As contractors, we often find ourselves locked in a battle of price versus performance. Though we’d like to be chosen based on the merits of our capabilities, more often we’re selected based on the price we offer for a particular project. And while most of us believe that our construction company is truly unique and offers a high level of service, building with quality and integrity, to many owners we all look alike. “Pick Contractor A, B or C—it doesn’t really matter, they’re all the same.”
In this article, we’ll explore what contractors can do to break out of the price war that is today’s bid market and separate their company from the pack.
Taking A Lesson from Mayfield
Most of you grew up drinking milk. At our house, we seemed to go through a gallon a day. Could I name the brand of milk I drank as a kid? Probably not. But fast-forward to the late ‘80s, and a company called Mayfield Dairy Farms began to package their milk in opaque, yellow plastic containers. In contrast to the white containers around them, you can’t miss the distinct packaging in the grocery store milk case. Mayfield’s advertising campaign explained the opaque containers protected the milk from ultraviolet light, keeping it fresh and better tasting for a longer period of time.
Almost instantly, Mayfield created separation from all other milk brands by creating a common perception that their product is superior and then making it easily recognizable among its competitors. Mayfield charges slightly more for their milk, but they’ve managed to convince consumers that a superior product is worth a little extra cost.
So how can we apply Mayfield’s strategy to the construction business? It will take a concentrated effort to put your company in a position to separate from the pack. Most every contractor believes they build a quality product—and most probably do. Every contractor claims to build on time and in budget. But do these claims match their reputation in the community?
It’s time to do a reputation check of your company. Find out how your work is perceived among past clients, as well as architects and engineers you’ve collaborated with. What do they see as your strengths and weaknesses? Armed with that information, you should be able to craft a presentation for prospective clients that highlights your company’s best features. You’ll also be able to tackle your weaknesses, eliminating or modifying things that may put your company at a disadvantage.
Tips of the Trade
I have found that clients who negotiate for their building services are looking for three things from their contractor:
1. High Level of Service
As a negotiating contractor, you need to be ready to provide multiple budgets in order to get the project in the owner’s desired price range. Should you be ready to review the architect’s initial design and offer suggestions to make the project as cost effective as possible? Absolutely. And should you be out looking for land mines – aka potential change orders – that might increase the owner’s project cost? I would.
2. Trust
I can’t overestimate the importance of trust. Clients must feel that you are always working towards their best interest. When I ask potential clients why they come to my company for their construction needs, most often the answer is, “I know you’ll do it right and treat me fairly.” A reputation that you can be trusted may take years to build, but it can be destroyed in one project. Trust and reputation go hand and hand, and establishing both is a marathon, not a sprint. Each project you do, no matter how small, plays a role in building the community’s perception of your company.
3. Quality and Timeliness
Any client that negotiates a contract with a builder believes they should receive a high quality project and have it delivered on time and as promised. The last thing a contractor wants is to have the quality of their work called into question. If this happens, fix it and do it quickly. Owners are making a big investment in their project, and they expect a result they can be proud of.
Nothing will get your client riled up more than a sliding completion date that somehow always seems to be two weeks away from completion. Always establish a completion date that you can live with, and be willing to go the extra mile to make that date. There is no substitution for an excellent line of communication with your client when talking about schedules. Communicate early and often.
To successfully negotiate work on a consistent basis, you must have an organization that has a track record of meeting and exceeding clients’ expectations. If you can build a company that has a history of delivering what is promised, then you may find your success in negotiating work closer than you think.
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