Create clients and projects will follow

I believe the remodeling business needs to reverse ‘the create projects and client will follow’ paradigm.

November 15, 2011

Do you have a client-based business or a project-based business? When asked what business you are in, how do respond? In business today, you really need to intimately understand these issues. They need to be part of your DNA, your culture, and your specific strategies and messaging. While these are very simple questions, the answers can be very complex. It is important to explore why this is not such an easy subject.

Your client calls you to do a project. It could be a simple bath project, or a more complex two-story addition. The bottom line is that they are calling you (as are many others today) because of a project, not because of a relationship. This dynamic causes you to always want to put hooks/bait in the water that are project driven such as beautiful photos of projects you just completed or a special offer for an “under 10k bathroom.” Your sales strategies then are designed around building value around the “project“ or a cool portfolio showing off your greatest work.

Are your close rates better now than they were five years ago? Is your lead flow better now than five years ago? Is your sales volume higher today than they were five years ago? If the answers are yes to these questions, then keep doing whatever you are doing. If the answers are no, then read on.

I believe the remodeling business needs to change an important paradigm if it is to grow and thrive in this environment, which will be tough for many years. This paradigm is tough to crack, but it is the difference between the 10 to 20 percent that are not only having good sales years but also record levels of sales and growth. This paradigm is to reverse “the create projects and client will follow (or be made)” to “create clients and projects will follow.” This sounds simple, but it is a dramatic shift from what most businesses are doing. The following are some thoughts or themes that will help understand and begin the process.

1. Remodeler as Tour Guide

Everyone who owns a home needs to maintain it, remodel it and eventually sell it. Right or wrong, it continues to be their greatest asset and unfortunately for many, it is now becoming their greatest liability. The remodeler more than ever needs to be the tour guide, the financial advisor and the home therapist. All these roles are pointed to helping the client, not building projects. Create clients and projects will follow is a business mindset that will lead to your success.

2. Know the numbers

If you begin to understand the lifetime value of a client, you will be blown away. You (or your sales people) will begin to look at each client/referral/lead as a gift that should be revered/savored/treasured. This process requires you to examine your top 10 clients in your database. Go back 10 to 20 years, and begin to look at the projects and their dollar values and the subsequent referrals from these clients. Then analyze the total dollars, the referral dollars, the close rates on these clients and referrals, the net profit on these clients, your reduced marketing cost on these clients, and the referrals from them etc. Studies show that your net profit is 3 to 5 points higher with past clients than new clients. Now do the math. You should see some incredible numbers. You need to spend an hour on the process yourself to appreciate that this is a holy grail.

3. Make it easier

Your life and the life of your business is way too tough, way too stressful, way too unpredictable. By doing more business with the clients you know, you like and who allow you to make money, life is better. Top salespeople are more productive and less stressed because they focus on creating clients and projects follow. Begin to think of this as not just a growth strategy, but also as a stress management approach for you and your team.

Many of you will say you are doing this. I say “great,” however, are you living this mindset in your business? Is your team waking up everyday focused on the client? Or are they mapping out the work (the project)? There are few businesses or individuals that are fully embracing this approach to business. My challenge to you is to begin to adjust your course and you will find some great results.

Mark Richardson is co-chairman of Case Design Remodeling and the Case Institute of Remodeling. He is a member of the NAHB Remodeling Hall of Fame and an Affiliate at Harvard University’s Joint Center for Housing Studies. Richardson is the author of the best-selling book, “How Fit is Your Business,” and a forthcoming book, “Business Themes to Live By,” to be published in 2012.

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