How you should think differently about construction estimating

Some new strategies you need to embrace and some systems you can use to become an entrepreneurial estimator.

Offering "Free Estimates" is like a car dealership offering free test drives. It's time to stop thinking of it as "estimating," and start calling it selling, business development or revenue generation.

Common frustrations from construction estimators and business owners:

"I send out a lot of estimates, but they don't go anywhere."

"I want to get more private and negotiated work, but I don't get invited to bid."

"I waste so much time doing budgeting and design work for people who either don't have the budget or they're just kicking tires."

"I have a business to run, and I can't spend all my time doing estimates."

You need to think about construction estimating differently:

If your value proposition is to offer a quote, you're not standing out from the crowd.

Advertising "Free Estimates" is like a car dealership offering "Free Test Drives." More about that later.

Let's stop calling it "estimating," and call it selling, business development or revenue generation.

Realize that everyone who comes in contact with a customer is in business development, not just your sales and estimating folks.

Just like good sales people don't sit and wait for the phone to ring, like an "order taker," if you are responsible for estimating, you need to realize that you can and should be strategic.

Strategies:

1. The focus must be on the needs of the CLIENT, not on YOUR needs or capabilities.

Remember the Toby Keith song, "I wanna talk about me," from several years ago? It was a popular song, but it is a lousy marketing strategy.

If you look at a lot of contractors' websites (probably yours too), you will be given the opportunity to learn about where their office is, how long they've been in business, how many employees they have, the charities they support, pictures of the last 5k their CEO ran in, their certifications, acronyms of all the trade organizations they are part of, a detailed listing of their cranes, dump trucks and trackhoes complete with model numbers (my favorite), and maybe a bunch of technical jargon.

Guess what? Your prospects don't give a flip how many 185 cfm air compressors you have or the maximum digging depth of your biggest trackhoe , or even where your CEO went to college!

Here's what they want to know: "Can this company solve my problem?"

Think about it. If you needed to hire a CPA, would you care what model of laptop she built spreadsheets on? Probably not.

Instead of talking about yourself and your company, you need to be focused on your prospect.

Start by answering these questions:

What kind of external problems do they experience that you can help with? They need to expand their plant, have a blocked drain, deteriorated driveway, need to remodel their office, etc.

What are the internal problems they may be dealing with? They might be afraid of paying too much, nervous about having someone in their house, feel bad because their house is run down, or concerned about the future of their job if they don't manage the office remodel properly.

How you can you help them with the external problems, and how can you address their internal problems or concerns.

In a nutshell, talk about your prospect and their needs a lot more than you talk about you, your company and your equipment.

2. Shift the focus away from PRICE, which is a commodity, and focus on building relationships and trust.

Back to "Call for a free estimate."  First off, have you EVER heard of someone who actually charges for an estimate? Secondly, do you really want to compete strictly on price?

"Call for a free estimate" is code for, "I am a commodity and the only value I can provide you is a number, so you can shop around and compare my price to all the other guys who think of themselves as commodities too."

The purpose of the construction estimating and sales process is to create opportunities for people to get to KNOW, LIKE and TRUST you. When people know you, like you and trust you, they are very likely to do business with you.

So here's what you should do. Take the "Call for a free estimate button" off your website. Today.

"If I stop offering estimates, how do I engage with my prospects?"

Figure out something that will be of value to your ideal prospect and give it away on your website. Set up a simple opt in form on your site so people enter their email address to receive that something valuable. Then you can follow up with them periodically.

What should you give away? Here are a few examples:

- For all contractors: Free Checklist for Project Owners/Homeowners: Top Ten Things To Remember When Hiring a Contractor.
- General Contractor - Checklist for vetting out contractors, a case study on lien laws or a comparison of the different contract delivery methods available, e.g. design-build vs. traditional design-bid-build.
- Deck builders: Put together a document with a bunch of different deck planning ideas, ideally consisting of pictures of your work.
- Concrete finishers: Checklist of things to consider when replacing your driveway or patio.
- HVAC installers: List of any rebates available from local utility companies for replacing air handling units, condensing units, furnaces, etc.
- Electricians: Case study on how much money could be saved, and rebates that could be realized, by upgrading light fixtures in a commercial building.

When you give away something valuable to your prospect, you are positioned as an authority on the subject and they feel like you are on their side. It also taps into one of the tools of influence that Robert Cialdini wrote about in his book, "Influence," which is reciprocity.

3. Be generous. Add value every opportunity you get. (Listen to Episode 16 with Brent Darnell)

4. Understand their problems and pain instead of just giving an estimate on what they ask for. Give your clients what they NEED, even if that's different than what they ASK for.

5. Qualify your prospects and get to level of commitment with the optimal amount of effort. Remember the Three D's: Dollars, Dirt and Desire.

6. Follow up. Follow up. Follow up.

Tactics and systems

1. Set up a CRM database to keep track of contacts, opportunities, calls, emails, and set reminders, etc. There are plenty of low cost options out there, and they are worth the money. Check out my buddy Rob McKinney's site at  www.conappguru.com for some recommendations.

2. Identify the ideal clients (developers, general contractors, property owners, etc.) you would like to work with. Do an 80/20 analysis (Listen to Episode 31)

3. Network your way into making connections with people on your target list (LinkedIn, Twitter, etc.)

4. Keep your eyes open for articles or resources that would be valuable to your target prospects, and every month or two, send them an email with valuable information. Consider setting up a blog to post articles written by you or others.

5. Call your prospects about once a month and ask if there is anything they need help with. Sometimes it is all about timing.

6. Call your subcontractors and vendors and ask them to make introductions to people on your target list.

7. Call architects engineers, that work in your area or industry and offer to provide free budget work if they need help. Add them to the target list and contact them regularly. This will help you learn of upcoming projects, and help get your name on the bid invitation list.

8. Hand written notes: It sounds old school, but after your first phone call with someone on your target list, send them a hand written thank you note on some nice stationary. It has a surprising effect.

Joe Girard, the #1 car salesman in the country for twelve years, sent out 13,000 cards per month that said, "I like you. Happy (Insert holiday of the month.)"

What should you do next?

Listen to Episode 16 with Brent Darnell and Episode 31 on how to do an 80/20 analysis.

Print out these show notes.

Follow the advice of my old college professor, "Turn the crank."  Set up your system and begin to work through the strategies and tactics

If there's something you need help with or have questions about, email me - todd(at)constructionleadingedge.com.

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How to develop joint ventures and collaborative relationships as a diverse contractor, how to maintain culture in an organization and Monroe's approach to giving back to his local community.

In this episode, I interview Monroe Barnes, President of MBJ Consultants in Cincinnati, OH, which provides construction management and facilities management services to clients in the midwest and California.

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Here are some of the questions I asked, and Monroe's responses:

How important is the culture of an organization, and does it affect the impact the bottom line?
[Monroe] Our culture is to service the customer, service the customer more, then service the customer again. The customer is our friend. If you don't service your customer and don't do a good job, it definitely impacts the bottom line.

We drive a culture of taking care of each other, on the job and outside the job. If you get in trouble outside of work, it is going to affect your ability to do a good job at work.

What are some things you do to reinforce culture?
[Monroe] I've had to remind some of my apprentices that the way they look and carry themselves is a reflection of the company. I try to make my people understand that they should carry themselves in a way that it looks like they care about themselves and about the company.

When you think of a successful construction company, what are the measuring sticks you use?
[Monroe] Companies have to make money to be successful, but they also need to impact their community. Part of your success is to help those who can't help themselves, or need to find kids that have had tough starts, are underprivileged and bring them into the company so they can grow up and have families, and their kids can grow up in a normal atmosphere. Then all of a sudden we break this poverty mode.

Success goes a lot further than just creatinga project on time. I think it's the lives in your organization that you affect, and the community.

What are the challenges to people trying to make the jump out of poverty?
A lot of the young men we may hire, nobody has ever demanded anything out of them. I have one guy who practically raised himself. They've never seen anyone get up and go to work every day, or buy groceries, or buy new cars. Some of these kids are sheltered within their community, often surrounded by people who would rather sell drugs or steal than get a job.

What are some of the common mistakes you see construction business owners make?
[Monroe] Sometimes we spend too much time on the paper documents, and on how you build buildings. I wish I had learned more about the business side; the financial side, cost projections, what is the bank looking for, what is the bonding company looking for?

I spent too much time on just the plans and specs of the projects while the business thought process was suffering, and dragging down our business.

What are some practical things you do to focus on the business and not just the projects.
[Monroe] At the end of the day, my job is to manage the risk of the company. In order to do that, you need to have data. If you are gathering data, and keep seeing the same mistake coming up, you can hone in on it, and figure out how to mitigate that problem.

Using data to help you mitigate your risks is very important.

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Listen to the rest of the interview to hear Monroe's advice on how to develop joint venture partnerships with large contractors and a variety of other topics.

How you can get in touch with Monroe

www.mbjconsultants.com
mbarnes@mbjconsultants.com

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