advancing rapidly, but remodeling company websites have been slow to catch on. This is an opportunity to get ahead of the competition. Dr. Tom Leighton, from MIT and Akamai Technologies, has predicted HD video will be 75% of all Internet traffic by 2014.

Creative ways to use video if you have a contractor website

Capture attention

Engage website visitors through well-made videos.  Use them as a way to start building a relationship with your company even before the first meeting or call takes place. You can really show your company as a professional operation, while putting a personal face on the business and easing potential customers’ fears about having their house remodeled and who will be doing the work.

Introduce the leader

A pitch from the company president or owner should have a short intro about the company, around minute in length if possible, sort of an expanded elevator pitch.

Show and tell

Present the (hopefully) polished staff who will be working in clients’ homes and as well as those interacting from the office. Also consider including key trades people if you work with them regularly. By using videos you’ll be going beyond what a write up can do with these introductions. The talks will pro-actively address any uneasiness homeowners may have about what kind of people will be in their homes.  Ideally I suggest keeping each one to under a minute.            

How We Work:

Consider having a section illustrating the company’s methods of working.  A simple piece would be the president/owner or project manager speaking interview-style about the company’s philosophy and policies on areas ranging from smoking to not using occupants’ belongings.  While a narrator describes things a How We Work video could show things like details of dust control methods in use, how flooring is protected, workers in clean company shirts, how a temporary kitchen is set up during a kitchen remodel, a message board area in use (if any), end-of-day cleanup going on, and any details which demonstrate the company’s professionalism.

Testimonials:

Include testimonials by home owners filmed in their favorite spots that were part of the project.  Since people generally choose to work with those recommended by people they feel they can relate to and trust video testimonials of real customers in their real home settings can be a powerful way to do this.

Walk-throughs:

Before and after photos can be powerful, but a before and after video can really pull a viewer in deeper; especially those who have no experience with remodeling. One particularly engaging feature would be a smooth video walk-through of your completed projects, filmed without any camera shake using a camera dolly or special stabilizing rig.  Handheld, shaky camera work rarely makes for high quality video and may not project a professional image of your business.  Moving a notch up would include adding a before walk-through of the space recorded before any work begins.  The before video does not need to be free of shakiness, as long as it is paired with a carefully done after video.

Remember, video killed the radio star. 

If Dr. Tom Leighton is right it may take over for the written word as well!                       

Watch for Chuck’s next guest blog

Chuck has committed to contribute another guest blog in the near future.  Be sure to subscribe to the Design/Builders Blog so you won’t miss it.  Here’s a rough outline of what he will discuss in that blog.

• Topics for the introductory talks
• Tips on creating high quality video and audio
• Additional sites and uses for your video

 

Guest Blogger:  Kim Downs has been focused on building WOLF’s brand and shaping product messages for 17 years. Her integrated approach to program development includes interdepartmental communication as well as common sense strategy resulting in programs that work. She has a steadfast belief that building a marketing plan doesn’t require an unrealistic budget. Kim contends that even small, meaningful steps can do wonders in building a brand.

How Contractors Can Sell Themselves - Without Selling Themselves Short

Last month Shawn posted a blog warning contractors of the price shopper titled "11 Common Traits of People Who Buy Remodeling On Price". He explained two types of prospects who price shop remodeling; Those who are driven to pay as little as possible and those who simply don’t know what else to consider so they base their decisions solely on the bottom line. 

I think the biggest problem is that consumers just don't know what to expect. HGTV has been a blessing and a curse for our industry. Because of shows that do a major project in 2 days for just $1000, people have gotten the idea that improvements are not only easy...but cheap.

Rather than chastising their ignorance, you need to educate them during your sales process.

Unfortunately, I agree with Shawn when he stated that many contractors are terrible salespeople, so they have to sell on price.  If that’s you, then you really need to ask yourself if you’ve actually invited the “haggler” to contact you.  If your brochure, ad, website or any other selling tool you use promises “Best Prices”, “Affordable Service” or “Small Cost for High Quality”, as Jeff Foxworthy would say…"there’s your sign”.

If this sounds like a lot of the potential customers you talk with, it’s time to get tough.  Not on the prospect…on yourself!  You need to do a better job of selling yourself and not the job.  So how do you sell yourself, without selling yourself short?  The easiest way to do that is with your website.

By the way, if you’re saying to yourself, “Wow, I don’t even have a website,” then that’s an entirely different issue!

Website tips to help you differentiate your business

Tell your story

Most people do a bit of research before calling for bids. Make sure your website clearly explains your business philosophy, process, product choices and anything else that will help steer folks away from price shopping. Include lots of pictures. Before / After shots are great…and if they include the homeowners in the “after shot” better yet!  Real people, real project, real happy! 

Let others tell your story

When you buy something on Amazon, do you read the reviews before pushing the “Buy It” button?   You can have the same type of “rating system” on your own website.  Easier yet, add testimonials from the happy customers in your photos.  But be sure to keep it current…and real.  Many people visit a website multiple times before making the first contact.  You want to be certain they see new images and comments when they visit so they know you’re a busy professional with lots of satisfied customers.

Brag a little

Have you earned awards or accolades from pertinent associations?  Non-customers and peers giving you kudos speak volumes to a potential customer. Are you a Certified Installer for a particular product?  My company offers perks and real benefits for becoming a certified installer of our products…and it has proven to make a big difference in our Certified WOLF Pro’s sales process. 

Get personal

People do business with people.  You can be professional and still let your clients know a little more about you.  A personal connection can build a level of trust and comfort that goes a long way in building a better working relationship.

Leaving out the dollars makes sense

Steer away from the phrases mentioned above and focus on the quality of your service, your process and the satisfaction of your customers.   If you don’t want your customers to focus on the price, then you shouldn’t!

Watch for Part II

So now that you have your website crafted to sell, you need to understand how to make it an integral part of your sales process.  In a follow up blog to this one, titled “Using Your Website As A Resume To Help You Sell”, I’ll share some suggestions for improving your sales process. 

About WOLF:  WOLF provides kitchen and bath cabinetry and building materials, marketing and sales support and financial services exclusively to independent LBM dealers in 28 states in the Eastern and Midwestern U.S. Since its founding in 1843, York, Pa.-based WOLF has evolved into a sourcing company that offers American-made, WOLF-branded products and other high-quality product lines.  Learn more about WOLF at www.wolfleader.com and www.wolfhomeproducts.com.

How One Contractor Is Keeping His Prospects and Customers Happy As The Economy Rebounds

As the remodeling marketplace picks up the amount of work a business owner must get done is also picking up.  The challenges of keeping up can become multifold depending on the type of work you sell.  For example, for many full service remodelers, not only is the number of projects increasing, so is the average project size and therefore the number of details to be handled for each project.  If you downsized your staff during the recession to control costs you might want to consider staffing up again if you want to keep your customers happy and help your prospects make quicker buying decisions.  Another good reason might be that you want to have a social life again someday.

One contractor’s success story

One of my coaching/mentoring clients, Joe Levitch of Levco Builders LLC in Boise ID, recently shared with me that he was having challenges getting prospects to pick out products and make decisions during the design phase.  This prevented him from finishing up their agreements in a timely manner and getting new jobs started.   He was also having problems finding the time for ordering and procuring products during production as well as closing out jobs due to the number of small details to be managed at the end.  All of this was getting in the way of Joe growing his business and being able to keep up with the pace of sales.   He shared with me that worrying about getting everything done was often times getting in the way of being “fully present” at meetings with clients and prospects. Joe referred to it as feeling like spinning plates in the air.  He said he didn’t want to get to a point where he dreaded another new lead phone call coming in and wanted to be sure he served his clients in the best way possible.

To address his challenges and take advantage of the opportunities of a recovering marketplace Joe created a job description detailing the help and skills he was expecting and used it to recruit and hire the right person to add to his team to work with him and his clients.  By working together with his new hire Joe reports that he now has time to work on the future while his new office person works on the current. 

So far so good

The changes Joe has made provide a better level of service and attention to current prospects and customers, and, at the same time, gives Joe the time and ability to also fully focus while meeting with new prospects for the first time.  By sharing the workload with the right person and using the right process Joe has improved the service his company delivers and his customers are very happy.  He says he now looks forward to working with new prospects as their calls keep rolling in.

Not All Remodeling Leads Are Created Equal

All contractors want leads.  Without leads there wouldn’t be any customers to do business with.  Some contractors are happy just to get leads and they give little thought to the quality of the lead.  Other contractors want specific leads and create criteria they will use for qualifying the value of those leads.  If as a contractor you want to sell more projects and don’t want to waste valuable leads you might want to consider where your prospects are in their buying process before you try to close the sale.  Attempting to close the sale too early can kill the value of a lead all together; at least for your business.

A name and a phone number do not represent a lead

It’s important to consider how you and your business will define a lead.   This subject came up recently at a Remodeler’s event I participated at earlier this year at the Marvin Windows and Doors Training Center up in Warroad MN.  From the discussion that followed we all came to the conclusion that most contractors who do no marketing at all consider a lead to be anyone who calls their businesses looking to get work done.  On the other hand those remodelers who were doing proactive marketing were adamant that a qualified lead was what they were after. To these remodelers, and I agree 100%, a qualified lead was a  lead that qualifies to do business with a company based on that company’s pre-established  target customer and product or service offering. 

Qualifying leads

There are many ways to qualify the value of a lead and whether or not your business wants to work with a certain prospect.  In a previous blog post I shared a list of 25 questions contractors can use for prequalifying prospects.   As the market picks up and leads increase you won’t want to be wasting time chasing poor quality leads.  Use those questions, and any others that make sense for you, to help focus your efforts on the right leads. 

Consider the importance of timing

One thing many contractors neglect to consider is where their prospect is in their buying process.    Here are three ways to think about this:

1. Some prospects are just getting started thinking about what to do.   They aren’t ready to commit to any specific product or choose a contractor to work with yet.
2. Some prospects have already started their research.  They may be clear about what they want to accomplish and the things they need to consider, but may not yet have chosen the right products for them or even know where to start looking to find them.   They too may not yet be ready to chose a contractor and make a commitment to buy.
3. On the other hand some prospects have done their research, done their due diligence picking out products and are ready to interview contractors for the purpose of moving forward and getting their project under contract.

Knowing where your prospect is in their buying cycle can often make the difference between closing the sale and alienating the prospect.

Close the sale or nurture the lead?

Consider that if you try to close a prospect that is still in steps one or two above they will not likely buy anything from you, at least at that time.   How could they?   They still don’t have enough info to make a confident decision.   If you try to close them you might just alienate them.   Depending on your approach, if you make them feel bad because they wouldn’t make a decision and or that they wouldn't buy from you, they may never buy from you.  But, on the other hand, if you know they are not ready to buy, rather than attempt to close them see if you can help them move their process along so they can do the due diligence required to confidently make a decision and sign a contract.   Helping them through this process is what is often referred to as lead nurturing.

Practice Catch and Release

According to GE Capital Research consumers spend 38-115 days researching before making a major purchase. If your qualified prospects are not yet ready to buy, respect their process and consider your approach with them.   Give them the time they need when they need it.  By this I mean give them time to do their research. And, at the same time consider offering them some guidance to help move them along and to show that you can be a trusted adviser for them.   When they are ready to decide on products and need help with that part of their process again be ready with help and guidance, but don’t try to close them yet.   Remember, if they told you they were still trying to decide what products to use how could they make a buying commitment?  Trying to close them may seem disrespectful to them.  Instead offer them guidance and let them know you would love to work with them when they are ready to choose their contractor.  The idea here is that if you practice catch and release, and your prospects can swim off unharmed, they will likely remain in your pond and may decide to jump on your hook when they are ready to bite!