Fundamentals of Sales and Marketing for a Construction Business

No matter how good you are in what you do, you always need to maintain a healthy flow of new customers. 

Although you are busy and overwhelmed now and can't think of accepting any new projects, you cannot predict when the cycle will change. You never know when the momentum of your subcontractor business will slow down, and at that point, it may be too late to start sales and marketing efforts, since leads do take a while to materialize. 

Now that we understand the importance of having a steady pipeline, we need to decide on the number of new customers needed to sign up. How do we come up with this number? Start with the end in mind!

Step One - Begin with the end in mind!

Start with a clear goal. Our end goal will determine the amount of sales efforts we need to put in. Let's first answer the following questions;

• What are our companies goals for revenue this year?
• What is the average size per job or project? 
• If the company has multiple departments, you'll need a number per department. For example, if the company has a commercial and residential division, what is our average commercial job, and what is our average residential job?

To understand this, let's start with a sample company: 

1. ABC Contractors has a goal of achieving $2,000,000 in sales for this year.
2. The average project invoice amount is $35,000.
3. Based on the above, the company will need 57 signed contracts for the year ($2,000,0000/$35,0000) or five new jobs per month. This example assumes that there is only one category of jobs. In the case of multiple departments, you'll need to calculate them separately. For example, you can achieve your $2,000,000 sales goal by splitting your jobs between commercial $1,200,000 and residential $800,000, and your residential and commercial jobs may have a different average size. 

Step Two - Understand the difference between a "lead" and a "qualified lead"

Now that we have established that you'll need five new signed contracts per month, we need to ask ourselves what percentage of leads or qualified leads will turn into actual customers. 

1. A lead is someone that interacts with your company. They may have reached out to you, but the fact that they called you doesn't mean that they are a good fit. They may be too large or too small, or may not be willing to pay your prices.
2. A qualified lead is someone that you or your sales team already had a conversation with, and you believe they are the right customer for you based on their needs and on the scope of the project.

To put this in perspective, what is the likelihood that a lead would become your customer? 10% or 15%? With a qualified lead, the likelihood of them signing a contract should be 40% to 50%.

Step Three - Bringing them together

Now that we have an understanding of leads vs. qualified leads, if we are aiming for five new jobs per month, you'll need to get 33 cold leads as only 15% will end up signing a contract or 10 qualified leads per month since we expect that 50% of qualified leads will end up signing. 

The person in charge of sales at your company should be aware of your goals. Continue reading more here on how to maintain your sales pipeline. 

👷Now that you know the number of leads that you will need, read this article that will help you achieve the leads that you need.

👷Learn more about Profit Margin and After Action Review for Contractors here.

This is an oversimplification of the process so this should be a starting point and you can build on this. If you need help creating a budget or setting your goals reach out to us to learn more about how we can help you.