Marketing For New & Growing Service Businesses

#1
MARKETING FOR
NEW AND GROWING SERVICE BUSINESSES



Sun Brite is a residential service contractor specializing in wood restoration.

Sun Brite franchises are available in the Southeast.

Sun Brite supplies excellent cleaners, sealers, and equipment to contractors nation-wide.

Sun Brite offers training seminars combining the technical aspects of wood restoration with classes on managing your business for maximum Profitability.

If you are interested in finding out more about the next Sun Brite technical and business seminar, please contact us at (770) 277-6363 or check us out at
www.sunbritedecks.com

MARKETING YOUR SMALL BUSINESS
TO RESIDENTIAL CUSTOMERS



Marketing is not a science. There is no absolute formula for success. There are no right answers and no wrong ones. There are only results. If these results were guaranteed, then there would be no element of risk and everyone in the world would own their own business. As it is in the real world, spending advertising dollars in hope of getting more back is the risk we are all required to take. Our job today is to help minimize the risk as much as possible.

I’ve got some bad news. There is no free lunch. This depression-era saying remains true today, particularly in the world of marketing. There are some things that come close to being free, and we’ll finish up today with discussion about those things. In the meantime, lets start with the more traditional marketing tools.

By the way, the first rule to effective marketing is “Never lose a customerâ€. Customers cost a lot to get (compared to what they cost to keep). That’s as close to a real “freebie†as you’ll find in the world of advertising.

Marketing your company can be a simple process if you start with a plan. To create the plan, you must know your target customer and his needs.

There are three basic ways to improve your sales:
1. Increase the number of customers
2. Increase the frequency of their purchases
3. Increase the amount they spend each time they call you

A good marketing plan addresses ALL THREE of these goals.


Increasing the number of customers is usually the first goal of the average business owner – so we’ll discuss that first. This is also the most expensive method of growing a business, so we’ll look at alternatives afterwards.



INCREASING THE NUMBER OF CUSTOMERS


Increasing the number of customers you have can be expensive. Referral Programs, for example, are often the least expensive way to accomplish some growth - but there are still real costs associated. Referral Programs must be well communicated, and usually involve some financial gain for the person referring a new customer.

You might increase your customer count by leaving a marketing message (flyer, magnet, etc.) at the neighbors of any customer. It is the next best thing to Word Of Mouth- but its not free.

Any method of increasing the number of people who call you involves advertising, and that’s where the mystery and expense comes in for most new business owners.

It is typical for a growing business to spend from 6% - 10% for Marketing. In the very beginning, particularly in a highly competitive atmosphere, even more might be required to establish top-of-mind awareness.

Marketing dollars are spent ahead of the time when revenues come in, so this is really investment spending. Plan your budget and cash flow with these time lines in mind. If you only spend when you have lots of money coming in, you will have too much work then and not enough later.

What is the most effective way to spend these dollars? Before you can properly answer this question, you MUST know who your customer is and where (s)he is. You will use a different method to reach customers in an established neighborhood versus those in a newly developed area of subdivisions, for example.

In established neighborhoods, buying patterns are already set. You must effectively communicate why you are different, better, less expensive, etc. In established areas, it is often valuable to drive home your company name or have a catchy phone number (trying to improve your ‘top-of-mind’ awareness). In older areas, competitive sales ads are usually effective.

In new areas, buying patterns are not set. That means you first must communicate that you are there and that your service is tailored to that area. The name of your company is less important than the image that you are the established service for the area (there before the new resident moved in). In newer neighborhoods, the Yellow Pages is more effective than in older areas.

In both of these cases, both the message and how you tell it will vary considerably. How you deliver the message is called the MEDIUM (plural is MEDIA)


MEDIUM


The medium is the way you present the message. The medium determines who sees the message, and is the primary cost of advertising.

Media effectiveness changes according to your customer base and several other factors. For example, who picks up the mail from the mailbox on Tuesday? Who picks up the mail on Saturday? Since they are different, the messages might be different.

The key to effective marketing within a budget is to have a clear idea of the results you expect for every dollar spent and to choose the strongest medium. Sometimes, experimentation is the only way to really determine what is effective in your target market.

To complicate your choices, there are two distinct types of media in advertising – Dynamic and Informational. Dynamic marketing reaches out to the customer, and forces him or her to consider whether or not they want your services. Informational marketing is limited in that the customer must first decide they need a service like yours and then search for information about who to hire.

Your business needs both of these approaches to pull in customers.

Examples of Dynamic marketing media are:
§ Flyers
§ Signs
§ Newspaper display ads
§ Direct Mail
§ Shared Mail
§ Radio
§ TV
§ Billboards
§ Cold Calls
§ Magnets
§ Vehicle Identity
§ Community newsletters
§ Premium items

Examples of Informational marketing are:
§ Yellow Pages
§ Service Directory
§ Web Page
§ Business Cards
§ Referral programs

Plan your marketing to get the biggest bang for every dollar spent, and make yourself available to everyone who wants to find you.


INFORMATIONAL MEDIA


Let’s look at Informational marketing first. Marketing this way enables your customers to find your name and number when they have decided to hire someone.

The first examples cited are Yellow Pages and Service Directory. Neither of these methods is inexpensive, but both together form an unbeatable presence in front of your customers.

Everyone knows what the Yellow Pages are. If you are not in the Yellow Pages, people assume that you are not a “real†business. They might assume you are either new (inexperienced) or cheap. The customers attracted to this type of business (not in the Yellow Pages) are usually price-oriented and may not be your intended target customer.

A simple 1†listing will cost from as low as $40/month (depending on the number of copies of the directory circulated, or the size of your potential customer base). Typical Yellow Page placements are billed as a part of your phone bill, so the cost continues through the year of publication (even during your slow times). A quarter-page ad in a major directory could cost $1000/month in some cities.

If your local directory has no other listings for your kind of service, no ad is required. You get a free one-line listing included when you get a business line. If there are a few others listed in your area, a simple 1†listing is all you need.

There is an additional expense in Yellow Pages advertising. You are required to have a business phone line, which costs a lot more than your home phone. Unavoidable issue.

Hint #1 – Stick with the official Yellow Pages. Imitators may be cheaper, but seldom have the same effect.

Hint #2 - The first year you advertise, many phone companies will double the ad size free in order to ‘up-sell’ you the following year. Consider placing your ad under more than one heading as an alternative.

The second Informational medium we recommend is the Service Directory in the newspaper. These ads can run as little as $40/month (on a contractual basis) to as much as $250/month.

Hint #3 – Advertise in the Service Directory of the paper everybody reads, not the one that is cheapest.

The cost of doing both of these methods will be steady each month, and must be figured into your business plan.

If you do both of these things, you know that everyone who wants to hire a contractor can find you.

Business Cards - Effective communicators, often kept for future reference.

Hint #4 - Hand out business cards freely to everyone you meet.

DYNAMIC MEDIA


Now let’s look at some Dynamic marketing. This is where we get in front of the customer and ask for their work. We can do this in many ways.

Flyers – Inexpensive to print, thanks to Kinko’s and some other places. Flyers can be hung on doors, taped to mail boxes (not inside – against the law), placed under windshield wipers, passed out at local events, etc. Cost each is in the $.02 to $.08 range in a single color. Using bright paper and colored ink increases the attention these receive from the customer. However, most customers are tired of flyers and may ignore them. Most flyers have a 15-second life span. The customer may or may not look at a flyer, but if he looks at it he will decide within seconds whether or not to act. Most neighborhoods pass “no solicitation†rules to ban flyers. Bottom line – flyers do not present the image of a permanent business and often cry out for pricing specials to be of any effect at all. Never ignore the cost of distributing flyers. It will take you a full day in most neighborhoods to pass out 500 flyers, and this day might be better spent doing a deck. Expect a good flyer to produce 1-4 inquiries for every 100 distributed (1%-4%).

Photos – Always be ready to show off a portfolio of your work to prospective customers. Sharing pictures helps convince the homeowner that you take pride in your work. Include pictures in every appropriate message format. Photos are more effective than a list of references. Photos help set the customer’s expectations of your work, and usually help close the sale.

Signs – Plastic 12†or 15†square signs can be purchased for about $10 each and mounted on phone poles and other spots visible to drivers. These signs are generally ineffective, since most people driving by don’t take the time to write down the phone number. Can only fit a few words (i.e. “Pressure Washingâ€) and your phone number in readable lettering. Lawn signs are usually bigger and better, staying long enough to tell neighbors who their neighbor hired. Cost is about $20 each. These are effective at getting the neighbors to call, and take on the influence of a “word of mouth†endorsement.

Newspaper display ads – Usually too expensive for the return. Newspapers today are too full of ads to hope that yours will stick out significantly. If you elect to go this way, plan to spend between $500 and $8000 for a good-sized ad (depending on circulation). MUST use a “grabber†headline.

Direct Mail - Probably the most effective method of reaching targeted customers. Direct mail can be a letter you produce yourself sent to a mailing list of potential customers at a cost of about $0.50 each or as inexpensive as a photo postcard at about $0.30 with postage. Much more costly than Shared Mail, but much more effective. Look for return of 2% - 15% depending on the quality of the list you are mailing to.

Shared Mail - This is your message sent out in the same envelope as 10-20 other companies. Very inexpensive, ranging in cost from 1.5 cents to 11 cents, depending on quantities. AdVo, Val-Pak, etc. Try for exclusivity clause. Expect a return of 1/4% to 1%.


Radio – Reach a lot of people within a large radius. The commercials can be effective, but are handicapped by lack of visual information and usually reach too large a population base. It’s often possible to get good radio placement in a smaller-sized city for a few hundred a month. Consider talk radio formats, particularly if there is a home improvement show you can get in on. Cost for two spots on a Saturday morning show in Atlanta - $250 per spot.

TV – Not just the play toy of rich corporations. Positive image, with the ability to target specific market areas through cable. Cable advertising can be relatively inexpensive for the number of customers who will see your spot. Producing your own spot in cooperation with the cable company, in a 30-second format, will allow you to eliminate production costs and talent fees. Plan to spend between $500 and $1500 per month, depending on your area and the number of people served. This is the fastest way to penetrate a market, demonstrate the need, and communicate quality. Too expensive for many start-up companies, unless they limit the advertising to specific months and establish broadcast “flightsâ€.

Billboards - Fun, attention-getting, but expensive and probably out of reach. Excellent visual. Range in price from about $1000 to $5000 per month for good locations.

Cold Calls - Many start-ups in the cleaning industry use cold calls because they are seeking commercial customers who are receptive. In the residential marketplace, customers often tune out sales calls - whether by phone or in person - unless they have had some past dealings with the person calling. Can be hard at first, but could get you started with little cash cost.

Magnets - Good visual effect, with excellent targeting. Potentially long-term effect, because they may be kept for future reference. Return may be as high as 5%-10%, but slower than you might want. Expect long-term effect to cause a return of two or three times what flyers produce.

Identity - Can’t emphasize the importance of Image and Identity enough. Driving a clean vehicle with good signage on it is essential to creating awareness within your customer base. Add the effect of clean-looking crews who smile while they work is extremely effective. Avoid hand-lettering a vehicle, and opt for vinyl graphics instead. They last longer and look better.

Community newsletters - Effective, localized, and inexpensive. Expect to pay $100 to $200 per year to be in every issue.

Premium Items - Koozies, keychains, etc. Effective only if the perceived value causes the item to be kept and used at the right time. Usually an expensive item is effective, but it may not be the best use of advertising dollars.

Address Lists - You can buy large lists of home owners on CD ROMs. These are available at most software stores. These are relational databases, and can be sorted by zip codes or even by street names for specific neighborhoods. Most direct-mail houses use similar lists. Beware of out-of-date information.

Actual lists of homeowners can be purchased as well, but they are less useful if they are typed out – and not on diskette or CD ROM in a usable database format.
MESSAGE


Once you have selected the media you can afford, you need to consider the message you are sending out. Let’s discuss what you really want to say.

Cheap
Competitive
Only game in town
Better than the other guys
Fast
Quality of Material
Quality of Workmanship
Expensive
Fix current problems
Prevention of future problems
Don’t mess the house up too much
Improve the Customer’s Self-Image
Won’t kill the dog or the plants
Affiliations (i.e. PWNA, BBB, etc.)

If you try to send too many messages, the customer will get confused. Limit your message to one or two points and call it a day.

Hint #5 - You can hide one message inside the other. (i.e. Quality can be communicated in the layout and image of the message without the words being used).

The greatest difficulty some of you will have is clearly communicating what you do. Wouldn’t it be a shame if you spent a bunch of money for a Yellow Pages ad about treating decks, and every caller thought you built decks? This happens all of the time.

In this case, the right message is Action – (i.e. we clean and seal wood exposed to the elements).

Sometimes, the easiest way to communicate what you do is the Before-and-After photo. Remember that a picture is equal to a thousand words. Now you can see the value of a visual medium. We have seen photos used effectively on business cards, magnets, etc.

Keep your message consistent. If you use a logo and/or color, keep the image consistent each time it is presented. The theory in marketing is that it takes a number of “gross impressions†within a time period to create the willingness to purchase. If the image of your ad changes every time, every impression is the first one. On the other hand, if you always use the same colors and logo, and you use it on your truck, on your business card, on your flyers, on your lawn signs, etc. you are creating an ad campaign that will cause the consumer to think of you first. Your professional image will create a trust in your ability to do the job and the likelihood that you are in the business to stay.

Work within your budget, and don’t get sidetracked by a fast-talking salesman.

Track your responses, so you don’t repeat any mistakes.

If you are dealing in a competitive world, introduce coupons. Do not devalue your work. Add value to the purchase price. Limit coupons to a certain time frame (i.e. 30 days).

When you are creating your message, keep the message simple and clear. Resist the temptation to fill every square inch with words and multiple messages. Keeping a fair amount of ‘white space’ will make all the words you use stand out more and be easier to absorb.

Use photos where practical. It helps you communicate better in less space and it also helps you set the customers’ expectations.

In these days of desktop publishing and scanners, many of you can create your own layouts easily. If you aren’t a computer user, then most advertisers will do your layout work for you for free. Don’t expect miracles from them, because their payoff is in selling the ad – not in creating more sales for you. Their expertise is valuable, but you are the best person to decide what will work for your business.

Use color to get attention. Keep in mind that multiple colors means multiple runs through the printer, so the cost rises with each added color. If you are reproducing photos, a minimum of three colors might work, but four is the standard.

Printing for photos preferably starts with full-color negatives or positives. (You can start from an actual photo, but the results might not be as sharp.) The four colors are separated into groups, with a separate negative for each of the four colors. Then the piece is run through the printer four times (one for each color). There is new technology that simplifies this somewhat, but this is an overview of the common technique used.

Use the right paper. Weight, texture, finish, and size all play an important part in communicating you message to the consumer.

Great wording is essential. Avoid using negative images (i.e. “Don’t mistreat your deck!â€). Instead, use positive images (“Treat your deck and yourself!â€). Keep the message short and focused. Aim your message to the person who will read it. The message to Dad might use the word Protect, while the message to Mom might be Beautify.

In the end, the best and most cost-effective way to grow your business is to impress all customers and ask the neighbors for their business. Offer a referral program to reward the customers who recommend you.


IMPRESSING THE CUSTOMER


The least expensive and most effective marketing you can do to get new customers is to impress the customer. A good word to a neighbor or two means you are guaranteed to get more jobs at the same fair price – without spending additional dollars on marketing.

Respond to a request for a price within 24 hours.

Use an answering service, and carry a pager or cell phone with you. This way, when someone calls, you can respond immediately. If no one hears from you, they may assume you are not going to respond and call someone else.

Show up prepared. References, pictures, samples, brochures, your personal message.

Set the customer’s expectations.

Quote in odd dollars. Round numbers mean “off the cuff†and subject to negotiation.

Smile confidently.

Do everything you promise. Your word is your reputation.

Show up on time.

Provide the extras that don’t cost much - I.e. sand the handrails, pound loose nails, etc.

Write a personal note on every quote (i.e. “I’ll make your deck beautiful for you!â€)

Say ‘Thanks’ for the work! Follow up with a Thank You card a few weeks after the job is done.



INCREASING THE FREQUENCY OF YOUR SALES


Design your company’s service so that you can get your customers to call you as often as possible. Once you have gone to the expense and effort to win a customer, and to impress them with your work, getting them to call back often should be easy (and a lot less expensive).

Often, during the sales process you can introduce your “Maintenance Program†as a way to differentiate yourself from your competitors. Maintenance at some companies is priced lower than the regular service, making it attractive to the value-conscience customer.

Gather all of the information you can about the customer and his needs (contact information, dimensions of work, etc.). This is the information you can use to generate future business. You should create a database to store this information, and use this list later on for targeted mail or telephone marketing efforts.

Keep all information in as much detail as possible. We even keep files on non-customers and market with those names. After all, these are people who considered hiring you in the past. What if they are no longer happy with the other guy?

Collecting the customer’s information is easy. It is always best to answer the phone when the customer calls, presenting a confident image through your voice and words. If you cannot have the phone answered (because you are the boss and employee and are out on the job) then an answering service is the next best thing. A good answering service is usually $25 to $200 per month or so, and sounds very professional. Make sure your service gets the customer’s name, address, phone numbers, and the nature of the work. Follow up with a call within hours confirming that you will be doing an estimate within the next day or so. If you are really opposed to spending the money for an answering service, an answering machine is your only alternative. Make sure your answering machine can be accessed remotely, so you can check for messages from a cell phone or pay phone.

If you add to your menu of services, you have an automatic audience who wants to know what you can offer them.


INCREASE WHAT THE CUSTOMER SPENDS
WHEN HE DOES CALL



The third way to increase your sales is to get each customer to spend more, which is called up-selling. An example of this is “upsizing†fries and coke at a fast-food restaurant.

This is a key area often overlooked by new contractors. The idea is simple. It costs lots of dollars to get a customer, but it only takes a little time and sensitivity to get a customer to spend more.

If you are bidding restoration of a deck, look for a fence to do at the same time. You might see a wooden playset in the yard, or even a patio or driveway that needs to be washed. If the deck is located over a patio that is obviously used, offer to wash and seal the underside to make it look nice. You could offer to replace damaged boards or build a gate or any other service that you are capable of offering in order to get the size of the job increased.

Do not offer the customer a “package priceâ€, as this often intimidates the customer into thinking you will only take the job if it is big dollars.

Instead, once you have closed the sale, say “By the way...â€.

If you tell the customer that you can offer a special price on extra services because you are already going to be on the job, the sale is often an easy close.

The best close I know of on an up-sell sounds like: “I would normally charge $100 for sealing the playset and $150 for cleaning the driveway, but if I can do these at the same time as we are doing your deck, I'll do both of these extra jobs for only $175. Let’s get this scheduled for next week.†The customer smells a bargain, and the $175 is an affordable amount. All you are trimming is $75 off the driveway cleaning, which is a labor-only job.

Other potential “up-sells†for deck guys are:
· Sanding the handrails
· Routing the handrails
· Deck tightening (replace loose nails with deck screws)
· Deck additions
· Gates
· Cleaning patio furniture

If you pressure-clean houses, you can offer to clean the driveway, the patio furniture, or the deck. No matter what you specialize in, there is almost always something else you would be willing to do for a few dollars more. No matter what services you offer, and no matter what message you use when you advertise, you cannot assume that the customer knows everything you might be willing to do for him.

Its much easier to get the OK for a $500 job and a $175 extra than it is to get the OK on a $675 bid that includes everything. Don’t ask why, because there is no answer.

The person who adopts this attitude will collect hundreds more on average from every customer than the person who doesn’t – at no additional cost in marketing.

OTHER INEXPENSIVE POSSIBILITIES:


Send out newsletters seasonally with helpful hints and reminders of appropriate work you can do for them.

Issue Press Releases whenever appropriate. Use a “grabber†headline, start with a quote that tells the news, round out with company information, and close with all contact information. Most business sections will run Birth Announcements (new company on the scene), etc.

Look for opportunities to be featured by someone else’s advertising (i.e. AmEx, FedEx, car dealerships, banks, sign companies, etc. often feature other businesses in their ads).

When placing newspaper ads, ask if they offer short feature articles introducing local businesses.

Make sure you get full information every time you make a customer contact.

Consider barter for ads, etc.

Co-op advertising messages with other companies (i.e. deck restoration company and lawn service print a common flyer and each distributes).

Use the free design and layout services of your printer, the newspaper advertising rep, etc. Don’t expect them to know your company and services like you do, but they see a lot of good and bad stuff and will usually help you out a lot for free.

Use lawn signs to tell the neighbors exactly who is doing the work.

Use clear truck signage, and maintain the appearance of the vehicle.

Send a reminder of your referral program a few weeks after the job is done.

Place flyers on windshields at Home and Garden shows.

Offer to address neighborhood meetings (such as a Garden Club in a subdivision) to explain your service and offer attendees a group discount for several customers who sign up at the same time.

Mail hand-signed letters to your customer base reminding them that its time to re-do what you did before. Use mail-merge function of word processing program.

Offer additional services to existing customers.

Post your services with local referral agencies for contractors. Bulletin boards and web-sites offer you opportunities.

Honor your guarantees.

Display your work by doing examples at local stores and businesses and leaving a sign.

THINGS TO AVOID


Betting it all on one horse

Firing before you aim.

Cutting advertising spending when business is down.

Fixin’ things that ain’t broke.

Changing direction without testing the waters.

Timing problems.

Bad Image.

Letting your ego control your budget and message.

Coupons in general, long-term coupons in particular.

MASTERY OR MYSTERY?


It is easier than ever to put together your own marketing plan and implement it. Desktop publishing means that you can create your own messages, customized for your needs and your target. There are some basic rules to keep in mind as you start this venture:

BE EASY TO FIND If your phone number is consistently available in the same place and is easy to find, your sales will increase. Don’t fall into the trap of using one medium one week and another the next. Find the one that works for you and stick with it. Don’t decide that one medium works and another doesn’t based on the results of a single use. A 90-day trial is more informative.

BE EASY TO UNDERSTAND Don’t overkill with information and details. Remember that we have reasonably short attention spans. Leave white space in your ads. Limit yourself to one main clear message.

VARY THE MESSAGE, BUT NOT THE IMAGE Make your ad layout and your logo similar every time. Vary the message to create interest, but make your ads easy to identify without reading them all the way through.

SPEND CONSISTENTLY Its better to avoid blowing your whole budget on one large display ad. Plan your spending to create business when you need it and can handle it.

CONCENTRATE YOUR SPENDING ON JUST ENOUGH PEOPLE Its better to reach 10,000 people five times than it is to reach 50,000 people once.


MEASURE


The s

------------------
Dan Flynn
Timberland Power Wash
www.powerwash.net
Houston, Texas.
 

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