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Construction Marketing, 101 - The rules have changed

Date Posted: April 27 2007

Editor's note: across Michigan, local unions and contractor associations are increasingly hosting management and workplace consultants at seminars to talk to members about how to get an edge over the competition in the construction marketplace.

Following are excerpts of an article written by Guy Snyder of Michigan Construction News.com, that illustrates what contractors can do to improve their firm's marketing efforts. Of course, in many cases, their efforts will also depend on successful buy-in from their construction workforce.

Want to get more work in the highly competitive construction market? The simple answer, Scott Humrickshouse, a director and shareholder of FMI Corporation, told the West Michigan Construction Alliance, is to differentiate your contracting firm and showcase its distinctive qualities through proactive marketing.

Humrickshouse hammered these themes during the WMCA's April 4th Construction Labor-Management Conference. Speaking before an audience of organized labor representatives, contractors, and executives from employer associations, he said significant changes have occurred within the industry during the last ten to 15 years.

They've made old models of marketing construction and design services virtually obsolete. Instead, to succeed, a far more comprehensive model must be used - a model that leverages all of an organization's most qualified resources.

Following are some points to ponder from the conference:

*Construction has always been a "price-driven" industry. Today, fast tracking, increased dependence on intelligent technology, and strong movement toward negotiated contracting using construction management and design/build project delivery systems, have all but destroyed the traditional design-bid-build process.

The hard emphasis on price remains but the pace has accelerated astronomically. At the same times plans and specifications have become sketchier and more dependent on a "just-in-time" philosophy, drawn as the building goes up. Not only construction managers, architects, and engineers need to gain early knowledge of upcoming construction, today's major subcontractors need to as well, if just to provide input on constructability and cost issues.

All of a project's major players must gain a position on the construction team well before the work comes up for bid, or else face being swept away in the mad rush. As a result, construction professionals must develop very long range "sales radar" to learn about potential projects before they've even been conceived.

*Under the old model, Humrickshouse said, marketing was a function handled by a company's most senior management. There was no real strategy or attack. The pace of project development was slow enough that those who had a natural talent for such work usually were able to sufficiently react to changing market conditions.

Potential clients were wined, dined, and driven to the golf course. The most common question directed to a potential project owner was, "what work do you having coming up?" The project owner's typical answer was, "I don't know yet but when something hits I'll tell you." There was very little available for an inexperienced project owner to use to identify contractors that consistently exceeded industry averages. Often they could not tell the competition apart.

In today's market this approach is stale and no longer effective, Humrickshouse said. Instead, generating name recognition due to qualities or abilities that set a contractor or designer above the mundane is what's important. The goal is to establish a reputation for expertise so that owners will immediately think of involving your company with their project as soon as the need arises.

*Because very few firms are large enough to do everything, Humrickshouse discussed how contractors need to carefully target their markets, identifying prime customers that will most likely have a need for their particular services or products.

Rather than restricting project owner contact to a business development manager or representative, he outlined a holistic approach to market development, where key departments within a contracting firm are trained to work directly with project owners.. Many project owners, he emphasized, want questions answered by the estimators, designers, schedulers, and project supervisors who'll actually perform their project's work. "Team selling," Humrickshouse stressed, "has to become a significant part of the business development process."

*He introduced the concept of the "Business Development Pyramid" to the workshop and showed how various marketing tools fit into it. Public relations, advertising, events, conventions, and web sites are to be used to gain the attention of targeted markets and identify potential customers within in. These potentials - through applications of direct mail, telemarketing, and print material distribution - can become prospects that welcome a visit from your business development personnel.

From there a relationship can grow that, down the road, leads to contracts and, hopefully, repeat business.

Focusing for a moment on just one tool, Humrickshouse placed a heavy emphasis on public relations, especially the use of news media for achieving recognition.

Construction industry firms, he recommended, should consistently issue press releases about such developments as contract awards, groundbreakings, and project completions. They should inform reporters and editors about awards, community service contributions, new services, the hiring of new personnel, and staff promotions. Any positive feature articles written about them should be reprinted and distributed to potential customers as direct mail pieces.

Stories appearing in the news media can be an extremely powerful and positive force for marketing, Humrickshouse declared.

Always the goal of a contractor's marketing should be the delivery of construction projects at the "best possible cost," recognizing, as Humrickshouse said, "there's a lot of parts in the term." Developing a long-range relationship with project owners can lead to their understanding that "best possible cost" includes high levels of productivity, quality, on-time scheduling, and safety. Too heavy a weight given to lowest bid price often overlooks these important elements. And overlooking them when bids are first received can lead to delayed project completions, expensive change orders, a higher end cost, and dissatisfaction with the end result.