The Garrison Report #2002-9

How to Increase Business in a Competitive Market

Too many contractors lower their prices to compete in a highly competitive market. (Obviously contractors who only bid work have no other choice. That’s a good reason contractors should not bid work; there is always someone crazy enough to do it for less.) Instead contractors should build relationships by adding value, which is interwoven with the concept of trust. Today relationship selling is important in virtually every industry, but in the construction industry, it is absolutely critical because no one buys a $20 million building from a salesperson. A commitment of that amount requires trust—the very underpinning of relationship selling. So how does one add value and gain trust?

  1. Continuously learn: To build trust you must continuously learn more about your customer’s construction-related problems and seek solutions for them. But don’t just fix the problem; raise the bar with a better solution. Accomplishing this requires continued development of the necessary skills to implement those solutions. This includes skills in innovation, leadership and trust building to name a few.
  2. Openness: It may surprise you, but most buyers of construction services don’t expect perfect contractors. However, they do expect open and honest contractors. Don’t try to bluff your way out of a mistake because no matter how bad it seems, it will only get worse if not addressed. Many contractors mistakenly believe they can escape the monetary damages by turning in change orders for their mistakes and blaming them on others, but the damage to your reputation will cost many times the price of the repair. In contrast, studies have indicated that when you make a mistake and fix it to the customer’s satisfaction, that customer will be more loyal than if you never made a mistake in the first place.
  3. Competence: Your occasional mistake notwithstanding, buyers want competency in their contractors. They are looking for contractors who bring solutions to the table and stand behind their recommendations. They are tired of contractors who just bring change orders and pass the buck. Competent contractors must continue to invest in the continued education of their workers in construction techniques, technology and systems. When a contractor is not the expert needed to solve a particular problem, that contractor should step aside and recommend someone who fits the bill. Even when this means giving up some project, the contractor will see it will actually help business because in the contractor will benefit from its increased credibility.
  4. Contractors must think long term: In my seminars I tell contractors, “Those companies that focus on their bottom line don’t have to worry about it for long because they won’t have one to worry about.” While the audiences appeared stunned for a minute, they usually figured it out. If they don’t worry about their customers’ well-being, they won’t have any customers left. I’m not suggesting companies can ignore their bottom line, but their decisions need to be focused on the long term. The most profitable project is a repeat customer, so the decisions should be based on how to get the next job from the client rather than how to maximize the short-term profits on the project. Contractors must learn that they don’t have to prove they are right! Sometimes winning an argument is more like winning the battle and losing the war.

    The final thought: Don’t wait for competition to increase before you start building trust. It’s something you should give a 100 percent effort to every day.

 

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