Why Do Some Construction Companies Have Repeat Clients, While Others Struggle?

Two words: Brand Experience.

Before you start ranting about how people don’t have a “brand experience” with construction companies, or how my brand experience nonsense is for coffee shops and product retailers, please hear me out. Understanding why this concept is important to construction companies will put thousands more dollars in your pocket each year, and may even make your professional life easier.

First off, why are we even discussing the difference between having repeat clients or not? Simply, having a reliable core of repeat clients is a sign of a strong, well-managed construction company, and for your CFO types… it means you save money on new client acquisition costs.

Now, some construction companies are low-bidders, and they will continue to grind it out day-in-and- day-out for the least amount of money they can get until they either close their doors or drop dead from exhaustion. If this low-bidder description fits you, then you probably won’t care about what I’m about to discuss because it will not help you win your next bid unless you’re transitioning to best-value bids.

Across all industries, it is cheaper to keep and maintain a current client relationship than it is to get a new one. Many business journals and publications cite the related cost difference as five times more expensive to acquire a new client. In construction, I believe it is higher than that. You see, the industry’s average cost for a proposal is $10,000 (including materials and man hours) from the bid’s release to acceptance. To many of you, that number may sound high, and that probably is because you do not track your real time and actual cost of each bid process. I assure you, if you factor your pre-construction, marketing, accounting, legal, administrative, and executive teams’ time at even $50 an hour from your initial go/no-go meeting through to the bid presentation, your actual number will probably be much higher than the $10k. On top of that, this number does not include the cost of your business development and marketing efforts to even be included on the list of bidders leading up to the proposal.

If it costs so much more to get a new client, why go through all that expense and headache for a new client? That is easy. Your current clients may not always have work for you to do. Even though it is more cost effective to maintain a strong core of loyal clients, you do not want to find yourself at the mercy of a few companies and their construction budgets. Doing so closed many construction companies during the 2008-2013 recession. Also, sometimes you lose clients, for reasons out of your control: someone retires, quits, or is forced to use someone else. You always need to be looking for new relationships– keeping that pipeline full, so to speak. Even the best companies tout a project list made up of 70-80% repeat business. You’ll always need to be looking for new work, new clients, and new relationships. [You also don’t want to be in the position of being forced to work for clients you’d rather fire.]

Now that we’re up to speed on why maintaining good relationships with repeat clients is so important; let’s talk about that brand experience issue. You’ll find that it isn’t all that complex of a subject, either. People do business with who they like, and they like vendors who make their lives easier. If you’re field teams perpetually under deliver, miss deadlines, do shabby work, do not answer emails and calls, only call for work change orders, keep a messy job site, and are perceived as being rude or crude, then it is obvious you are cruising to lose that client, forever. You’re probably not working for that’s client’s industry peers, either. Word about your experience delivery will get around quickly in this relationship-driven industry in which we work!

Working to overcome a horrid experience delivery like this one is not your challenge, however; construction companies with this sort of customer service will put themselves out of business quickly enough. (Unless they are okay always being the low bidder working for the lowest margins.) The challenge for reputation-concerned companies is delivering consistently an amazing experience each and every time. When you do, word will get out about this too! So, what’s my point?
Dozens of companies want to work for your client and will deliver an average/mediocre client experience too. If you’re grouped with them in the client’s mind, then you’ll be chasing low-margin projects right along with them.
Unless you have a patented trade, specialty equipment, proprietary processes, or hard-to-find expertise, you’re competing with companies that are just as qualified as you. Do NOT let the price be your differentiation; let it be the brand experience you consistently deliver. Your company should never lose a client because they had a bad experience with your company.

Use your business development and marketing efforts to position yourself to win best value proposals with a competitive profit margin, and then keep that client forever – period. For most construction companies, adding one or two strong client relationship a year is enough to add 10-15% growth. Continually adding new relationships diversifies your client list just in case a long-standing client’s project needs or budget goes dry.

I never thought I’d quote Maya Angelou in anything construction-related, but she nailed it with, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

A consistently delivered branded experience focused on exceeding your clients’ expectations in the construction business yields sustainable growth. It also increases profitability for your company, establishes valuable marketable reputation qualities, and ultimately will put more money in your pocket.