David Lupberger: Positioning for the recovery

If we work with homeowners to help them design their project, assist them with their product selections, and then guide them through a remodeling project, we develop a unique relationship with each one of our clients.

January 25, 2013

In the November 2012 issue of Professional Remodeler, the Remodeler’s Exchange focused on the topic of “Keeping Customers for Life.” This is a subject that is dear to my heart. It’s more than that: It’s the future of the remodeling industry.

Over 15 years ago, I was working with a group called the Remodelers Guild. Some of you might remember this group and our goal of assisting remodeling contractors with the goal of making their companies a saleable asset. You haven’t heard anything about the Remodelers Guild because we failed. We failed for a variety of reasons, but some comments from a banker we were working with have stayed with me to this day. He let us know that he didn’t think remodeling companies were good investments, and that as a banker he wouldn’t finance the sale of a remodeling company. When we asked why, he told us:

  • Every year remodeling contractors start over. Because you only do projects for past customers once every 10 years, you need to find a new group of customers to work with almost every year. Doing $1 million in work last year doesn’t mean you will do $1 million or more this year.
  • The “whims” of the economy. A terrorist attack or economic downturn can change your marketplace, and you have no control over these “outside” influences.

There was a part of the Remodelers Guild program called the Home Life Plan. The purpose was to show remodelers how to create a recurring revenue model by providing homeowners with an annual home evaluation—identifying and scheduling projects in advance. It’s a proactive business model. The banker liked that part of the program. That part made the most sense to him.

Remodeling contractors have a unique advantage in the marketplace. If we work with homeowners to help them design their project, assist them with their product selections, and then guide them through a remodeling project, we develop a unique relationship with each one of our clients. No other trade contractor or supplier shares this kind of relationship.

This close relationship leads us to another level of service that we can provide to each of our clients. Look, that first sale is the most difficult sale you will make; so let’s invest the emotional capital that you’ve accrued during the construction process, and use that capital to create a “client for life” business model. A successful remodeling contractor in Santa Barbara, Calif., once said to me, “When our projects end, our relationship is just beginning.” That was Dennis Allen of Allen Associates, a founding member of the Remodelers Guild. He has taken this core belief and built a small projects division within Allen Associates called Building Care and Repair. This small projects division allows homeowners to call Allen Associates for any home-related concerns.

The client-for-life business approach is the future of the remodeling industry. As a remodeling contractor, you already have the trade contractor and supplier relationships to respond to most requests your homeowner clients might ask of you. Trade contractor and supplier partnerships are already in place, and all that may be lacking is your ability to coordinate small projects. Some contractors don’t like to do small projects, so who else is in your market that could assist you with this? Is there a local Handyman Matters franchise, or another handyman-type company that you could work with? Look, the right handyman/service company is just another trade-contractor partner. If needed, fill out your team with someone like this who can help you with these small projects.

An annual home evaluation will allow you to create a recurring revenue stream and build equity in your remodeling business. Ongoing work will be a byproduct of the annual evaluation. Annually, you will work with your homeowner clients to develop a plan for their home. This includes:

  • Service and seasonal maintenance work
  • Home repairs
  • Energy-efficiency upgrades
  • Aging-in-place improvements
  • Future remodeling projects

A benefit of this approach is that you begin to take a proactive role with your homeowner clients, becoming a resource that they call for any home-related concern or question that arises. Just as they have a family doctor and dentist, you become their family contractor. The loyalty that grows from this business relationship allows homeowners to move beyond cost as the primary consideration because the service you offer becomes so valuable to the homeowners you are working with. You are not just their family contractor—you are their asset manager. If you like this idea, go to www.remodelforce.com. You can read more about it there. PR

 

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