How Does the Electrical Contractor Grow in the New Economy?
By Stan Rydzynski
The economic turbulence over the past twelve to fifteen months has completely changed the previous formula for growth in the foreseeable future. Most companies have pruned staff to meet bottom line financial goals for the current year. Others still have a ways to go. Truck and warehouse inventories have been lowered to increase the bottom line. Monthly gross or net sales figures will be nowhere near pre-recession levels. As a contractor, how can you increase revenues, or just get profitable work, in 2010’s flat economic climate?
Believe it or not there are a number of ways to grow in a down economy. For the vast majority of contractors, their marketing effort was the old reliable word of mouth (Which is not bringing the volume of business required any more). For larger contractors much business revolved around 3-5 builders, developers or general contractors that have either slowed down dramatically or went out of business. Finding new customers in weeks or months is not that easy. In fact, according to a recent Channel Marketing Group survey, 70% of contractors didn’t have work lined up beyond 6 months and 42% didn’t have work beyond three months! What can you do two survive or hopefully grow? Here are some action steps.
- Change to a marketing philosophy rather than an operationally-driven/financial contractor - Almost all contractors are trained in how to quote, execute the work and pay the bills. Not enough training or attention is paid to getting the order. Remember, without the order you will not have to worry about the operation/financial details. You need to be more marketing oriented to succeed. Marketing should be everything your company does to sell your services at a profit. How you answer the phone to the way you express your attributes (Benefits) to new or existing customers is some of the ways marketing companies excels. If you need some training there are some very good industry pros that have developed marketing and planning courses that are extremely effective and easy to learn and implement.
- Audit your business – It is time to develop a plan of attack to move forward. When was the last time you and your key employees and/or an independent outside experienced leader you respect audited the way you go to market? Well the time is now! What are your strengths? Weaknesses? Why do customers want to buy from you? Why do they buy from your competition? How do you get new customers? Do I market all the electrical work I can perform? What new areas should I be in? Is service work an opportunity?
- Growth by acquisition - If you have a healthy cash position or have negotiated a strong credit line, the coming year may offer opportunities never ever seen before. This could be especially effective in diversifying your business.
- Extracting more Sales from Existing Customers – More than any other time, this should be on the top of your list. You already sell or have sold them. Two of the most effective marketing communication tools are email and direct mail. You can have mailers printed rather inexpensively with new services your company now performs. Lists can be purchased as well for local penetration.
- New Customers – This by far is the hardest to achieve in a short period of time. But you have to start somewhere. This is a planned long term process that is better viewed through a one year window. The most effective way, with little or no money, is to join the your local business clubs, associations, NARI, NAHB, Plant/ Facility Chapter, local hospital maintenance group and Chamber of Commerce. People want to do business with the people they know. It will cost you dues and drinks but you will meet many business owners in your area. For consumers, join the Knights of Columbus, church groups, political groups, etc.
- Segmentation – Are there new market opportunities that fit your company’s abilities to serve? Am I taking advantage of new emerging customer needs (I.e. - emergency generator installation, energy audits for hotels/hospitals, harmonic testing and installation, thermal arc flash inspections)? When I promote my company, do I list all the electrical services I expertly do?
- Communicating your attributes – Now is the time to develop a marketing communication plan. Yes it requires money. You have to start branding your company. Word of mouth is wonderful but when you need sales you have to expand your pool of potential customers not just your previous customer’s friends, neighbors, business associates or relatives. The very best is TV. Yes it can be done with a small budget. Call your local stations on the details. TV is by far the most effective vehicle to communicate your message to the most customers. Email or direct mail would be next. Trade shows or consumer remodeling shows can be very rewarding. Local advertising or Yellow Pages is another way if you develop an effective ad. E-marketing can work – localized searches, localized ads, and advertising on local websites (I.e. your newspaper website).
- Outside Help – Many IEC, NECA or local contractor groups can be excellent sources of information. It is amazing how people like to talk about their successes at informal meetings with a little prompting (This can happen at a distributor’s counter as well). Ask questions and keep your ears open can be very rewarding.
As we stated before, there are industry marketing and planning programs that are reality-based that can provide a great return on your investment. Ask your local contractor group or electrical distributor if they can arrange and/or sponsor an industry professional to provide a talk or roundtable discussion on marketing and strategic thinking/planning. While many contractors have guided their businesses successfully before, the battlefield has changed. Now is the time to truly believe that, “Two heads are better than one”. Outside fresh thinking is required.
Stan Rydzynski
Channel Marketing Group
516-319-1191
srydzynski@channelmkt.com
Stan Rydzynski, Executive V.P., Channel Marketing Group, has over 35 years of experience in marketing/sales/product excellence in the electrical industry. The Channel Marketing Group provides strategic planning, marketing planning and market research for contractors, manufacturers and distributors with a focus on growth initiatives to accelerate performance. If you have a marketing/strategic planning question, you can contact Stan at srydzynski@channelmkt.com or 516-319-1191. In addition, Stan conducts a 2-3 hour marketing/planning contractor seminar covering basic marketing concepts as well as teaching how to write an effective contractor marketing plan. Contact your local IEC, NECA chapters and/or your local distributor to arrange for him to conduct his highly effective and informative seminars.
Mike’s Comment: Stan is one of the most respected electrical industry veterans I have known and worked with over the decades. He has an extensive background in marketing/sales and has authored articles and given presentations on marketing for the electrical contractor. Since many of you are trying to find the right approach to increase sales in these difficult times, I asked him if he could share some of his thoughts and experiences.
