If I read one more comment that says if the economy continues to decline, we’ll be putting our vital organs on ebay, I’m going to throw my spleen away, just for spite.
Okay, sure, I accept that the economy has deep problems. I accept that “disposable income” is diminished, and people scrutinize large purchases. I further accept that many contractors who are “waiting around to see what happens” will get exactly what they expect.
Yet I don’t accept that Americans will soon be reading by candlelight, poking a stick fire with the charred leg of their former coffee table. Because when the need for home services arise, they’re getting it fixed, period. Being on their mind when that happens is a good idea.
Newsflash: Many Americans Still Have Homes
There are millions of homeowners largely unaffected by the state of the current economy. In fact, they have their own economy: substantial reserves, multiple income streams, little relative debt, and recurring revenues. I’m not talking about the people who make $100,000 and spend $150,000, I’m talking about the people who’ve been rather quietly amassing, growing, cultivating, and socking away cash for years. Some for decades.
Unheard on the nightly news is that millionaires are the fastest-growing economic group. In fact, their ranks jumped by an astounding 9.2% from 2005 to 2006, according to the 2007 World Wealth Report. That rate was higher than those joining poverty ranks.
Take a look at what the majority of other contractors are doing, and counter it — hastily and provocatively. As other contractors enter retreat mode, they’re also likely promoting sales and discounts.
If your prices were the only thing between a prospect buying or walking away, your value must be sorely under-represented.
Marketing to people who have money seems like a cinch, right? If they have the money to spend and a problem they need fixed, what could possibly be so hard?
Oversaturation.
These people are heavily marketed. You think you’re on some goofy mailing lists? The average American gets close to 12 catalogs at Christmas time. The highly affluent list averages 44. Multiply this by all the insurance companies, credit cards, mortgage brokers, charities, and heaven-knows how many fringe-element luxury retailers all year long, and you have enough trees to replenish the Amazon on a monthly basis.
Additionally, contractors sometimes get uncomfortable talking about income, class structure, and price elasticity. But in equal discord, contractors haven’t any problem saying “I can’t charge that much,” or that “you need to lower prices to get the job.”
This thinking predicts the outcome, just as the recession-focused contractor gets their recession.
The Voice of Experience
An elderly gentleman approached me during a speaking break and startled me with his first comment as he stuck out his hand, “I retired broke. I wish I’d met you 25 years ago.”
Half-way flattered and half-way saddened I asked, “What would you have done differently?”
“I’d quit thinking that other broke people were going to float my business and gone after people who could pay for quality instead.”
We laughed, and he ensured me his son (in attendance) was going to do just that. There was wisdom in his humor. His inaction lead to inactivity, and he knew it now, destined to break that cycle with his son.
If you position yourself as “cheap” you’re going to miss the higher-spending and ever-growing group because you lack value. They can afford quality. Cheap and quality do not comfortably coexist outside of a commodity.
Simple Fix
Position yourself as the contractor with the most value and you’ll gain wealthy customers. If you can afford to position yourself in near exclusivity, you’ll be in even better shape.
Do not immediately say, “That won’t work for me” because of market size. I know of several contractors in smaller population areas who own the mid- and upper-market customers, with 60% replacement margins and virtually required agreement programs, hanging on to mid-teen nets.
They got there by being known, staying in touch, and being referred systematically. Maybe you’ve heard me preach about top of mind awareness (TOMA) marketing, understanding that “unknown” and “not worth knowing” are nearly interchangeable.
The wealthy group is very influenced by brands, exclusivity, and reputation. This means a couple of things. In this group, if you’re known for your position and whom you’ve worked for — if you’re the contractor in your area — you’re at the enviable point of price elasticity, more money for the same job with no customer loss). A good place to be.
Word of mouth is loved and appreciated by this group. If a friend tells them that you’re good, it won’t matter what your prices are, they’ll pick you.
This doesn’t mean you can hike your prices when you know someone’s calling from a nice neighborhood — that’s illegal. It just means that you can charge a lot more than the bargain basement guy who thinks he’s lowering his prices to make money. The ethical path to greater transaction size and net margins.
Three Ways To Hit The Wealthy Target
1. Market your IAQ services. If you’re the only contractor in the area who offers state of the art, cutting-edge IAQ testing and maintenance, this group will look to you for information, guidance, and service. If there’s a competitor around who does IAQ, prove you’re better. Prove your services as worth more money and they’ll spend it.
2. Think green. The wealthy tend to be aware of what is socially acceptable and what is taboo. And with the global warming crisis, the release of An Inconvenient Truth, and the pressure to become carbon neutral, you can bet the wealthy want to know what you can do that will make their neighbors green with envy. Offer energy analyses and highly-efficient product offerings. A little green in your presentation goes a long way toward getting a lot of green in your company’s accounts.
3. Tie them to you. That means maintenance agreements, newsletters, anything that reminds them of your connection. The wealthy look to ease headaches and hassle. Plus, they’re not in “paycheck survival mode,” and appreciate the value proposition of a maintenance program.
The affluent are also typically well-educated. They read more, love information, and generally have an active need for learning. This means that they are a prime candidate for well targeted, well written, aesthetically pleasing direct mail letters, postcards, newsletters, websites, and informative correspondence.
Finding and marketing to the affluent has a tremendous side benefit some of you may have picked up. If you market cheaply to the cheap, you repel the affluent. Yet, when your marketing matches the upper requirements of the affluent, you also attract and become more desired for those seeking affluency. Should that include you, your wish can be granted by eliciting behavior that is consistent with the desire.
Adams Hudson is president of Hudson, Ink, a creative marketing firm for contractors, and author of the recently published Contractor Marketing Secrets. Readers can get a free marketing newsletter by faxing their letter-head with the request to 334/262-1115. Call 800/489-9099 or check out www.hudsonink.com for other free marketing articles and reports.