Turning the available customer base into construction locavores will take time, energy and patience as part of your wider business development efforts.
The Great Recession changed the industry landscape in a multitude of ways. One striking change is the extent to which larger regional or even national players are increasingly squeezing out the midsized contractor. Project types and sizes, which did not interest the big guys in the boom years, are now firmly in their wheelhouses. Project mix and diversification have become a key mantra. The large firms want to broaden their range of project type and size because they need to spread risk, provide a training ground for up-and-coming operations staff, and allow others to cut their “get-work” teeth on some smaller opportunities.
Construction is and will always be a local business. The big question is, How much will the Big Brands push out the local players? The reality is larger companies have deeper pockets, access to greater resources and are often perceived by customers to have stronger competencies. They are often seen as lower-risk options. As the old saying goes, “Nobody ever got fired for buying IBM equipment.”
Taking a Page From the Locavores
How can the smaller players fight back? The trick is to avoid fighting the bigger organizations on their strengths. Trying to match them will most likely further highlight these deficiencies. One alternative approach is to learn from the locavore food movement.
What is a locavore? In the realm of food and produce, a locavore is someone who pays attention to where his or her food comes from and is committed to eating as locally as possible. For some, it is an environmental aim (i.e., to reduce the carbon footprint associated with the processing and transportation of food), and for others, it is a reaction to the big-box stores that dominate the supply chain and drive down prices (with great social cost, in the locavores’ mind). By observing the locavore movement, we can adapt some of the declared benefits to the construction industry. The trick is to help your buyers understand and acknowledge these benefits. Here are a few details on how they apply to the construction and engineering industry.
By eating locally, most locavores, in an effort to resist industrialized and processed food, hope to create a greater connection between themselves and their food sources. In the construction and engineering industry, you need to build a customer contact plan, which increases the level of connection. A truly embedded customer knows you, your business and your people. Customer intimacy results in a better project cycle and outcome. This increased connection and understanding require regular, meaningful contact with the customer. This means calling on customers periodically, not only when your backlog is low.
The majority of locavores buy as much food as they can from farmers, growers and sellers with whom they have a relationship or whose growing or producing practices appeal to them. For construction firms, applying this principle means asking: Do your customers truly understand what makes your organization tick? You have to help them understand your people, your processes and how they are focused on a better project outcome. If you do not give the customer a reason to believe you are different, why would they think it is important? To be different you need to appeal to them in some meaningful way. One meaningful way is to be highly knowledgeable about your customers’ businesses. Do you understand what makes their organization tick? Do you understand their people, their processes and what their focus is on project outcomes? When you can talk their language and put yourself into their shoes, you are significantly different from the commodity construction resources.
Many locavores give themselves several exceptions to their local diets. Commonly excluded items include coffee, chocolate, salt and/or spices. In construction, there will be times when you simply cannot fulfill a customer’s needs. This might relate to a particular expertise, technology, process or capability. First, make sure this truly is a gap or something you could satisfy through a partnership, purchase or use of an outside resource. If you conclude it is a real deficit, then be honest at the earliest stage. However, do not let this one item sink the opportunity.
Eating local means more for the local economy. A dollar spent locally generates a multiple income for the local economy. When businesses are not locally owned, money leaves the community at every transaction. The same rule applies in construction. While the field force may be local in both scenarios, there are still implications for how (and where) project profits are ultimately used.
Locally grown produce is fresher. Produce that is purchased in the supermarket or a big-box store has been in transit or cold-stored for days or weeks. Produce that you purchase at your local farmers market has often been picked within 24 hours of your purchase. There is a corresponding improvement in taste and nutritional quality. In the construction and engineering fields, look at how project decisions are made. How flexible can the local team be when faced with customer demands? How is the responsiveness and quality (i.e., taste and nutrition) affected if the construction source is local? Local food translates to more variety. When farmers produce and sell locally, they are free to try small crops and varieties that would likely not make it to a large supermarket. They are less concerned about shelf life or high-yield demand. For construction firms, this translates into flexibility and a willingness to try new things on a one-off basis. What are the reduced constraints on a locally controlled business compared with a larger, more centralized approach?
Buying locally grown food is fodder for a wonderful story. Whether it’s the farmer who brings local apples to market or the baker who makes local bread, knowing part of the story about your food is such a powerful part of enjoying a meal. For construction firms, the previous comments feed this bottom-line conclusion. What is the upside for your customer who can tell this story locally?
Pioneer Your Own Buy-Local Movement
The buy-local movement has always been a mantra for the smaller players in our industry. However, the application of this principle has been varied in its execution. Being local does not mean customers are obligated to buy from you. There is no moral code that says they must do so. Turning the available customer base into construction locavores will take time, energy and patience as part of your wider business development efforts. Do not underestimate your impact. While Walmart will never appeal to the locavore movement, even this large retailer is shifting its approach to selling fresh produce in response to changing customer demand.
There will always be customers for whom IBM equipment will be the default choice. The trick is to find an audience that can be persuaded to consider the alternatives. Be proactive and early in your approach; once a project is public knowledge, it’s too late to start the locavore conversation. The food locavore builds relationships with local farmers early and for the long term; the trusted relationship comes from continued effort and experience on the part of both parties.
Planting the FUD factor (fear, uncertainty and doubt) in the minds of buyers is a tried and tested sales technique in all industries, often targeted at smaller (riskier, so they would like you to believe) providers. As your landscape changes around you, ask yourself how you are evolving your approach to meet this challenge head on in the coming years.
Stephen Boughton is a senior consultant with FMI Corporation. He can be reached at 813.636.1245 or via email at email@example.com.