When sales drop and the economy tightens, electrical contractors' knee-jerk response may be to pull advertising and cancel marketing campaigns, but in the words of William Wrigley of the chewing gum empire, “That is like shutting off the fuel to an airplane in mid-flight.”
Rather than decreasing marketing in tough times, electrical contractors need to invest more time and money in attracting and retaining clients. Rick Cross, president of Waco, Texas-based Mr. Electric, says many companies buy an ad in the Yellow Pages and then wait for customers to call them.
“In a great economy when there's more dollars than electricians, it's not a problem,” Cross says. “When things get tough, you've got to go out and look for it. As the owner of a business, your job is to make the phone ring.”
Here are 10 strategies to help you boost your sales without emptying your pockets.
Develop a marketing plan. As a general rule of thumb, electrical contractors should spend between 4% and 6% of their gross sales on marketing, says Adams Hudson, founder of Hudson Ink, a Montgomery, Ala.-based marketing firm for contractors. Small electrical firms should spend 25% of their marketing budget on Yellow Page ads, 20% on newspaper advertising, between 15% and 30% on direct mail, and 8% to 12% on customer retention. The balance may be used for truck decals, yard signage, radio advertising, and “on-hold” messages. Larger contractors, however, should develop and implement a formal marketing plan. Larry Walker, chief marketing officer and executive vice president of St. Louis-based Sachs Electric, says his company first started publishing a marketing guide almost a decade ago, and now distributes the book to the Sachs management team as an internal, proprietary publication. “Our marketing plan helps us to focus on our industry and match up Sachs' strengths with the market strengths,” he says.
Make personal visits to your clients. Developing and cultivating relationships with your clients can open the door to new business opportunities. Sachs Electric, a network of four companies, organizes events called “Lunch-and-Learns” about seven times a year. Walker says his company visits general contractors, construction managers and plants, offers a catered box lunch to the employees, and then presents a 30-40 min PowerPoint slide show followed by a Q&A session about the Sachs family of companies.
Organize promotional giveaways. Contractors can also keep in touch with their clients by sending them personalized gifts during the holidays. Wayne J. Griffin Electric, a Holliston, Mass.-based electrical contractor, recently mailed 2,600 packages containing a golf umbrella, Post-It cube, and drinking glass to clients and friends of the company. All of the products featured the Wayne J. Griffin logo (see photo above). Vice President Jackie Griffin says her company also sends out a small toy. “This year, it was a light-up yo-yo with our logo on it,” Griffin says. “Last year we did a bouncy ball. Those little things seem to get the most attention.”
Get involved in your community. One simple and low-cost way to spread the word about your company is to organize charity events like golf tournaments, volunteer for a service club, or sponsor an association. For example, Griffin says her company supports Skills USA-VICA, an association for high-school vo-tech students. “It's a good opportunity for recruiting vocational high school students into the electrical industry,” she says. “We get very involved in that sponsorship, and I believe we will continue to do that.” Contractors who work in larger metropolitan areas can also become involved in electrical organizations and league groups. Cross says one New York City Mr. Electric franchise has become very successful by joining an electrical league, regularly attending the meetings, and networking with other contractors. “Try to find other people who are doing the top quality work that you are doing in other trades,” he says. “They may know people who are doing some remodeling in their home and need an electrician.”
Advertise in the newspaper and get listed in the phone book. Electrical contractors can run a small ad in the service directory section of the classifieds without breaking their budget. Hudson recommends that companies commit to running a 1-in. by 2-in. ad for 13, 26, or 52 weeks to generate name recognition. “It will drop their daily rate for advertising in that newspaper because their volume has gone up,” he says. While Hudson believes advertising in the phone book is a helpful tool for small residential contractors, he thinks buying an ad in a mail pack of coupons is a waste of money. “If a contractor is selling something on the basis of how cheap it is, he is desperately begging for a slow death of bankruptcy,” he says. “When profit margins slip in order to get the job, you can't offer the benefits and guarantees that homeowners really want, which are safety, security, and reliability.”
Invest in an inexpensive postcard program. Mail postcards to your customers at least four times a year, but preferably once a month. Rather than distributing standard-sized postcards, invest in oversized, 5.5-in. by 8.5-in. cards that won't get lost in a stack of mail. Cross says his 109 franchises send postcards to their clients 10 times a year. The cards feature season-appropriate themes, such as “Time for a Checkup,” “Safety First,” or “Yard Work.”
Send out personalized newsletters. Electrical contractors can also retain their existing customers by mailing newsletters. Hudson says his company sends out about one million newsletters a year to various subcontractors. Rather than glorifying the contractors' projects and achievements, however, the newsletters feature general interest articles that cover such topics as comfort, safety, and savings around the home. The contractors' contact information is then slipped in at the end of the article. “Informative articles that end with a little bump toward a company are eight to 15 times more effective, readable, and memorable than ‘We've been in business 28 years and our company does this and that,’” he says.
Launch a Web site. Many Web-savvy homeowners may search online for an electrician rather than flipping through the phone book. To stand out from the rest of the dot-com competition, post articles that are relevant to your potential customers. Hudson says one crime that many electrical contractors commit is making a Web site a shrine to their greatness. “They will put their company name and logo up top and commonly use ‘we, us, and our,’ he says. “What I see is contractors spending gross amounts of money telling people how great they are when customers do not care.”
Drum up press coverage by hiring an outside public relations firm or creating an internal marketing position. The nation's largest electrical contractors don't need to advertise in the phone book or newspaper. Instead, they should spend a lopsided percentage of their marketing budget on public relations. “The little contractor doesn't often get to make news, but the big contractor does,” Hudson says. “They would be better vested spending about 30% of their money on a good PR agent and only paying him or her on the published media.” Some contractors, like Wayne J. Griffin Electric, also have in-house marketing and business development employees who help drive revenue and create new business opportunities. Griffin says her company has a marketing coordinator who sends out news releases once a month. “We'll determine what projects are worthy of a spotlight, gather all the information, and put together a press release,” she says. “Sometimes it runs and sometimes it doesn't, but it's a good chance to take because basically, it's free advertising.”
Pay attention to your existing customers. If you're too wrapped up in getting new customers, you may forget about retaining your existing ones. The cost to acquire a customer is generally six times more than the cost to keep a client, Hudson says. Many contractors overspend in nonfocused marketing and underspend in customer retention. “If a contractor went to a microscopic amount of trouble to show they cared two to four times a year, they would be miles ahead of the game,” he says. Cross of Mr. Electric says contractors need to foster a continuing relationship with their customers. “Some electricians are sitting on a gold mine, and they don't even know it,” he says. “We have a tendency, just like other businesspeople, to think that just because our customers wrote us a check once, they will remember us for life. The reality is that they can't remember the name of your company when your taillights are out of sight.”
Whether you're a small business owner or one of the nation's largest electrical contractors, you can boost your sales, increase customer awareness and gain a competitive edge through marketing and advertising campaigns. On the other hand, if you skimp on this area, your sales could drop like an airplane running out of gasoline in mid-air.
SIDEBAR: Weathering Tough Times — Advice from an Expert
According to the book, “Advertising in a Recession,” companies who promote their businesses in a slow economy can boost their sales, increase profits and market share, and open the lead on the competition. In this Q&A, Kathy Simonsen, president of Auburn, Calif.-based Simonsen Sales and Marketing, discusses the importance of advertising — not only in a robust economy, but also in the tough times.
EC&M: Why is it important to ramp up marketing efforts in down times?
Simonsen: In a recession, companies that continue to advertise do much better than those who pull back and then try to advertise later. Advertising consistently helps your audience realize that you are a strong and stable company. It's also a good time to take away market share from your competitor. As a competitor pulls back and you continue to forge ahead, you will gain market share.
EC&M: What advice would you offer electrical contractors who were contemplating cutting their marketing budgets?
Simonsen: If your sales start to drop and you eliminate the one thing that will help you increase sales, you're really asking for trouble. Advertising is not about getting a sale tomorrow. It's about getting a sale in six months.
EC&M: How can electrical contractors generate more business through advertising and marketing campaigns?
Simonsen: Give something away for free like a catalog or a pen. If you get a lot of people to respond, you will get leads and then you can follow up on those leads. Some of those will probably turn into future sales.
EC&M: What marketing tools are the most effective?
Simonsen: Good marketing uses a variety of methods to reach to a target audience. Trade shows are great for in-person and advertising is great for image and exposure and branding. A lot of companies are also using e-mail newsletters, which can also be very effective. You just to figure out what you want to accomplish with your marketing, and then select the method that will help you reach those goals.