Alan Gayle is a sales and marketing consultant specialising in the construction industry. In this column he offers advice on how to make an impact in the market. This time he looks at the value associated with removing risk.
In last month’s article I bemoaned the fact that given the choice, the people that actually make the buying decisions in the construction industry almost invariably go for the cheaper option. Sad but true.
It was pointed out to me that it could be seen as a rather defeatist attitude for someone who makes his living in marketing.
Perhaps. But I didn’t say that price was the only consideration. Very often it isn’t.
In my experience, the two most important factors that will get a client or contractor to pay more for your products or services than they will pay for those of your competitors are relationships and risk. I have dealt with relationships previously, so this time let’s go further into the area of risk as it relates to marketing in the construction industry.
When I was a rep for Redland Roof Tiles we had industry leading specification training. It was my good fortune that I joined them in 1989 when they opened a huge training centre in the Gloucestershire countryside (South Cerney to be precise).
At the time they had been market leader for concrete roof tiles for several years but they were just being overtaken by Marley.
In the concrete roof tile market at that time Redland and Marley were a bit like The AA and the RAC. Other competitors existed but they were the two dominant players and, in truth, there wasn’t a whole lot to choose between them.
Redland made a strategic decision not to fight with Marley for market share because it was driving down prices and with it their profit margins.
Instead they decided to pursue more added-value specification sales.
Enter the new specification sales team.
When you’re the specification sales rep for Redland Roof Tiles in central London getting new specifications is pretty easy. Especially when Redland were running a comprehensive marketing campaign in the architectural press aimed at specifiers.
Redland were good at marketing. They spent a lot of money on it and knew exactly what they were doing and why. The marketing people would tell the sales people which benefits they were featuring – rather than focussing on the product, they would often promote the added benefits of buying from Redland – and what response to expect. Low and behold, they invariably got it right.
After an advert or piece of PR was featured, the phone would always ring with new enquiries. Getting new specs wasn’t a challenge. The challenge was converting them into profitable sales.
As you might expect, while I was there I learned a lot about the up side and down side of building product sales and marketing. Perhaps the most important was what we called the ‘fear factor’.
It involved promoting your strengths and pointing out the potential risk to the client or contractor of buying a cheaper alternative product.
We did it in different ways for different products but, combined with an effective marketing campaign, it helped us to hold on to specs at prices that were higher than Marley’s. That meant as Redland’s turnover went down, their profits went up. Do less, get more. Fantastic!
It’s the same with our own buying decisions. You can buy a laptop from PC World for £500. The same machine is probably available from an eBay shop for £400. Who would you buy from? What about if the eBay price was £450? Would you take the risk for £50? What if something goes wrong? The eBayer might have to offer a saving of over £150 to tempt you, but at those margins is it worth it for him?
Even in the construction industry, people will pay you a premium if they don’t trust the cheaper product / service supplier. How much more they will pay you depends on how they perceive the risk of your competitor.
The big question is: How do you create more confidence in your company than there is in your competitors?
Read this column in January to find out.
Alan Gayle is a sales and marketing consultant specialising in the construction industry. He spent 19 years with some of the UK’s leading building product manufacturers and has worked in the stone sector for the past eight years.
Alan now runs Gayle Associates, which provides a range of sales and marketing services for small and medium sized contractors and suppliers. His clients are seeking growth but the management are too busy to do it themselves and they don’t want the commitment of a full-time employee.
alan@GayleAssociates.co.uk
www.GayleAssociates.co.uk