I define a full-service remodeling company as one that does a broad range of projects, interior and exterior, everything from decks to whole-house remodels. Most can do small, medium, and large projects. Specialty contractors, as the name implies, focus on a specific project type, such as window or roof replacement, or, just as common these days, offer a menu of the three, four, or five separate projects they're equipped to estimate and efficiently produce.
Both types of companies, for instance, might replace windows or construct a sunroom addition. The product would be the same, the installation process would be the same, and the price might even be the same. What differs is the business model.
THE DIFFERENCES Getting the phone to ring. In the full-service world, as much as 80% to 90% of the business comes from personal referrals. One job begets the next. The specialty contractor, on the other hand, largely relies on marketing efforts such as telemarketing, direct mail, and print advertising to produce leads. Media-driven marketing today is a lot more expensive and less effective than it was 10 years ago.
Of course, the way you build referral business is by establishing a relationship with clients. Installers working for specialty contractors often are either subcontractors or are on the jobsite for such brief duration that they don't have the opportunity to bond with customers. The result: Specialty contractors are typically smart marketers who know their numbers a lot better than the average full-service firm because they have to. The full-service contractor, on the other hand, is adept at relationship-building. His installers are trained to connect with clients and are rewarded for doing so.
The sales process. In the full-service sale, the salesperson serves as consultant, therapist, and, sometimes, marriage counselor. The sales process is something like dating, and multiple visits are needed to close. Though it may not be the most efficient process, it is effective. A competent full-service salesperson can close 50% to 60% of prospects, compared with the 35% or 40% closed by a specialty company's superstar. And rescission at most full-service companies is less than 2%, compared with 10% to 15% at specialty companies. The difference, again, is in relationship-building.
The follow-up. The good full-service remodeler has an ongoing relationship with the client through newsletters, visits, and holiday gifts, not only after the sale but long after the project is completed. The full-service firm makes the follow-up part of the process.
The result? Clients are reassured that they made a great decision to do business with that remodeling company. Although a mature specialty organization may do some follow-up, most of these new prospects and the latest closing techniques.
LEARNING OPPORTUNITY My point is that these two very different business models and cultures could each learn from the other. Full-service companies that want to grow would do well to emulate the marketing skill, financing acumen, and familiarity with business numbers that characterize the best specialty companies. And if specialty contractors could make building customer relationships central to their marketing, sales, and installation efforts, they would lower their expenses by getting more referrals and would retain more of the business that they sell. —Mark Richardson is president of Case Design/Remodeling in Bethesda, Md.
Does your company have a business practice or installation technique to share with the industry? Call Jim Cory at 215.923.9810 or e-mail firstname.lastname@example.org.