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The Twelve Secrets to Successful Marketing (2)
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Author:
Article: The Twelve Secrets to Successful Marketing (2)
By Kevin Lister In my last article, I shared with you the first three secrets of my Twelve Secrets to Successful Marketing - profitable target market, strong competitive advantage and a simple marketing plan. Next up are secrets four through six.
| 4. Proper Pricing
As one of the four Ps of marketing, pricing is very important to your marketing success. When bidding, if you price a project too high, you will not get the sale, and if you price the project too low and win the bid, you may lose money on the job. Thus, it is very important to price jobs appropriately if you want to grow your organization. To price your jobs appropriately, you first need to determine your gross profit margin objective. Most good contractors experience a 70/30 ratio (cost-of-construction to gross margin), thus a gross profit margin of 30% should be your goal as well. | 
| When pricing your next project, be sure that your bid achieves a 30% margin by marking up direct costs 1.43%. At this ratio, if you find that you are losing bids due to market overpricing, then you may need to look at ways to lower your direct costs (cost-of-construction) as well as indirect costs (overhead) so that a 30% margin is achievable. Lastly, if you are achieving a 30% or greater gross profit margin and staying busy, then you are pricing your work properly, so continue what you are doing.
5. Balanced Promotional Effort
Promotion is the third P of the four Ps of marketing. Promotion includes personal selling, direct mail, e-marketing, public relations and advertising. When creating your promotional plan, it is very important to use a balanced approach blending all five elements. This assures the best bang for your marketing dollar. Relying on just one or two elements can really hamper your marketing effort's success.
I suggest putting most of your promotions effort into networking (with prospects and referral sources) and direct mail and/or e-marketing (to customers, referral sources and prospects), employing some PR and lastly, devoting only a small amount of your budget to advertising since it can be very costly. Lastly, you must have a good, up-to-date Web site. If you don't, this should be your first or next marketing expenditure. The majority of prospects go to the Web to find and learn more about the contractors they may hire.
6. Attracting Referrals vs. Leads
In all my clients' marketing plans, our focus is on attracting referrals first and leads second. The reason for this is that referrals are much easier to close and are less costly to attain than leads. This is why in secret number five I suggest putting the majority of your marketing efforts into networking, direct mail, and e-marketing.
As a general rule, you should be getting 60% to 70% of your business from referrals. To increase the number of referrals you receive from your customer base, you may consider sending them a monthly newsletter or at least a quarterly postcard. With your more recent customers, post-project follow-up calls three, six and twelve months after the project ends is a good habit to start. To increase the number of referrals you receive from referral sources (those who target your customer but do not compete with you), you should consider regular networking. You should then keep in touch with them quarterly, or at least bi-annually via an email or a postcard. Remember, out-of-sight, out-of-mind.
Lastly, to attract qualified leads, networking with prospects works well, as do job-site letters and quarterly postcards to a targeted prospect list. Again, don't forget the Web. A good Web site coupled with targeted pay-per-click advertising can also produce many qualified leads.
I write for the Contractor Power newsletter on a regular basis and am always looking for interesting and relevant topics. If you have a business-related question that you would like me to answer in one of my upcoming articles, please feel free to contact me at info@paradigmstrategies.com. Also, if you would like to read any of my previously written Contractor Power newsletter articles, you can view them at our Web site: www.paradigmstrategies.com.
About the Author
Kevin Lister, founder and president of Paradigm Strategies, the business advising firm to the trades, is a leader in the field of business performance improvement. He possesses nearly 20 years experience in business management and consulting, effectively operating his own ventures and assisting others with realizing business success.
With an entrepreneurial spirit and CEO's point of view, Kevin brings hands-on expertise to helping building contractors, sub-contractors, and suppliers. Kevin has deep knowledge and understanding of the trades, based on fifteen years in the construction industry, a family history of owning trades businesses, and a genuine interest and enjoyment in helping blue collar enterprises.
Kevin possesses a Masters of Business Administration (MBA) from Olin Graduate School of Business at Babson College and a Bachelor of Science in marketing from Bentley College. He teaches management and marketing for the University of Phoenix Online.
Kevin is a member of several professional and business organizations, including the Institute of Management Consultants (IMC), the Associated Subcontractors of Massachusetts (ASM), the Builders' Association of Greater Boston (BAGB) and the Boston Chapter of the National Association of the Remodeling Industry (NARI). |
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