Remodeling has an outdated sales model. Traditionally, we do the following:
- Referrals
- Social media
- Truck signage
- Jobsite signage
- Updated website
- Targeted marketing
By doing many of the things above, we get our name into the marketplace, and then we cross our fingers and hope the phone rings. This business model works until the phone stops ringing. In 2008, the phone stopped ringing. Homeowners lost confidence amid the economic downturn and decided to put their projects on hold until the economy recovered. We had no control of this market downturn, and many companies lost 50 percent or more of their annual sales.
The market downturn dealt a real blow to the remodeling industry; however, because most economic downturns are cyclical, markets do come back. Many of the projects that were put on hold in 2008 and 2009 are being done now.
The market has come back, and when I talk with contractors around the country, some tell me they have project backlogs of six months or more.
Here is the problem: When I ask the contractor what happens after those six months, the answer is usually, “I don’t know.” My problem is that remodelers are doing what they have always done. When the phone is ringing, business is good. When the phone stops ringing, business isn’t good. I promise you there will be another economic blip that causes a market slowdown, and the phone will stop ringing. Every market has up and down cycles; however, there is a way to offset the next downturn.
We don’t control these market cycles, and we can’t control consumer confidence. We can, however, sell to our customers in a way that changes our working relationship. We can manage this relationship so no matter what the economy brings, we maintain a strong and ongoing relationship with our homeowner clients. We can become their home adviser.
The old business model is a reactive business model in which we are subject to the whims of the marketplace. This new relationship-driven business model is proactive and is what doctors, dentists, and even car mechanics have built for years to run successful and profitable businesses.
Every year, their customers come back for car tune-ups, dental cleaning, and physical check-ups. We have the same opportunity. Who does the annual home check-up on your customers’ houses?
I can almost guarantee the homeowner isn’t doing it. They don’t have the expertise, and they are no more qualified to perform an annual home check-up than they are to give themselves an annual dental cleaning. They need an expert’s assistance with this, and as their home adviser, you are that expert.
This is not a home inspection. Home inspectors are licensed, and the home inspection is part of the real-estate sales process. What I am recommending is a professional assessment of their home by a licensed building contractor. You know home construction. Your goal is to help them take care of their home.
When you find areas that they need assistance, help them with that needed service or repair, or refer one of your proven trade contractors for their HVAC, plumbing, electrical, or roofing needs. As most family doctors are general practitioners, they have a network of medical specialists they can refer when their patients need specialized help. You are no different with a trusted and proven network of trade contractors and suppliers. You have a unique opportunity here. The first sale is always the hardest. If you follow the project-driven business model, you are always looking for that next job and selling to new customers. You are not maximizing the relationship you have with past clients. A key point: Their homes are aging just like we are. Their homes have ongoing service requirements that you can assist them with on an annual basis.
If there are some small projects involved that you don’t want to do, find a local handyman service and work with them as a preferred trade contractor. You can provide them with ongoing service work referrals, and they can pass on the bigger project referrals they are not qualified to do. If you’ve been in business for any amount of time, you know small jobs lead to bigger jobs. They allow you to engage and interact with your clients, and they build trust. Your past clients need and want assistance with these various projects they are ill-suited to do. Do the small jobs well and help your clients take care of their biggest asset. The large remodeling projects will follow. That is an economic certainty.
If you would like more information on this business model, email me with the subject line “Client for Life.” I will forward a more in-depth description to you. PR
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David Lupberger has been in the remodeling industry for more than 20 years and is author of “Managing the Emotional Homeowner,” “The Remodelers Turnkey Program,” and “The Home Asset Management Plan.” He can be reached at [email protected] or 303.442.3702.