The results of FMI's Business Development and Marketing Report show that sometimes contractors need to spend money to make money. FMI surveyed general and trade contractors with annual profits that range from $20 million to more than $250 million, and found that the most profitable companies are those that use marketing and sales to set themselves apart from the competition. On average, construction firms spend 3% of their annual total sales volume on marketing and sales and 1% on promotional activities, yet 52% of respondents said their spending was too low — and they may be right. Respondents who felt their company was differentiated in the marketplace spent 7% on sales and marketing and had a 17% better hit rate for submitted proposals, while those who spent 3% didn't feel differentiated.
The report also shows that having a marketing plan with a strong leader can make a company more successful. Specialty contractors with top executives heading the marketing planning efforts ranked among the most profitable, and 75% of those who consider themselves differentiated in the marketplace have a strategic plan for the marketing process. Respondents said the most effective marketing tool is a well-planned proposal and presentation that focuses on information, preparation, and differentiation.