Taking Control
LeRoy’s goal is to eliminate bidding and to “completely operate from referrals.” Until that happens, the company is trying to control and manage the bidding process. “If we don’t get face time with a client, if they do not visit past jobs or do not call our referrals, we do not proceed on the bid. If they do not show interest in us and our quality, they are just looking for a number,” he says.
In most cases the company charges for a bid. LeRoy explains to clients that the company’s thorough bid includes a detailed packet with a preliminary project schedule, a budget forecast with 250 line items, references, copies of the company’s license, photos of past projects, and a certificate of liability insurance. “This approach trumps the standard one- or two-page estimate turned in by competitors. It filters out a lot of [clients] if they are not willing to pay $500 for an estimate,” LeRoy says. “It has reduced the amount of times we get involved with the bid process, and when we do, the potential client is invested.” He says that creating that estimate consumes an enormous amount of time, talent, and resources.
Alward says the paradox is that small jobs do not bring in enough to support an office staff for a large company but they take a lot of time to process. He used to have just one person on staff who was responsible for estimating. Now, he has two people who work only on estimating and are not responsible for any active jobs. However, he is committed to maintaining office staff. “For the amount of business we are doing, we are top-heavy,” Alward says. “I am grasping for opportunities and to make a sale. I’m still revenue-driven.”
Devil in the Details
Alward needs support staff to help respond to potential clients. “Seventeen job estimates spread among a staff of five people is not insignificant. To turn these into work, you need to get them out quickly,” he says. Though he tried to cut back on the details in the estimate, he was unsuccessful because of the company’s ingrained culture of providing comprehensive information.
Even with a set of schematics, Sullivan says, there are so many unknown specifications that it’s difficult to prepare a detailed bid. “Do you assume they want $2 per square foot tile from Home Depot or $30 per square foot tile from a luxury tile store? You don’t know. And there are 20 items like that on a job, so you keep putting in allowances. But even though clients know there are allowances, they will say, Smith Contracting has lower allowances than Paul’s company so we should go with them. Then they choose $30 per square foot tile and end up being the same price,” he says.
Borden says that with his company’s typical 45 to 50 line-item bids, half of the line items are allowances. “Exactly what is a bath fixture? Does it include a shower door or not? Do I include bath glazing as a separate line item?” he asks. When he’s meeting with clients for just an hour, Borden can’t get a sense of their desires or choices for products. “The ‘swag’ part of the bid is where you get into trouble. My specifications are based on a median of what my previous clients have used,” Borden says.
Sullivan says that his company is perceived as one of the more expensive remodelers in the market. “I prefer to leave it that way. We are not the most expensive, but we are up there. We have to be in order to provide the type of service we do and to have the staff and vendors that clients in our market expect.”
To present the bid in person is a “high-pressure tactic,” Sullivan says. Instead, he tries hard at the initial client meeting to present himself and his company in the best light, explaining what his company provides that the competition does not and offering to take the homeowner to see a past project.
Associating with Architects
Most architects LeRoy works with have been educated to follow a bid process. “The natural tendency is to think that in a down economy the bid process becomes more prevalent, but among certain architects we have seen the opposite,” LeRoy says. Many architects surviving the downturn are having a paradigm shift from a bid process approach to a more relationship- and loyalty-based approach.
Architects view remodelers as a potential lead source, so they don’t take the relationship for granted. Jackson & LeRoy Remodeling’s marketing plan brings the company a steady stream of design/build leads that they take to architects. “[Architects] have turned to us in these slow times, bringing their work to us in an effort to get some of our work back to them,” LeRoy says.
The company focuses on two or three architects who best fit its niche and work well with its clients. “The three we work with educate clients and care about process all the way through,” LeRoy says. “Those architects are good about telling clients that low bids are the most incomplete.”
For most projects, Borden says that homeowners approach the architect first, and the relationship between them grows during the year they spend on design. The architect introduces the client to builders they feel will be the best fit for the project. To help bring in more projects, Borden is visiting the architects he knows in his area for some “face-to-face marketing.” “We’re trying to get more plans from more architects,” he says.
—Nina Patel, senior editor, REMODELING.