David Lupberger: The Revenue is in the Relationship

The market has come back. After four slow years from 2008 to 2012, the remodeling market is rebounding. The biggest issue remodelers now encounter is finding good help to respond to all the work they have coming in. The phone is ringing again, but we don’t know for how long.

When I speak with remodelers about this, they tell me that they have work until July or August, and then I ask what happens after that. The answer is usually “I don’t know.” That’s not the correct answer.

Look, because the phone is ringing again may be good news in itself, but most remodelers agree that a major economic event could disrupt this market rebound and drag consumer confidence back down to 2008 levels.

We don’t control the economy

A market downturn or terrorist attack could send this economy into another tailspin, undermining a recovering real estate market. If something of that nature occurs, the phone could stop ringing. With that understanding, we can’t do what we have always done. Remodelers who are busy again are doing what they have always done. As long as the phone rings, they stay busy. But if the phone stops ringing, they would be back to 2008, wondering where the next job was coming from.

We need to change that project-driven business model. Every contractor I know is always looking for their next job; and to promote that job, they post job signs, do neighborhood mailings, have truck signage, and may have some form of targeted marketing. Then they cross their fingers and hope the phone rings. Business as usual.

Let’s change this paradigm. Let’s move from this reactive (they call--we come) project-driven business model, to a proactive, relationship-based (we call--we come) business model. Let me explain what I mean. The revenue is in the relationship. Managing relationships

In most projects, especially those that involve design, we build a strong relationship with the clients we work with. We assist them with taking abstract, conceptual dreams, and we assist them with putting those dreams into a design and budget. During this process, we get to know our clients very well; we get to meet and know their kids, as well as the family dog or cat. Special relationships grow from working together, and no other serviceperson the homeowner works with shares the bonding experience that comes as a result of a remodeling project.

Manage these relationships! When any job ends, your relationship is just beginning. If you have completed some kind of remodeling project or addition, you know more about that house than anyone else. Go back each year and offer a whole-house evaluation to all your past clients. They already do this with their doctor and dentist, so offer them an annual check-up for their home.

Create a list of recommendations:

• Suggested repair/service items
• Replacement schedules for the hot water heater, roof, siding, etc.
• Suggest an energy audit if their monthly heating and cooling bills exceed $250 per month
• If the clients are planning to stay in their home, which additional improvements would they love to make

As this issue of Professional Remodeler is focused on home energy concerns, suggest a home energy audit, and then help them understand the results of the audit. According to the Residential Energy Consumption Survey, 96 percent of homes in the U.S. have never had an energy audit; so partner with a home energy auditor to implement an energy audit and then assist the homeowners with creating an action plan for their home.

An energy audit contains numerous recommendations. Prioritize these recommendations based on return on investment and assist the homeowner with implementing an action plan. Find that serviceperson to complete required air-sealing on exterior walls and ceiling. Refer them to a competent HVAC contractor who can assist them with a more efficient furnace. When outdated windows need replaced (if the homeowners is planning to stay in the home), partner with a good window replacement company to review the best options and cost. Finally, make sure that your clients take advantage of available tax credits for energy-efficient upgrades.

Because of your expertise, these are the areas where you can support your clients. Be their home advocate and guide them to competent trade contractors and suppliers. Revenue follows the relationship. Manage this relationship, and work will follow. As their home advocate and adviser, you can be working with this client every year, regardless of the economy. PR

As long as the phone rings, they stay busy. But if the phone stops ringing, they would be back to 2008, wondering where the next job was coming from.