Let’s go over some construction sales techniques that can grow your construction business.
My name is Daniel Quindemil, founder of I AM Builders, and I’m a construction consultant. My team and I specialize in helping contractors grow their construction businesses.
Here are 10 tips that you can use right away that you don’t require fancy software or a whole lot of training that you can implement in your business right away. Almost immediately, you’re going to see a big shift in your sales.
We specialize in estimating for busy contractors, so once you implement some of the strategies I’m about to share with you below and you need help estimating, we can help. Learn more about our estimating service for Contractors and Subcontractors.
1: Bid as Many Projects as You Can
Tip number one is to bid as many projects as you can. We are in a numbers game and the law of large numbers basically says that if you bid a lot of jobs, you just have a lot more chances of winning more jobs.
The industry’s average in closing for construction is about 10%, and that 10% consists of the good closers and the bad closers.
I have a lot of clients that have a lot of good relationships in the industry and whatnot. So they’re closing 30%, 40%, 50% of their bids.
On the other hand, I have clients that they’re more builders and not as experienced in the business end of the industry. They don’t spend so much time in the leads that they get and following up with them. This is important to take into account when bidding jobs.
2: Develop a Lead System
Tip number two is to develop a lead system so you can pick the jobs you actually decide to bid. If you are interested in getting more leads, we offer lead generation for contractors.
We have these great platforms that are available for you to use. They’re called lead generation platforms. There are many platforms, but the main ones are platforms like ConstructConnect, iSqFt, Dodge, and The Blue Book.
They all have research teams that research projects in your preferred area and allow you to see what’s going on in your backyard. That way you can bid for jobs in whatever city you want.
These platforms also allow you to find the general contractors, the architects, and even the developers that are actively looking for bids.
So, I encourage and highly recommend you to use one of those services.
Developing a lead system is going to allow you to get a lot of leads in the door, so you could cherry-pick the ones you want.
Not every lead is good. Not every project is good. Not every contact or company is good to work with. So if you get 20, 30, 40 leads in a week, guess what? You’re not going to be able to bid them all. Even big companies aren’t going to be able to bid that many jobs. So you got to be picky on the ones you do.
3. Visit Clients
Tip number three is to visit clients, which has become a lost art in the industry. In the old school days before the internet and cell phones, salespeople used to go door to door knocking.
It’s so easy to be behind a desk or behind a computer and just call and email people. However, visiting clients is really the key to our business.
Construction is a face-to-face and people business. When you’re in the construction industry, you’re not in the construction industry. You’re in the people business.
What you want to do is make a list and use what we call the Google Maps 100 method (I have an article that I talk about it). It’s called 27 Ways to Grow Your Construction Business.
Essentially, you use the power of Google. You search for your perfect type of clients. If you’re a subcontractor, maybe general contractors are your ideal client. If you’re a painting contractor, maybe you look for property managers. If you’re a GC, maybe you’re looking for developers or architects.
So, you type that in and you’re going to get a list from Google or from whatever search engine you use. Once you get that list, you’re going to start calling and visiting them.
It’s so easy to use the excuse of saying “Hey, I happened to be in your area, so I wanted to stop by. I’m a general contractor, and I’m interested in working with you guys.”
If you’re a subcontractor you could say “I’m a drywall subcontractor, and I’m interested in working with you guys. What do you have coming up?”
That’s how you start the conversation. You’ll be amazed at how many projects developers, architects, and GCs have pending that are sitting at their desks that they haven’t bid out.
They haven’t submitted. They’re not on The Blue Book. They’re not on ConstructConnect. They’re not on iSqFt. These are the ones that you can get when there’s less competition.
Visiting clients is key and is one of the main techniques to implement when learning how to start a construction business.
Tip number four is to follow up. Visiting is going to get your foot in the door, but what happens after you submit the bid? You have to follow up.
What happens is most contractors are so busy that they don’t have time to follow up. They don’t go visit clients. They don’t call clients. They don’t say, “Hey, how was my bid? How was my price?”
You should always be calling to follow up on your price because if your price is too high, have an opportunity to negotiate that project down a little bit.
This list consists of 10 sales techniques to help you grow your construction business. However, I’m going to add a bonus tip and call it tip 4.1.
Here it goes:
While you’re doing your follow-up, one of the things you should do is actually find out who else is bidding on your same job.
If you’re a general contractor, you should know what your competition is, because it’s going to allow you to determine whether you want to raise your price or lower it.
If you’re not that big of a contractor and you’re going up against a big company, this means they have higher overhead.
They have more project managers with higher salaries, which means more expensive general conditions and supervision. That means you could be higher on your price.
If you’re the big guy and your competitor is a smaller guy, you don’t want to go too high on those jobs because then you’re going to overbid them.
Same thing as a subcontractor. If you know that there are three GCs on the job that are bidding, you should submit your bid to every GC. How do you do it? You go to the title block or the cover page and you call the owner and the architect and you find out who are the bidding general contractors.
Implementing this technique is very important when learning how to get a construction job for your company.
5. Always Be Closing
Tip number five is to always be closing.
One of the simplest sales techniques that’s very powerful is to always be closing. In construction, what you have to say is, “What else do you have coming up?”
Whenever you’re calling, prospecting, calling clients, or talking to project managers, try to make it a habit in the conversations you have with these people that you say the following:
“Hey, by the way, I know we’re talking about change order number three, but what other projects do you have coming up?”
“Hey, I was in the area, and I’m interested in working with you guys. What projects do you have coming up?”
“Hey, I found this project on ConstructConnect. I’m interested in bidding on it. Great. I’m going to send you a bit for that. By the way what else do you have coming up?”
You always have to be closing and always trying to see what else is coming up so you can bid for more jobs, which will help you in running a successful construction company.
6. Do Every Job with Excellence
Tip number six is to always do a stellar job when you land a job. When you do great on a job it gives you the opportunity to repeat business because of your proper construction business management.
The biggest issue that about 90% of contractors, homeowners, and architects have with contractors is that a lot of contractors don’t do what they say.
They don’t show up on time. They always have excuses. They overcharge. They say it’s going to cost one thing, but later it’s another thing. They have a problem. They don’t man the job right. These are all common things.
As a GC, I have subs that are always giving me excuses. The biggest excuse in the book is this joke we have in the office that we usually say in Spanish because it comes out better that way, but in English, it goes as, “I have a flat tire, or my car is broken, or something’s wrong that I can’t get to the job, or I’m sick or whatever excuse.”
Don’t have those excuses.
You have to remember customer service and you have to want to do a great job. Project managers are like gatekeepers.
The project managers for the owners’ reps and the project managers for the GCs’, they’re the ones that decide who gets the jobs.
You want to make sure that those guys want to keep using the same people.
Remember, when these contractors hire a new guy as a subcontractor, they’re taking a chance.
Also, the person hiring the subcontractors is usually not the owner. It is an employee of the company, which means that they are not going to want to take risks when hiring these subcontractors.
Think about it.
If you’re the owner, you would be willing to take more risks when hiring these guys because it is your money that you are risking the responsibility falls on you.
However, if you are the employee who is the one doing the hiring then you are not going to be risky because it’s not your money on the line and if you mess up in the hiring process, you could end up losing your job.
With the intention to not be risky, the employee will think to himself:
“Hey, you know what? I’m going to use this framing contractor. I’ve used them before, and I know for sure, they’re a little bit more expensive, but they’re good. I know they’re going to do a good job.”
Versus, “Hey, this guy just sent me a bid. I don’t know who he is. I don’t know his credentials. I don’t have any referrals. I don’t even know him. I haven’t even met him.”
What you want to do is get repeat business from the people that you are currently working with.
7. Have a Professional Image
Tip number seven is that you want to have a professional image. What’s a professional image?
Here’s a checklist of things your company needs to have a professional image, especially if you’re just starting a general contracting business:
- Company logo
- Nice website
- Company polos. Instead of wearing a t-shirt, wear a polo or a nice dress shirt, preferably with your company logo, because you want to be presentable.
- Proper documentation for your paperwork with your logo on the paperwork and the contracts. The paperwork needs to be written with correct grammar.
Even though this doesn’t have anything to do with construction, it has everything to do with your image, which is a subconscious indicator of how your company’s going to perform especially if you’re talking with homeowners.
Even when you’re in the B2B space, talking to GCs and architects, or a professional company, potential clients are going to think and say “Hey, if these guys have a website and they’re investing in their image, they’re probably a good company. They’re probably investing in their operations.”
Even though you might be a small company with a small team, you can go a long way in this industry by having a very nice image through business cards and things like that.
8. Budget Estimating
Tip number eight is to exercise budget estimating. This is the secret to bidding fast.
There are times that they’ll call you on a Tuesday, for example, and say, “Hey, I want a bid on a Thursday, or I want to bid on a Friday.”
If you’ve been in your industry for long enough, you’re probably going to have a specialty. You might do a lot of restaurants. You might do multifamily. You might do concrete, whatever it is.
You might know your prices in and out. Sometimes, you can look after years of estimating all types of projects.
It’s funny because I can look at a job and say, “This job is going to cost about… Where is it? What area in the country is it? Oh, Massachusetts. Oh, California. Oh, it’s in Texas. Oh, this is going to be $450,000.”
When we actually estimate construction cost, we put in our general conditions, and we put in our equipment and things like that, very often, I’m right there.
Also, if you’ve been doing this for 20 to 30 years, you’re going to look at a job for about a minute and already have a budget price.
Guess what? Like I always say, the first price you submit is like a preliminary price. It’s never the final. So don’t be scared to submit a budget price that’s high, because once you submit, you just want to get that price in by the bid date so you can negotiate that.
Even if you want to perform the proper estimate, submit the budget where you know it’s a little higher than you normally will come in. Then the next week, you can even submit a replacement most of the time.
If your number’s lower, they’re going to be super happy. They’re going to say, “Hey, we submitted $500K for this job, but after we performed the estimate, we want to be a little bit more competitive. We can be at $450K.”
This is a valuable tip because if they went in with your number and you’re able to save them a couple of thousand dollars, they’re going to accept your second price.
9. Bid High and Negotiate Down
That leads me to tip number nine, which is to bid high and negotiate down. When you do have the time to estimate, I recommend you put in contingency. I recommend you put in some cushion in your estimate, but not too high. However, if you need help with your estimating, I AM Builders is a construction estimating firm that would be more than happy to help your company.
Your supervision and equipment estimates should be conservative. Your profit margins should also go a little higher than you normally would because the first price you submit is never the final.
While doing the estimate, don’t get too bogged down with the little nitty-gritty and little details.
“How much is the framing? Is it 51 cents or is it 50 cents?” you might ask. Just go with the higher price. Get in front of that negotiating table and get your foot in the door so that you can start talking to the managers that are going to issue you the job.
10. Bid Low with New Clients
And finally, tip number 10 is to make sure to bid low when dealing with a new client in order to get you’re your foot in the door.
Now, I’m not a fan at all of being the low bidder because I think that being the low bidder is a myth. A lot of contractors think that the only way to win a job is to be the cheapest guy.
Although that might be true in a lot of cases, if they know who you are, you have a good reputation, and they’ve worked with you before, then you don’t want to be the low bidder.
What we want to do, however, is get our foot in so we can get the first job, even if we do it almost at cost.
Do this in order to get repeat business.
There’s this thing in sales and marketing called lifetime value.
If I go in on the first job, it’s almost like a marketing a tripwire. You come in, do the job very cheap, get the job, and do a great job. When they come back for the next job, that’s when you start putting your real prices.
They’re going to be so happy with your work. If you did tip number six, which was to do a great job, they’re going to want to pay a little bit more to have your service.
The other thing to consider is that on almost every single project, you’re typically going to recover an additional 10% to 30% in change orders over the course of the job. It’s just the natural way of construction.
Things come up. There are owner revisions. There are inspection requirements that they didn’t get picked up in a plan review. There are mistakes that get done on the job.
I have a whole strategy that I use regarding change orders where the owner’s changes get priced the highest.
Whenever you’re dealing with back charges, you kind of want to be a team player, but the point is that you are always going to make money on all these changes. You’re going to recover up to 30%.
I just did a change order for one of my clients. He called me and said, “Hey, the plans have this mistake on them. The dimension is wrong. Can you estimate this?”
So, we estimated it and they’re going to recover an additional $9,000 because extra things were added to their original contract.
It’s not that we’re trying to overcharge. It’s just that things naturally come up often on the job. So don’t be afraid to bid low and make your money through change orders.
So those are 10 tips. If you implement those tips in your business, then I know that you’re going to get quicker sales, faster sales, and you’re going to build a real business that has a lot of lifetime potential.
Remember, you only need 5 to 10 repeat clients that are going to keep coming back for you to have a few million dollars a year business.
I encourage you to do that. If you need help with estimating, if you need help with leads, or if you need help with strategizing your business, give us a call.