How many leads generate the number of prospects that turn into the number of customers needed to run your construction business profitably? Clarity is essential to a successful marketing plan. That’s why pros remind us that the best starting place for a marketing plan is actually the Profit and Loss Statement.
Analyze: Leads, Prospects, and Sales
When you know the number of leads, prospects and ultimately customers needed to operate your business successfully, you can design a marketing plan aimed specifically at reaching those targets. That’s the advice of Shawn Van Dyke at Built to Build, who encourages using your Profit and Loss Statement (P&L) to reverse engineer a marketing plan, noting: “Your income, your cost of goods sold, your expenses, and your net profit – those items are your business. The P&L tells the story of your business…. The P&L shows how your business operates, but your business starts with sales. So all the income that comes into your business is sales. That’s where your business starts.”
Creating a successful marketing plan means digging in to understand how many impressions, be they yard signs, ads, or social media campaigns, are needed to generate leads, how many of those leads become prospects, and how many prospects become customers. Van Dyke advises construction companies to follow these steps for more strategic marketing efforts:
- Start with your total revenue → What are your SALES?
- Determine your average project size in dollars → What is your average project price?
- Calculate the number of projects you need to hit your SALES → How many CUSTOMERS do you need?
- Determine your CLOSING RATE. How many PROSPECTS do you need to get the right number of CUSTOMERS?
- Calculate your CONVERSION RATE. How many LEADS do you need to convert to PROSPECTS?
- Design a filter to weed out bad LEADS so you can focus on good PROSPECTS.
- Set a monthly goal of LEADS to PROSPECTS and PROSPECTS to CUSTOMERS.
- Track and report your numbers every single month.
For a specific, step by step journey through his recommended approach, Van Dyke uses a business with annual sales of $1 million dollars, generated from an average of 20 projects each year, with each project bringing in about $50,000. How many leads and prospects must be in the funnel to result in those 20 customers? Examine the example here: reverse engineer your marketing plan. With clarity on your goals, it becomes easier to keep a steady beat of marketing efforts continuously humming along, rather than spin into a flurry when business is at a low. Successful owners underscore the importance of consistent attention to marketing. At Construction Business Owner, Michael Monahan reminds us that marketing is not just something to do when desperation for new clients strikes:
Marketing alone cannot grow your business, but it will help. Marketing efforts can bring in leads for new projects, introduce you to project owners and differentiate you from your competitors. When business is good, your marketing efforts should be running in the background maintaining your brand recognition … .If there is a lull in business, turning up your marketing efforts can help you fill the gap. Relying on marketing only when you need new business is not an efficient or effective strategy. When you market your company well, everything becomes easier, including learning about bid opportunities, winning business, attracting and retaining talent, and connecting with investors.
Taking It To The Next Level
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