What business activity makes the most money for your construction company? I bet you didn’t say sales. To most contractors, sales is no more than picking up a set of plans from a customer, estimating the job, turning in a bid, and then waiting for the results. They rely heavily on lower prices to sell most jobs. As competition increases and profit margins continue to stay too low, many owners stress about how to increase their sales and make more money. Some have even hired a salesperson to increase their revenue. But then what? These frustrated owners don’t know how to manage a salesperson to get the results they need or want.
Sales is Simple and Easy!
Sales is a numbers game. When salespeople make regular sales calls to the right customer prospects, your company will get your share of their business. When you don’t make the calls, you won’t get the business. The more sales calls, the more new business. Simple and easy.
Why do Companies Stop Growing?
A major reason construction companies struggle is the lack of a focused sales and marketing plan. They rely on old customers to be awarded enough work to make a profit. Successful companies have written sales systems and marketing plans to proactively and aggressively look for new customers.
There is a common thread within top successful subcontractors. They have a plan and they follow it diligently. Every week they come by their customers’ offices to meet with and build relationships with those who award contracts. They always seem to be in the right place at the right time, are always in selling mode and ready when an opportunity arises.
A proactive sales plan starts with a required standard of performance excellence. These include the number of sales calls per day, number of customer lunches per week, number of face-to-face meetings per week, number of proposals and total proposal volume per month. To know how you’re doing, you’ve got to keep score.
Keeping score is often difficult. Salespeople generally feel their gift of gab will get them through and reap enough results. But without numbers to hit, most salespeople will fail and not meet your expectations.
Sales numbers to track:
- The type of customers you want
- The markets you want to attack
- The project locations you like
- The project sizes you want
- The minimum fee per job
- Sales calls per day
- Leads from calls
- Face-to-face meetings per week
- Proposals from leads
- Proposal follow-up tracking
- Proposals or bids hit
- Referrals from customers
- Average job size
- Average profit margin
What’s Your Sales Success System?
To win more jobs, you must know your numbers and keep track of your weekly sales efforts. Every Monday sit down with your sales, estimating and project managers to review the sales progress from the previous week, and lay out a sales plan for the next four weeks. Without a weekly sales meeting, no priority is put on winning new contracts or building relationships with existing customers.
Laying out a sales plan starts with determining how much business you need to cover your overhead plus meet your profit goals. Follow this example to review how sales numbers tracking works:
Acme Construction Co.
- Annual overhead $700,000
- Annual profit goal $300,000
- Total overhead + profit goal $ 1,000,000
- Average gross profit margin anticipated 20%
- Annual sales required to meet goals $ 5,000,000
- Average job size $250,000
- Jobs needed 20
- Average bid-hit ratio @ 1/5 20%
- Annual bids needed 100
- Bids and proposals needed per month 8.3
- Face-to-face meetings per bid @ 1/3 33%
- Face-to-face meetings needed per month 25
- Sales phone calls per appointment made 25%
- Sales phone calls needed per month 100
In this example, Acme Construction needs to do $5 million in sales to generate $1 million in overhead and profit. Based on the market, they are averaging awards on one winning project for every five they bid. With an average job size of
$250,000, they need to be awarded 20 jobs. This equals 100 bids or proposals required for them to hit their goals.
For every three customer face-to-face meetings, one is converted into a bid or proposal. To gain enough bid opportunities, someone needs to meet with 25 potential customers every month. For every sales phone call made, one in four convert to a face-to-face meeting with a potential customer. To keep on target, at least 100 sales phone calls per month are required.
The question is, how many calls can a salesperson make or how many salespeople does it take to keep this sales plan working? You’ll find that at a minimum, a good salesperson should average a minimum of two to four phone cold calls per hour and at least two to three face-to-face meaningful meetings a day. That doesn’t sound like much, but it will be enough if they are calling on the right customer targets.
Sales Tracking Report
To keep your salespeople focused on the right projects and new customer targets, you’ll have to manage the process. Every Monday, review every lead, sales phone call and customer meeting. Review which customer targets were attacked and which are still needed. Create a new list of leads and keep focused on the big targets. This meeting will ensure your sales efforts continue and the tracking system will keep salespeople on track with existing and new customers to call on.
Sales Tracking Log
Date Customer Target Contact & Information Opportunity Follow-Up Type
The ‘Type’ refers to the type of contact your salesperson had with the customer. It could be a phone call, meeting, meal, event, bid, or proposal. I am a firm believer that phone calls or email are tools to set meetings with your customers.
In sales tracking, only face-to-face meetings count. On the phone, customers don’t always tell you everything you need to know about the potential project. In a face-to-face setting, you can start to build relationships, read your customer’s body language and get to really know them. So the more meetings, the more success will happen. And frequency is the key to unlocking success in your sales team. As J. Paul Getty, the famed American industrialist, once said, ‘Rise early, work late and strike oil!” To be successful in sales, rise early, work late and strike often!
George Hedley is a professional construction BIZCOACH and popular industry speaker who helps contractors increase profits, grow and get their companies to work. To learn more, visit www.hardhatpresentations.com.