To individuals who are not contractors, builders and subcontractors look like very similar businesses. But in reality, builders and subcontractors are vastly different businesses who face vastly different business challenges.
Builders often do not have field crews. They usually do not have large equipment fleets. They tend to have substantial office staffs. Subcontractors always have field crews, equipment fleets, and tend to have very small office staffs.
Virtually all of their differences are justified by their differing business models. All except one: their attitude towards selling. Builders believe in selling and subcontractors typically don't. Both should.
Selling is Essential to Survival
Selling is the key to business survival. It provides financial security. It fuels growth. It enables a business to attract and retain talented, hard-working employees. With sales, everything else falls into place. Without sales, sooner or later, every thing falls apart. When a contractor doesn't sell, he usually ends up with;
Bad clients
Bad contracts
Liquidity problems
Refusing to devote sufficient time and effort to selling is almost a death wish for a construction company. Lack of selling is probably why construction companies are of the two least likely businesses to survive 10 years.
Why don't subcontractors sell?
Builders understand the need to sell, to differentiate themselves from their competition. They pursue developers and owner operators, they work closely with architects, and they build close relationship with governmental agencies and departments.
Strangely, while virtually all builders understand the need to sell, most subcontractors don't believe selling is necessary. They turn their back on selling.
Subcontractors almost always start their careers in the field. Their comfort zone is operations. Like most operations focused people, subcontractors have a natural bias against salesmen and everything they represent (selling). Their dislike of selling (and salesmen) combined with endless bid opportunities reinforces their belief that selling is just not something their company needs to do.
Selling vs. Marketing
Contractors often fail to understand the true roles of marketing and selling. Marketing's role is to create sales opportunities. Selling's role is to close sales.
Marketing does not close sales. Selling closes sales. That's why so much attention in sales training is focused on closing the sale and why great salesmen are often referred to as great closers.
Buyers of high cost services buy from people they like and trust, people they have a relationship with. Marketing cannot create relationship. Relationship requires face-to-face interaction. Marketing cannot replace that. Marketing can open doors for salesmen, but it can't build relationships and close sales.
On a related note, many people believe classic advertising is the only viable option for marketing their business. They are sadly mistaken in that conclusion. Advertising is but one of several marketing techniques capable of generating leads. It also happens to be one of the least effective and most expensive options for generating leads. That's a bad financial combination.
Referral systems (organized word-of-mouth) are far more effective and efficient at generating new leads than is classic advertising. For that reason, contractors should spend their time and money on building a system for promoting referrals.
Misconceptions about Salesmen and Selling
David Sandler, founder of the Sandler Sales Institute which has trained thousands of salesmen through its network of 160 franchises, points out that "Sales success is dependent on attitude, behavior, and technique, and that each of those items is dependent upon each other." Attitude affects behavior. Behavior drive development of proper technique. Proper technique combined with effort produces results.
The selling process starts with having the right sales attitude, something subcontractors are almost always short of. Changing their attitude will be difficult without shaking off several common misconceptions about selling and the sales process. That is easiest to do by comparing the approaches used by poor salesmen and superstar salesmen.
The business world is heavily populated by used car salesmen. These individuals use every trick in the book to close a sale no matter how much the buyer will end up regretting the buy. These salesmen don't care about client satisfaction. These salesmen don't care if they destroy their company's reputation. Their only focus is on closing the sale. Used car salesmen have given all salesmen a bad name.
The business world is also heavily populated by salesmen wannabes. These are individuals who want to draw a salary, entertain prospects by going out to lunch or golfing, and love talking about the volume of prospective work they've tracked down. They never produce results. These salesmen are rarely worth the money they are being paid.
In reality, contractors' dislike of salesmen and selling is based on their extensive exposure to used care salesmen and salesmen wannabes. Neither operate the way superstar salesmen operate. Most superstar salesmen adhere to an approach similar to Sandler's recommendations:
Salesman should never manipulate prospects into buying things they don't need or want.
Salesman should only say yes to terms and conditions that are fair to both parties.
Salesman should never promising performance operations can't deliver.
Salesman should never accept work from clients who will stiff them.
Salesmen should solve client problems.
Salesmen shouldn't waste their prospects' time.
Salesmen shouldn't allow their prospects to suck valuable information out of them without a deal in place.
By gaining an understanding of proper sales attitude, behavior, and technique, contractors will discover that selling is really just problem solving and deal making, two things most contractors enjoy and excel at.
Hire the Contractor?
Question: Why don't more owners hire their builders and builders hire their subs?
Answer: They don't see any reason to.
If a general contractor doesn't give an owner a reason to hire his company, the owner will choose the general contractor with the lowest price. The same holds true for a general contractor when choosing his subcontractors. Both buyers need to have a reason to move away from the lowest price. That means the contractor better be offering to solve a problem of concern.
In order to get an owner or builder to pay more than the lowest available price, a contractor is going to have to solve a problem the owner or builder really cares about. For an owner, the list of possible headaches would include:
Blown budgets
Excessive change orders
Late completions
Time spent on close-out
Liens
Lawsuits
The list for general contractors would include everything in the owner's list plus:
Late shop drawings
Incomplete requests for information & change orders
Incomplete certified payroll
Violating OHSA safety rules
Not cleaning up debris
Not showing up on time
Not communicating with project team
All prospects have problems they'd like to have solved. Some are willing to pay for the solution and others are not. The salesman's first step is to uncover the prospect's problem then he can move on to qualifying the prospect's attractiveness as a customer.
Uncovering the Pain
Finding the problem that matters takes effort. Prospects are not going to just blurt out "hey, solve this problem and I'll pay you whatever you want." First of all, they often have to be reminded of the problems they've experienced because they've kind of forgotten about them. Second, businessmen rarely share their inner concerns with strangers (relationship is needed). Third, they may be relatively new to construction and haven't had the pleasure of experiencing all of the problems that can crop up on a construction project.
When selling, contractors need to ask probing questions then listen very carefully to the prospect's answers and watch the prospect's body language. If approached correctly, politely, and professionally, the prospect will eventually air the laundry list of headaches. That allows the contractor to keep his efforts focused on the issues the prospect cares most about.
Proving Your Capabilities
Now that the salesman knows the problem(s) to address, he need to convince the prospect his construction company is going to solve the problems. The salesman should do this by using education, case histories, and most importantly, testimonials to back up his claims. Prospects are highly skeptical of self-claims because history has taught them that salesmen often make promises they can't keep. They are far more likely to trust the words of former clients. This is why referrals and testimonials work so much better than advertising.
Summary
In conclusion, selling essentially controls a contractor's financial security. Neither marketing nor bidding strategy is going to convince a prospect to hire a contractor via negotiated contract. Only by calling on prospects and exploring their problems - in other words, selling - will generate negotiated contracts. With the right attitude and a little skill development, most contractors can become highly productive salesmen.
Ron Roberts is a webmaster of truebluecontractors.com truebluecontractors.com.
truebluecontractors.com truebluecontractors.com allows contractors to spend less money advertising, give fewer estimates, and get more work.
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