Generating More Customers

Of all the things you do to own, operate, manage and run your business, the most critical thing required to build a successful company is generating profitable revenue and sales.I recently received a phone call from someone who worked for a steel contracting company I wasn’t familiar with. We’ll call this person “James.” He had broken through our sophisticated phone answering system and voice mail vault and reached me directly. (Not hard to do-call my number and dial my extension!) He proceeded to tell me his name and company. He then asked: “Do you have any jobs to bid?” I answered back: “Why?” He then told me his company wanted to bid any jobs we had coming up. I again asked him: “Why?” He said: “So we can give you a price.” I told him we didn’t have any jobs bidding at this time. So he said: “OK” and hung up. I haven’t heard from him again.

What was he trying to do? Was he trying to be a salesperson, an estimator or a lead generator, or was he just trying to keep his estimating department busy or generate a new customer? I will never know, and I suspect he doesn’t know either. Most likely, his boss told him to call every general contractor in the phone book and find some jobs to bid. Attempts like that might work in good times, but when the economy is tight and competition is tough, generating more customers is not about cold calling 1,000 leads and hoping a few take the bait. It requires a professional selling system, extreme diligence to implement the steps and patience to build trust with potential customers.

The More Trust, the Easier the Sale

The more your potential customer trusts you, the closer you can get to a sale. Trust is earned over time via constant contact. Some companies use advertising on television to broadcast their message over and over again. This causes customers to eventually remember the company’s offer and call them when they need their product or service. Other companies advertise in industry trade publications. After seeing the company’s advertisement repeatedly, customers get familiar with the company and start to trust them more and more. Some construction companies start by bidding work to prospects. Over time, they get to know their potential customers and eventually are trusted enough to be awarded lots of contracts.

Think about James who called me looking for jobs to bid. Would I award his company a contract even if they were the low bidder? Unlikely. Why? I don’t have a relationship with them and therefore don’t trust they will be able to perform the work required if awarded a job. Over an extended period of time, we might develop a trusted relationship, and then they would likely win some work from us.

Focus Your Message on Solutions

When you decide you need to buy a product or service, do you really care who provides it or where you get it, if all else is equal? Not really. Plumbing is plumbing. Carpentry is carpentry. Trucks are trucks. But if you know someone at the company and trust them, you’ll be more likely to purchase from them. And if they are customer-focused and help you meet your goals, then you’ll most likely buy from them exclusively. I have an insurance agent I trust, so I buy all of our insurance from him. I don’t even want or solicit other quotes from different companies because my agent helps me meet my overall company and personal goals. I trust him.

So think about what you sell. Do you sell plumbing, carpentry, trucks or insurance, or do you sell actual solutions to your customer’s problems? When you show how you solve customer’s problems in your advertising, marketing, selling, proposals and bids, you’ll start building trusted customer relationships, which will generate more profitable revenue. When you offer the lowest price as your only differentiating factor between your company and your competitors, it’s very difficult to grow your loyal customer list, make a profit and turn leads into contracts.

James would have had a better chance of generating a new customer if he had called and asked me a few questions about our business challenges before he asked that awful sales question “Do you have any jobs to bid?” He should have asked me about the kinds of jobs we build, the type of contractors we like to use, the things steel contractors have done to make our jobs go well or poorly and if we have any special requirements that we often request from our subcontractors. These questions would have shown he was concerned about helping our company, which also would have intrigued me to take the conversation to the next level.

How do you package and promote solutions to your customer’s problems? Your goal is to attract new customers who have problems you can solve. For our company, the biggest problem we have with steel contractors is not meeting the schedule. They typically fail to get shop drawings drawn and approved fast enough, steel fabricated quickly, installation crews scheduled to meet our goals and finish items like ladders, handrails and gates installed without our constant harassment to get them to perform. James could have told me how his company has solved these problems for other customers and how he can make our jobs finish ahead of schedule.

Turning Targets into Customers

To get started generating more customers, you’ll need a system to turn leads or customer targets into actual customers who buy from you. Think of your system as a funnel-you fill the top with as many qualified leads as possible and a few profitable customers come out the bottom. To keep your business flowing, you’ve got to keep filling the top of your sales funnel with new potential customers and leads. Without this constant flow, your sales revenue funnel will stop generating more customers and eventually dry up. You also want to move the flow of customers through the sales funnel at a fast and steady pace through a series of steps that sorts them out, ranks them and keeps the best ones moving toward the exit or revenue end of your funnel.

The first step to get the sales process flowing is to identify your current and past customers. Make a list of all your customers over the last several years. Rank them in order of sales revenue and profitability. Then, identify specific things you did to help solve their problems. Look for patterns of how you helped overcome your customer’s challenges and obstacles, and how you provided solutions. For example, did you help make them more money? Were you ahead of schedule? Did you offer assistance training their supervisors? Did you provide more than expected according to the contract terms? Did you help your customer generate more business? Did you offer value-added and cost savings ideas that saved your customer money?

After identifying what you did to help solve your customer’s problems, start thinking about what other potential customers need that you can provide. This is more than a list of every customer target you can find. It is a list of those who have the problems you can solve. Your goal is to get in the door by offering unique and different solutions to customers’ problems that your competitors don’t offer. You’ve got to give customers a reason to give you a chance to provide products and services other than providing the minimum expected at the lowest price.

Follow this customer target identification flow:

1. Identify problems your current and past customers have.
2. Determine how you have solved their problems.
3. Identify target customers who have the same problems.
4. List reasons customers chose to use your company.

How Much Sales Flow Do You Need?

What revenue do you need to meet your financial goals for the next several years? If your annual overhead is $750,000, your annual profit goal is $250,000, and the expected gross margin you can get is 20 percent, you will need $5 million in sales to achieve the results you need and want (Overhead + Profit/Gross Profit Percentage). If you expect your past customers to generate 60 percent of your annual sales goal, you’ll need another $2 million in revenue from new customers. If your average job size or typical contract amount is $200,000, you’ll need ten new jobs from ten new customers this year. Don’t expect a new customer to give you more than one job in the first year; they don’t have enough trust in your abilities until you do at least one job for them.

By looking at your sales close rate and bid-hit ratio you can determine how many leads and proposals you need to win ten new customers this year. Here is an example of how as the funnel flows:

Based on the example above (since this is just an example, and your results will vary), 800 customer targets contacted via advertising, mail, referrals or by any other method generates 400 qualified targets who need what your company offers. By contacting them by phone, you reach 50 percent or 200 potential customers. On the phone, you can ask what their needs are and schedule appointments with half of them. From these 100 face-to-face appointments, you get 50 opportunities to bid or propose on a contract. And if your bid-hit ratio is 5:1, you will be awarded ten contracts for the year with new customers you haven’t done business with before.

There are 800 or more potential new customer targets at the top of the funnel, which only generate ten new jobs. This is a lot of work and requires a real effort to make it happen. Your past reputation and providing quality work with good service won’t generate enough potential new customers to hit your goals. Waiting for the phone to ring will not work either. A sales system is required to keep the funnel flowing.

When I wanted to start my Construction Expert Witness consulting business, I started by identifying 400 lawyers in southern California who were litigators on construction and real estate lawsuits. I embarked on a program to contact them every three months with a phone call, e-mail, flyer, brochure, letter or attend a legal networking event explaining how my services will help them organize and win their cases. Eventually, over a year, the phone began to ring more often, and I was able to get appointments when they had a need for what I offered. Finding customers is an ongoing process. To keep the customer flow coming, I continuously make quarterly contacts since I can’t predict when each of the targets will need an expert witness for their cases.

What Do You Do to Keep the Flow Going?

Many companies attend networking events and think this will keep their funnel full. While it does add to the total flow, it is never enough. If you meet twenty people, how many of them actually need the solutions you offer? And what do you then do with their contact information after you meet them? You need a system to identify potential customers, qualify them and keep in touch on a regular basis. If, you actually closed one or two of the twenty potential customers you met, you still need to sell another eight new customers every year using the funnel flow example.

Tell Customers How You’ll Help Them!

Once you identify your target customer, your first job is to tell them how you can solve problems for them. Give them an offer focused on solutions. Use messages like:

• We build 25 percent faster!
• Our job is to save you at least 15 percent!
• Our goal is to make your job easier!
• We care about your success!
• We bring you peace of mind!
• We offer solutions to your challenges!
• We’ll help you finish your projects under budget?
• We can maximize your investment!
• We guarantee no hassles!
• We go the extra mile to solve your problems early!

I get tired of companies trying to convince me to hire them by telling me how great their company is or how long they have been in business. Tell me what you’ll do for me and how you’ll help meet my goals. Your goal is to get a signed contract and build a trusted relationship by mutually benefiting each other.

Your second job is to focus on getting customers to respond to your message and contact you for help. Offer guarantees, free reports or special one-time trials. Do this to get potential customers to call you, so you can go meet them and begin the flow down the funnel. A local heating and air-conditioning company advertises in our local newspaper that they offer a complete residential inspection, service and tune-up for only $39. This service usually costs at least $99 to $129. The owner’s goal is to get enough calls to generate customers who like what his company offers and then turn them into long-time repeat customers. I bet his phone is ringing off the hook.

Get Your Sales Success Funnel Flowing!

Now the job is yours. Start by identifying a long list of customer targets you can contact over the next year or two. Over time, you can qualify them and eliminate those who don’t need what you provide. Continue adding to the customer target list as some are deleted. Contact them regularly with your message of how you can solve their problems and make their life easier. Also offer special promotions to get your phone ringing faster. Follow up on every lead with a phone call to set up an appointment. Go meet these potential customers, listen to what they want, then deliver. By following this system, you will keep your funnel full, your top-line growing and your bottom-line expanding.

Construction Business Owner, November 2009