Tag Archives: revenue

New Revenues From Old Customers

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From marketing we understand that it takes less money to maintain our customer base than it does to develop new customers. It also means you can increasingly see new revenues from old customers as a key aspect of your future growth. While this seems to make sense for businesses that produce or sell “perishable” products like food, clothes, maybe even cars, I always found it rather difficult to apply this thinking to construction.  Boy was I wrong!

In more than twenty years in the construction industry, both as a contractor and consultant, I have realized time and time again the reality of increasing business from my number one “prospect”…my current customer.  Yet I continue to get requests from contractors on how to grow their revenues through developing new and creative business development strategies to capture new customers.

Now, we certainly need to maintain an effort to drive new business but too many opportunities slip by us to increase our revenues, and our profits, with those customers who we have performed work for in the past.  Let me share a few techniques and approaches that may help you to raise your revenue this year by going back to a proven “fishing hole.”

Gain the Vision of Your Customer

New Revenues from Old Customers

Photo courtesy of www.freedigitalphotos.net

Getting a clear picture from your customers about what their building or project objectives are should be an effort made during the selling phases leading up to the first sale.  If the project is commercial, will there be additional concrete needs?  What are the expansion projections?  If the job is for a residential customer, will the customer be looking at additional add-ons or improvements in the future?  Don’t be timid when it comes to identifying future opportunities that your customer may be looking at in the future.  If you don’t ask the customer might mistakenly assume you really aren’t that interested in more work.

Strive to “Partner” on the Development & Budgeting Effort

Nothing ties a contractor to a customer better than having been part of the actual development phase of the project.  Whether you can assist the customer develop a more inviting patio design or you can provide a more efficient method to put the columns in place, being part of the development of any project gains you greater respect and long-term opportunities.  Likewise, working as the financial consultant on developing a practical budget with your customer allows you to get close to the real emotional side of paying for the project.  Once you enter the “inner sanctum” of the customers financial world there is little else that they will be shy about discussing with you.

Personalize Your Follow-up and Stay-in-Touch with Customers

This combination of efforts continues to be the leading reason why more contractors fail to new revenues from current customers.  Follow-up moves to contact the customer about work that is in process to see how they are doing and what they are thinking.  If the customer shares their desire for additional work in the future follow-up gives you license to call or e-mail them on a consistent basis to keep your name and desire in front of them.  Even if you have sales people who made the sale it is important that you contact the customers.  Often, an owner brings even greater interest and intensity to the relationship.  Many contractors will send out generic thank you cards and letters, perhaps even putting new customers on their newsletter receiving list.  While these efforts keep your name out there they are not of the personal nature that brings greater “likeability” to you and your company.  Touch your customers…personally.

Host Customers for Your Company’s “State of the Union”

Once a year you should host a breakfast or luncheon where you invite some of your better customers to share with them your firm’s direction and commitment to your customers.  This is a good time to invite your customers to share their needs and expectations about where they are going.  I’ve facilitated many of these luncheons, often called “Lunch and Learns,” for contractors across the United States and the response is always very positive.  You can always hold more than one of these luncheons a year and simply better segregate the customers you want there.  The customers actually enjoy the luncheon since they will often fall into conversations with other customers who have also enjoyed your company’s work results.

Provide an Incentive to Repeat Customers

Certainly, many customers appreciate an incentive from a contractor who they have given work to in the past.  An incentive might be a percentage discount on upcoming work to be performed, a “pass” on a deposit that is often required of new customers, or a higher priority in scheduling upcoming work.  While the financial incentive might be the hook with customers whom you have just completed one or two projects the long-term customer may simply appreciate knowing that you will move their job up a little sooner on your schedule when possible.

Continue to Provide Before & After Photos

One mistake contractors can make is to discontinue giving past customers photos of their projects.  This is a subtle way of telling the customer that you don’t have to work that hard to keep their business or that you might be taking their business for granted.  It is just as important to maintain the same energy and sales effort with customers that you have done five or fifteen projects for as it is with the brand new customer who you are trying hard to impress.

Ask Customers for Referrals

This networking technique is especially important for contractors who work with residential customers.  While the home owner who needed a drive way or patio poured and finished might not own other homes or buildings they very often have other friends and relatives who trust their judgment to use you for their concrete needs.  Asking your customers for referrals is really part of “Sales 101” for sales and estimators but is often neglected.  Too bad because for those sales professionals who do ask for referrals every time they sell a job they increase their revenues 40%-60%!  This technique is a great way to grow your revenues through turning your existing customers into sales people and door openers for your company.

Introduce Your Customer to Other Building “Partners”

[pullquote]By keeping an open ear you might just hear something that could allow you to play “broker” between two potential partners that would only naturally look at you to do the construction portion that you specialize in providing.[/pullquote]

This technique may be more doable with commercial clients but there is a growing number of building owners who are looking to further their investments and ownership of buildings by looking for partners who might share some of the financial and management risks.  The conduit common to such an arrangement could very easily be you!  This gets back to the need to understand what your customer’s vision is for their own company growth and their resource situation.  By keeping an open ear you might just hear something that could allow you to play “broker” between two potential partners that would only naturally look at you to do the construction portion that you specialize in providing.

Do Quality Work!

One thing is certain, if you do not perform quality concrete work for your existing customers you fail to get new revenues from old customers.  All the greatest marketing and customers service tricks in the world cannot make up for poor quality.  You can increase the likelihood of driving up revenues from existing customers by doing a great quality job the first time.  If you and your work crews are not 100% fanatics about performing quality then you would be best served by getting this part of your company fixed first.

Just Ask for It

Do you really want to increased revenues from old customers?  There is only one thing that will do this in the end and that is to just ask for the business.  Even the customer whom you have had a great relationship wants to be asked.  No one likes to be taken for granted, even your most loyal customer.  When you are having that morning cup of coffee with a long-term customer and they talk about that new construction job they want to get started on in the next year, don’t assume that they already have your name written in as their contractor of choice.  Ask them for the work and let them know that you want their work.

Increasing your revenues can certainly be done without a lot of extra marketing and advertising costs.  Treating your current customers well and taking a sincere interest in their future will open many doors to repeat work.  Sure it may cost you a dinner a few times a year, maybe even a round of golf or some tickets to the ball game but this is still small potatoes compared to digging and scratching everywhere possible to find new business.

If you are doing some of the items listed above then go back and measure how successful any technique has been to increasing your revenues.  Can you see a direct correlation?  If not, perhaps you may need to rethink and adjust the effort to capture more opportunities to win additional business.  It is possible to realize new revenues from old customers but it will take working many of the ten techniques and approaches shared here.  Go back to your “old” customers and consider renewing your commitment to their future success.

Strategic Planning, , , , ,

Tightening Up Job-Site Productivity…and Profitability!

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John has a good pavement maintenance company in the big picture of things.   He’s a hard working contractor who has a normal mix of long term and short term workers.  However, he can’t quite seem to break through the profitability ceiling, or “PC.”  As much as he figures and refigures his estimating efforts he still is falling 3%, 5%, even 9% short of the gross profit that he should be realizing on most jobs.  His frustrations led to his asking me to come along side for the rest of this year to get him over the “PC” barrier.

Too many good contractors are struggling today with getting that next 3%-5% of gross profit.  Some contractors are literally approaching double figures in shortages from what they should be experiencing on their gross profit.  After reviewing John’s work processes that his field guys practiced I’m convinced that he can realize greater gross profit and tighten up his job-site productivity but it’s going to take some good planning, execution, and commitment.

Image courtesy of Serge Bertasius Photography at FreeDigitalPhotos.net

Image courtesy of Serge Bertasius Photography at FreeDigitalPhotos.net

Pre-Planning For Job-Site Productivity

First, most pavement maintenance contractors, do a horrible job of pre-planning their projects. This is their first mistake.  Pre-planning, especially pre-construction, is a specialized effort among general construction companies and our industry could learn much from the same effort.

Pre-construction, with an emphasis on pre-planning, begins when a field leader takes all the collected information from the estimate and begins to review what he and his crew can do to maximize the production effort.  This means recognizing where trucks, equipment, materials, etc. should be delivered, unloaded, loaded, and stored.  This effort alone costs many contractors thousands of dollars a year in accidents and damaged materials when not done. 

Second, continuing the pre-planning effort, the contractor should then set out the next week schedule by each Friday for the next week of work.  I introduced many years ago the “Next Week Look Ahead” to our industry at our annual conferences.  The contractors who have embraced this tool confidently share that this process of planning will add 2%-4% almost immediately to their gross profit, often more.  The big objection I hear for not doing this is that “the schedule will always change.”  The scheduled does change periodically but by having the plan in place the alternative decisions can be made faster and with more foresight.  There is absolutely no excuse for not planning!

Third, there needs to be an organized process to unload, place, store, and load equipment, tools, materials, etc.  This can also be preplanned by creating something Japanese Management has called “5-S.”  There are five components involved with incorporate 5-S but one effort that is critical for us here is the development of a 5-S Map. 

Develop Your 5-S Map for Job-Site Productivity

A 5-S Map can be used for many purposes that will help to keep things organized and encourage a cleaner and safer job, job-site, more organized trucks, and especially yards and shops.  Consider an aerial drawing of your tool truck where you have most of your equipment and hand tools stored.  Once drawn, you then identify where each item is to be kept.  You can do this by drawing an arrow to the location on the truck where the item is to be kept and then writing what the item is such as rakes, blowers, buckets, etc.

You should have a 5-S Map done on your shop, yard, etc.  Also, I recommend drawing a 5-S Map for how you want to lay out your equipment and tools once you are at a job site.  Some contractors argue with me but soon realize how much they can save by having all the items that they will be using lined out or positioned on a job site for faster retrieval and better handling.

Fourth, the leadership to hold morning and afternoon “huddles” between a crew leader and the crew members is crucial for successful production each day.  This huddle I’m referring to is a short 3-5 minute meeting at the job site that first clarifies what the targets are for the day, confirming who is doing what on the job, and reminding all workers to important information about the job and safety reminders.  This morning huddle isn’t enough, there needs to be a “PM” huddle just before all the workers head home or back to the yard.  The afternoon huddle would review what happened during the day, what can be improved, and what can be done to organize the site, trucks, equipment, etc. to make the next day’s production go faster and smoother.

Finally, the most critical issue to busting through your profitability ceiling is to be a driver of the first four items.  We have enough to battle each day with inexperienced workers or negative attitudes reflected by many of our workers without you not driving, supporting, and enforcing the completion of the four items listed earlier.  

Strategic Planning, , ,

Planning is For Winners

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I’ve just completed a two day visit with an incredible contractor.  They are not very large in revenue this past year; they did a little more than five million dollars in sales.  However, what they made would easily be envied by many contractors, no matter the size.

Looking deeper at the reasons for their prosperity it was glaringly obvious.  They control their expenses!  How?  The answer is even more simple…and obvious.  They PLAN!

seminarEach Monday morning they hold an employee wide meeting that reviews and reminds each crew as to their work schedule for the week.  In front of everyone each crew provides their strategy to get the week’s scheduled work completed.  Normally this type of meeting is attended for crew leaders, estimators, schedulers, and owners.  Not at this company, everyone is there.  In fact, members of each crew actually provide the strategy and execution plans for the week.

The second obvious aspect of planning is what is completed for each project completed.  Each morning each crew meets to discuss what is needed for that day.  No truck leaves the yard until every truck and worker has exactly what they need to complete that day’s work.  At the conclusion of each day the crew then reconvenes to discuss what happened during that day of work and then discussion about what will be needed the following day.  The crew leader takes notes, if needed, on each meeting.

Now, many contractors hold meetings such as described in the previous paragraph.  What then makes this contractor’s effort unique?  Quite honestly, it is the amount of detailed thinking and planning that takes place.  Let me briefly share some of the critical components of successful planning that is embraced by my contractor friend. [pullquote]Now, many contractors hold meetings such as described in the previous paragraph.  What then makes this contractor’s effort unique?  Quite honestly, it is the amount of detailed thinking and planning that takes place. [/pullquote]

First, the plan for the day’s project(s) is documented.  Each day the crew leader documents specifically what the particulars for that day are, including:

  • Material need
  • Labor need
  • Equipment/tools need

This is merely the beginning.  Next, the crew discusses:

  • What preparation is needed?
  • Who will complete the preparation?
  • What is the method or process that will be followed to execute the project?
  • Confirmation of understanding of the prints or drawings?

For many contractors, the previous questions may appear to be overly simple and assumed.  My experience with contractors however leads me to believe that the leaders may in fact raise these same questions however they are most often raised inside the leader’s head.  Most crew leaders do not discuss this information with their crews.  This is a tactical mistake that leads to misunderstanding and a waste of worker’s time on the job site.

Another final effort that is practiced by contractors really on their “A-game” is the allowance of questions to be raised by the crew workers, the very people who will be executing the plan.  Engaging your crew in the planning phase of any project, no matter what the size of the project is, will breed greater attention to details, more focused energy on getting the needed results, and actually reduce wasteful costs due to workers lack of knowledge or understanding about the project needs.

In review then let me outline what you need to do to make planning more of a positive and effective tool and technique:

  1. Document your plans for each project. (Don’t assume anything by anyone!)
  2. Engage the actual workers who will be completing the scheduled work in the planning discussion.
  3. Ask the same questions for each project, such as:
    1. What are the Material, Equipment/Tools, & Labor Needs?
    2. What preparation must be accomplished prior to starting project?
    3. How can I best position my crew to complete the work in the most cost effective and quality manner?
    4. What contact(s) must be made with the client, other contractors, suppliers, etc.?
    5. Are our copies of drawings/prints complete?  Any changes needed?
  4. Conduct a “Post Mortem” on each Project.  Discuss lessons learned, needed adjustments for the next project.

[pullquote]Planning is more than simply scheduling future work.  It is the methodical breakdown of everything that will be executed to complete the project that moves a contractor from average to superior.[/pullquote]

There really isn’t anything unusual or extraordinary about the four point outline.  What is unusual and extraordinary are the contractors who are disciplined to practice their planning efforts consistently, no matter the size of the project.  Contractors cost themselves greatly when they pay little to no attention for planning on smaller jobs.  It is often the smaller jobs that can cost you the most!

Planning is more than simply scheduling future work.  It is the methodical breakdown of everything that will be executed to complete the project that moves a contractor from average to superior.  For my money, focus more on planning and you will see greater return for every dollar spent!

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