Episode 48: How To Generate Leads To Fill Construction Slots With Rick Storlie
In episode 48 of the Professional Builders Secrets podcast, we’re joined by Rick Storlie, founder of Builder Lead Converter, based out of Minnesota, United States. Throughout this episode, Rick delves into how builders can generate leads to fill out their construction slots.
Episode 48: How To Generate Leads To Fill Construction Slots With Rick Storlie
In episode 48 of the Professional Builders Secrets podcast, we’re joined by Rick Storlie, founder of Builder Lead Converter, based out of Minnesota, United States. Throughout this episode, Rick delves into how builders can generate leads to fill out their construction slots.
Show Notes
Transcript
In episode 48 of the Professional Builders Secrets podcast, we’re joined by Rick Storlie, founder of Builder Lead Converter, based out of Minnesota, United States. Throughout this episode, Rick delves into how builders can generate leads to fill out their construction slots.
Inside episode 48 you'll discover
- The difference between lead generation and client acquisition
- What a healthy pipeline looks like
- How to generate more leads to fill construction slots
- Lead generation blind spots you may be overlooking
- How much you should budget for lead generation
- And much, much more.
Listen to the full episode to find out exactly how you can generate more leads to fill construction slots.
Rick Storlie - Founder of Builder Lead Converter
Rick Storlie is the founder of Builder Lead Converter. Starting his career in home building & remodeling as an entry level carpenter, he quickly moved to salesperson, sales manager, general manager, coach and now operates as “Chief Lead Converter” at Builder Lead Converter.
Timeline
1:32 Introduction to Rick and his business
3:11 How Rick’s business became so successful
5:04 Difference between lead generation and client acquisition
6:52 What builders struggle with in lead gen v client acquisition
9:43 What a healthy pipeline looks like
11:46 Generating leads to fill construction slots
16:23 An effective sales process
19:44 Lead generation blind spots
22:09 Lead conversion tactics
24:08 Current trends in lead generation
28:10 Percentage of budget to allocate to lead generation
30:02 Common mistakes with digital leads
33:02 Following up leads
34:56 Future of leader generation, sales and marketing
37:28 What builders should be focusing on for growth
39:12 What builders need to be aware of when building an effective sales strategy
Links, Resources & More
Builder Lead Converter Website
Join the Professional Builders Secrets Facebook group for builders & connect with professional builders world-wide.
Risk Storlie:
The biggest mistake you can make as a builder is you take on the wrong client.
Risk Storlie:
You can only start so many jobs a year. You’d better make sure you start the right kind of jobs for the right kind of clients and the right kind of margins.
Risk Storlie:
You need to stop doing what is not profitable.
Risk Storlie:
You want to create urgency in order to do that; you want to use scarcity.
Bosco Anthony:
What’s the one thing builders need to be aware of when it comes to growing an effective sales strategy?
Risk Storlie:
The longer people have to wait, the more desirable you are.
Bosco Anthony:
Hello and welcome to the Professional Builders Secrets podcast, a podcast by the Association of Professional Builders (APB) for building company owners, general managers, VPs and emerging leaders. Here we discuss all things running a professional building company, from sales processes to financials, operations and marketing. Hello and welcome. I'm joined today by Rick Storlie, founder of Builder Lead Converter based out of Minnesota. Rick, welcome and thanks for being here today.
Risk Storlie:
Bosco, it's a pleasure. Thank you for having me on.
Bosco Anthony:
Well, Rick, let's start off with you telling us a little bit about yourself and what you specialise in.
Risk Storlie:
In a nutshell, we free up time for builders and remodellers so they can grow revenue and margins. The market, of course – the housing market, the building market, the remodelling market – has been flipped on its head since COVID. We had been essentially being shut down; in some cases, municipalities forced us to shut down or the market to shut off in March 2020. So, we were scrambling like everyone else, saying, "Okay, how the heck do we sell homes or sell remodelling projects?" Of course, now that's morphed into all of a sudden, everybody wants a home. Everybody wanted to redo their projects, so we ran into supply chain issues and labour shortages, and the list goes on and on.
Risk Storlie:
What we're really focused on today is that each of our clients has limited resources and so that requires selectivity. What I mean by that is if you can only start so many jobs a year, you’d better make sure you start the right kind of jobs for the right kind of clients at the right kind of margins because otherwise the biggest mistake you make today is to take on the wrong client. It's not like you can go out and just reproduce that because you don't have the labour or it's going to take another six months to get a window. All those things factor in, so you have to be really smart and nimble.
Risk Storlie:
What we essentially do, Bosco, is we simply help our clients develop a large pool of opportunities that they can choose from. Therefore, they can focus on the types of projects they want to do. They can focus on making sure they have the right revenue, the right profitability and the right service area that they want to work in and be very smart with the limited resources they have available.
Bosco Anthony:
You talked a little bit about how the business came to life. How did it become so successful? Do you feel the demand just spiked the need for what you do?
Risk Storlie:
I had a client I was talking to recently and he told me, "You worked in this business; it’s where you cut your teeth. You know what it's like to run a building company." I think that’s what I bring to the table – I understand all of the challenges that builders deal with. I'm very strategic, and that's probably my biggest strength. There are lots of things I'm not good at, but I am very good at strategy, though. I understand the buyer mentality and what they're looking for in a builder relationship and then I’m able to provide those resources at the opportune time, so our clients, again, get a lot of opportunities.
Risk Storlie:
The biggest compliment I can get from one of my clients is when he tells me I tell people no. I have enough opportunities where I can say, "No, I don't want to do that job. Thank you, but we're not the right fit. Next." And they move on. The reason they can do that is because they have the opportunity. They have something else waiting for them. When builders don't have the opportunities they take on the wrong clients and that's how they get burnt today.
Risk Storlie:
My background is that I started as a framer. I literally picked up garbage on the job site and worked my way up to where I was a GM of a custom home building company. Then I outsourced myself as a sales manager for the first 12 years of our company while we were building that up. The thing I found though, as far as what we've become successful in, is that I found one common denominator with a lot of builders. Builders are great at building and remodelling homes, but they're not so good at client acquisition.
Bosco Anthony:
Right.
Risk Storlie:
That's the weak spot. So, I can come in and help them be as great at client acquisition as they are at fulfilment, which is actually delivering the home or doing the project and then having that happy client.
Bosco Anthony:
You talked a little bit about client acquisition. Let's differentiate between lead generation and client acquisition, for our listeners out there. What does that mean for them and why is it so important as part of the process for growing a building company?
Risk Storlie:
That's a challenge today, right now, because it's not hard to generate leads. Right now you can go into pretty much any neighbourhood, and you can put up a sign, especially if you're a remodeller, and you can say, "Hey, I do XYZ service," and you're going to have lots of people who are interested in getting your service. So lead generation is not hard to do. In certain markets it is, but today it's not. Client acquisition, on the other hand, is really the lifeblood of building a company today. I already mentioned the biggest mistake you can make as a builder is to take on the wrong client. That means you take on somebody even though the red flags were there, but gee, "Oh, I just couldn't resist", but all of a sudden you’re working with this client and then the problems keep coming and coming and coming.
Risk Storlie:
Now you've got a headache for probably one to two years where you're dealing with the wrong client. Your profits are going to suffer; it exhausts you emotionally; it's hard on your staff. There's an opportunity cost that comes with that as well. So, taking on the wrong client is a huge problem. You want to get really good at saying no. When you see it's the wrong opportunity, just politely say no and move on to the next client.
Risk Storlie:
The difference between lead generation and client acquisition is that the client acquisition allows the company to position itself for the types of projects it wants to produce, the target service area, and then, most importantly, highly profitable clients. So client acquisition is simply a process that you build, and it allows you to attract and convert the people who are the best fit for your company.
Bosco Anthony:
It's an interesting way of looking at it. I like the way you talk about having a choice in saying no as well. That's an important part of working with the right set of people. Where do builders struggle when it comes to lead generation and client acquisition and the process of doing this?
Risk Storlie:
I spent a lot of years when I was a GM, when I was sales manager, and I always saw design. I did a lot of pre-construction meetings and I saw the amount of work that builders put into designing and estimating and doing clients’ selections and building out the scope form and doing purchase orders. It is just the planning process, and it is so detailed and intricate. Of course, it has to be, because of the way we do things. We have to have the plan. We have to then go in to get the permit and then we have to build it. If we're not all on the same page, we get an undesirable result, we get an unhappy client, the project is bad, the margins are suffering and we're going to have somebody who's going to hate us for the rest of our building career.
Risk Storlie:
But if we do it right, it just sings along, and our clients get to the end and they say, "I can't believe what you pulled off. That was amazing." Somebody told me this once, Bosco, and it really is true, that we're in an industry – and it's really the only industry – where we manufacture in front of our customers. If you think about that, if you go buy a car, the car is assembled in an assembly warehouse far away from your eyes. The only thing you see is the final product. But when we're actually remodelling or building, we're doing it in front of the customers’ eyes. They're critiquing everything we do, so there's a tremendous amount of time and energy that's put into that process.
Risk Storlie:
But what I've found is that from my experience, when it comes to the client acquisition process, there's really a lack of understanding from the builder as far as what works and what doesn't, what is a waste of time and money. I think what it leads to is some apathy. Then there's really no plan or process and you almost throw darts. The worst thing that happens is you don't do anything. You just rely on word of mouth or organic marketing. A lot of guys do that, and they can build a little business that maybe will keep them alive for a while, but they're never going to scale anything.
Risk Storlie:
If you want to scale, you've got to treat it just the same way as you do when you build that house. It has to be an intricate plan. It has to work together seamlessly with the result at the end, which is, again, you're attracting the right client, right area, right product, right scope of work, where you're happy doing that work. Most importantly, it's a profitable project where there's nothing better than actually hitting your margins and then having a client thank you. When they hand you that cheque for hundreds of thousands of dollars or millions of dollars and they thank you for handing you that cheque, that's really the best part about it.
Bosco Anthony:
I'm sure you get this question quite a bit, especially with your line of work, working with builders, but what does a healthy pipeline look like for a building company today?
Risk Storlie:
Just to define a pipeline, I would define that as your database of people who have raised their hands at some point in time and expressed interest in working with you. The way I would answer that question is that if you were unable to generate another lead, your pipeline would have 12 or more months of profitable business baked into it, meaning that you could take your company on for another one to two years without having to generate any more leads and you would be okay. Now with that said, of course, to get that pipeline up, you have to be doing consistent lead generation. So, the best pipelines are able to generate and convert leads every single month. We're in a cyclical business. There are certain times of the year when, “Oh, it's the holidays. Nobody does anything in the holidays.”
Risk Storlie:
You can generate leads in the holidays, for sure. You can fill your pipeline in the holidays. But I know something that APB has talked about a lot, and I have as well, is slot selling. What we really want to try to avoid in this business is the ebbs and flows. We want to get rid of that roller coaster. We want what I'm going to call even flow, where you're able to start and close a certain number of jobs every single month, regardless of what the market is or isn't doing.
Risk Storlie:
You're always going to generate more leads in the spring than you are around the holidays. That's just a fact. People think that way. But it doesn't mean that you have to get into, say February, and not start any jobs because you didn't have any leads in December. A good healthy pipeline will generate opportunities all year long, and then it allows you to fill those production slots so that you can even flow for your company and cash flow is predictable. You're profitable. You're not taking on bad opportunities.
Bosco Anthony:
Tell me a little bit about the whole construction slot concept. We talked a little bit about it in a previous episode with APB, but how does a building company really generate those leads to fill out those construction slots?
Risk Storlie:
When you're selling, you're really always looking for two angles. One is that you want to create urgency, and order to do that, you want to use scarcity. It doesn't work in every market, but let's just look at today's market. There's a lot of opportunity out there, but there's a lot of the wrong opportunity too, so the first thing you want to do is build a client acquisition pipeline where you generate the right type of clients for what you're trying to do. As a builder, you say, "Okay, these are the resources I have available to me." This could be trades. This could be your own internal employees or subcontractors, who you have available to you, and it could be being able to get supplies. Windows are such a challenge right now, so that if you're going to be building homes, lead times right now are six or more months to get windows.
Risk Storlie:
You have a finite number of opportunities available to you in any 12-month calendar basis. What you do is look at all the opportunities available to you, and then you put together a realistic slot schedule based on production. How many homes can you start and how many homes or remodelling projects can you complete in any one month? Let's just use simple maths and just say it's four per month. So, you've got roughly 48 per year that you can start and complete. Then you work backwards from there and you say, "Okay, now I need to generate enough opportunities, enough clients, to be able to fill four and really more, probably more like five or six of those slots," because you have to factor in the cancellation rate. In other words, for every 10 jobs you sell, you'll probably lose one.
Risk Storlie:
Typically, 90% is about as good as it's going to get. You'll never get a hundred percent. People do fall out of bed for various reasons, so really what you're saying is, "Okay, I have four slots every month. I need to generate five opportunities." That's the backlog that you're going to build up to fill those slots. The interesting thing about this, Bosco, is that the longer people have to wait, the more desirable you are. I don't know what it is. It's like everyone wanted to date the prom queen in high school. Everyone says, "Oh, okay, well, she's the queen, so I guess she's the most desirable,” so we have a lot of people waiting for her. As a builder, when you are able to speak with your prospective client early on, and say right now it’s May, you’ll say, "Well, right now we are starting jobs in November. We're six months out."
Risk Storlie:
Most builders would say, "Oh, I don't want to say that because I'm going to lose the job." But what happens is that reverse psychology kicks in and clients think, “Well, everybody wants to work with you, so therefore I do too." By being able to say that you have a backlog, and you can't start because you're only starting four projects per month, it draws people to you. Really, what it comes down to is that you need to build a client acquisition pipeline and you need to produce five or six opportunities every single month for your four slots. The reason you do five or six is because if one cancels, that’s okay, you have a backup. Let's say somebody gets delayed. Perhaps they don't get their design done, so you have to push them out. Now you want to slide someone into that slot. So, you’re already working with more opportunities than you can deliver. That is the idea behind slot selling, it’s that you create urgency with your clientele through scarcity.
Risk Storlie:
I create an exclusive environment that's good for me. Ultimately, it's good for the buyer too, because it allows me to make sure that I can go through all my processes to make sure the project or the home is produced the way it should be produced. I'm not cutting corners when I get to the end of the project. I’ve got to go through all my punch list, my walkthroughs, making sure my back ordered items are in, try to get as minimal escrow work in there as possible. It's a win-win for everybody. But ironically, I have a client right now who’s 12 months out and we're actively pushing client acquisition for him. And you know what? He's telling people, "I'm not starting that job until 2023." People still want to come in and meet with him and they still want to talk to him, they still want to sign contracts and they're willing to wait.
Bosco Anthony:
What does an effective sales process look like to complement these lead generation activities and to further complement the client acquisition side of things? Is it so different from other sales processes in other industries?
Risk Storlie:
Well, I don't think so in other industries, but I do think that we are unique in building a home in that there are really three primary factors that we always look at when it comes to sales process. I would say the first thing that we do wrong, let's start with that, is we don't specialise. We promote ourselves as generalists.
Risk Storlie:
Builders say, "I am a remodeller,” or “I am a home builder."
“Okay, great. I need to have the service door on my garage repaired. Will you come remodel that for me?”
“Sure. Okay. I'll do that.”
Well, no, that's not what you do. You need to specialise and you really need to focus on what you do well, where you want to do it.
Risk Storlie:
Then when you’re focusing on the scope of the project, you can spend $25,000 remodelling the kitchen, or maybe you could spend $250,000 remodelling the kitchen. What sort of fit and finish level or project scope do you want to work in? Some remodellers really like to get into the high-end stuff, and home builders too like to work with very custom homes. Some say, "Ah, you know what? We're not made for that. We want to stay more in this area." You need to understand where that sweet spot is for you. Mistake number one is builders don't specialise enough.
Risk Storlie:
Mistake number two is that you let marketing dictate sales. Marketing is typically looked at as, “Okay, bring me opportunities. I'm going to put something out there and try to get something back in the form of opportunities.” But that's not what marketing is. That's more lead generation. Marketing is getting out there. What is the value of your service? In order to really hit the right target market, you have to make sure that your service is tailored to appeal to that target market.
Risk Storlie:
Sales dictate marketing. Let me give you an example of what that looks like. The builder targets the projects. They say, "Okay, I want to build kitchens,” or “I want to build custom ranch one level homes,” or whatever it is. They define the service area that they want to target. That's another huge mistake in this business, that builders get too big a service area. They spend too much time behind the windscreen and it costs them opportunities.
Risk Storlie:
You need to make sure you're working in the service area that is realistic to wherever your home base is and where your trades are coming from. Then you also want to figure out that project scope; are you trying to target $25,000 kitchens or $250,000 kitchens or something in between? So, the marketing plan is built around that and then you update it quarterly, because you pivot for the realities of your local market.
Risk Storlie:
Every market is unique and different. I talked to a remodeller about this the other day. We were discussing this very thing and I said, "You have it backwards." I said, "What do sales say? ‘Hey, this is where we're really good. This is where we compete well. This is what we're known for.’ So let's market around that and let's bring in more projects like that.” Then what I do is create a raving fan club. I have a thousand people who are following me for this type of project that we specialise in, in these areas. And now we're a specialist and a specialist always gets paid more than a generalist.
Bosco Anthony:
Tell me a little bit about the blind spots for builders today when it comes to lead generation. I'm sure that all builders must have a few things that commonly align when it comes to those entities of blind spots.
Risk Storlie:
Yeah. The biggest blind spot today is simply an over reliance on the market to deliver leads. That's the biggest blind spot. There's a quote out there: “Prosperity conceals your genius and adversity reveals it.” We have a lot of genius being concealed right now because people are calling and emailing and there's strong demand in most markets, not all, but in most markets.
Risk Storlie:
I would say the biggest blind spot today is really over relying on the market to deliver leads. Now we're well into year two of where we haven't had to do a whole lot to get leads. Yes, it's a challenge to get projects done, it's a challenge to hold our margins. But as far as bringing business in the door, a lot of people are busy and when they're busy, they simply work in the business, they don't work on the business, so they stop pushing the pedal down to improve processes.
Risk Storlie:
Again, I have certain clients who I don't have to push. They're just always pushing, like the guy I mentioned who said he's a year out. He said, "I can look at this in two ways. One is, I've got a year's worth of work, cut my ads, stop running this. The other way to look at this is, “I've only got a year's worth of work, so I need to keep my foot on the pedal, and I need to try new things.” He made a really interesting comment to me, in about 2008, so going back a few years. This was obviously when the recession hit, and the market crashed. He said, “We learnt right away we don't know how to market.”
Risk Storlie:
We just started trying everything and he said, “Now we've refined our process and we have it down, we know who our clientele is.” He told me the other day that when we book an appointment for him to tee up a client, he says, "Rick, I know I'm going to sell that client before I even talk to him because I have so much information on him. I know if it's the right client or if it's not before I even talk to him." That's the epitome. And by the way, he's marking up his jobs 56.9% for a design builder remodeller, which is off the charts, and he doesn’t do anything under $100,000.
Bosco Anthony:
That’s incredible.
Risk Storlie:
Yeah, but he’s worked at it and worked at it and worked at it and worked at it. I wish I could take all the credit for it. I can’t. Again, what do I do? I just keep opportunities in front of him and he just continues to push the pedal.
Bosco Anthony:
What are some of those organic lead conversion tactics that you need to factor into the sales process to acquire those clients?
Risk Storlie:
I think the biggest one, Bosco, is that you’ve got to get people before they’re ready. What I mean by that is that, usually if you’re dealing with a married couple it’s Mrs. Buyer who decides, “I don’t like my house.” So, she thinks, “Do we want to move, or do we want to remodel?” There's a process that people go through where they don't like their house because there are certain things in their lifestyle they're missing. Whether that's day-to-day living, whether that's entertaining, whatever it is, there's just something they don't like.
Risk Storlie:
Now they start to go into the process of thinking, "Okay, what if we remodelled our kitchen or we did an addition or we did this, how much would that cost?" You need to just get out there and start looking around. You’ve got to find them when they're in that spot, before they've developed any relationships, before they've met other builders, any of your competitors, and you've got to really position yourself, as you've got to be the local expert.
Risk Storlie:
You find what the resources are that she's looking for, and then from a marketing standpoint, this is called an opt-in or a permission-based relationship. It's permission-based marketing. Essentially what she's saying is, “Oh, you have something I want. What I will do is give you my contact information and the permission to start a relationship if you will give me that resource, because this is what I'm looking for. I need this."
Risk Storlie:
We'll talk a little bit more about this, but that usually falls into one of three categories. So if you just provide the right resources, position yourself as a local expert, educate people – and you have to be able to be a specialist to do this – then people will find you, and they'll start that relationship. It might take months, sometimes even years, but when they're ready to go, they see value in what you're doing, they've already developed a relationship and they trust you. You're going to get that job.
Bosco Anthony:
Talk to me a little bit about some of these trends that you're seeing around the lead generation process. In most of this acquisition and lead generation process online today, is it digital advertising that's predominant when it comes to the current trends?
Risk Storlie:
Let’s just define digital advertising as paid. You’re writing an ad and you’re paying dollars for it. There are other ways to advertise yourself digitally: organically, through your website, through your social media presence. You can also be on other websites as far as association websites, maybe some of your supplier websites, so you can get known that way too.
Risk Storlie:
But there’s a difference between generating a lead versus client acquisition. Generating a lead is simply, "Okay, here's my phone number. Call me," or "Here's a contact us form. Fill it out." What you’re missing there is that person who is just researching and not ready to talk yet. They're still thinking about it. They're still just wondering, "Is this something I want to do?" And they're trying to fill in the blanks. But with a client acquisition process, the first thing you do is recognise you're after people who are not ready and willing, but maybe they are able to do the project.
Risk Storlie:
So, what you're going to do is fill in the blanks to help them become ready, willing and able. The first thing you want to do is to provide the resources. That's a very current trend where you have to be an expert. You have to be an educator. You have to provide resources. You have to segment your list, your database. In other words, for a lot of builders, they don't even have a CRM. CRMs are not super important, but a database is, even if it's an Excel spreadsheet. Some builders just have people on pieces of paper here or some people over there and some people over here, but you've got to have a centralised database. Once you have that database, you have to segment it and segment it means you segment it by however you want to.
Risk Storlie:
You could segment it by project type. You could segment it by location. You could segment it by budget. You could segment it by timing. There are endless ways you can segment it. Number two, as far as a current trend, is really the trend away from email marketing and towards SMS or text message marketing. We know email marketing inboxes continue to falter. More and more email ends up in spam, and it doesn't get read. For text messages, the open rate is roughly a hundred percent after an hour and it gets read, so text messaging is really the way to go today to make an impact and actually work with your database, get those people to raise their hands, the ones who are ready to go. Auto booking appointments is another one.
Risk Storlie:
There's so much wasted energy happening today, Bosco, where people are just doing the old school method: a lead comes in, review the lead, wait until you have a minute to call them back, call them back, leave a voicemail. The lead calls you back the next day. You’re in a busy meeting and you go just back and forth. I call it the chase. There's all this chase going back and forth. Well, in the meantime that person has reached out to two of your competitors. What if they got hold of them right away? Now they're already developing that relationship and before you know it, they're saying, "Oh, you know what? I'm really happy with Bosco, Rick, thanks for the opportunity. But you know, we're good over here."
Risk Storlie:
You've got to be able to really auto book appointments, get them on your calendar as soon as possible. Then you need to get them on the phone and verify if they're a viable lead. But there are a couple of other things as far as trends going on today: Google My Business Chat is a big one. Google My Business for local businesses is huge. There's a chat function involved there now. There are also some different lead opportunities you can do from a pay per click standpoint on Google. But one of the simplest things we found that actually works really well is simply just retargeting on Facebook. If somebody visits your website or happens to visit a landing page or a Google ad, you just retarget them on Facebook. It works really well and it's cheap.
Bosco Anthony:
That makes sense. And you know, at the end of the day, we're living in a world right now where you can amplify so much when it comes to advertising and get more exposure that way too.
Bosco Anthony:
Here's a tough question, and you can either give it to me in a dollar value or in a percentage value, but what budget should a building company factor in for lead generation? If they're getting X amount of income, what percentage should they take and reinvest into lead generation today?
Risk Storlie:
Well, it's a loaded question and I have to preface it with, “it depends.” Number one, it depends on a couple of things. Let's start with home builders and then let's talk about remodellers. For home builders, the first thing it depends on is are you building model homes? Do you have a model home because that is your number one lead generation tool. Really, it's a marketing tool because you're able to showcase what you're capable of doing. So a model home; a lot of builders don't take the cost of the model home and put it into their marketing budget.
Risk Storlie:
I would say if you’re a home builder and you have a model home, you should be using roughly about 1% of your gross annual revenue for a marketing budget. Now, if you're a remodeller and/or you're a custom home builder who does not have a model home, probably closer to 2% of gross annual revenue. Custom builders might be closer to 1.5% because as a design build remodeller, if you're doing $5 million or $7 million a year, that's a pretty good sized remodeller. So 2% of that means you’ve got $140,000 going out the door in a marketing budget. That's a good way to look at it. If you get above 2%, then what I would say is you need to really look at where you're allocating your dollars and take a closer look at what you're getting as a return on your investment.
Bosco Anthony:
Wow. What are some of the most common mistakes that builders make when it comes to digital leads? You talked a lot about where to acquire some of these leads online with the trends, but what are some of the things that you’ve got to look out for?
Risk Storlie:
Number one is no strategy. Again, I go back to the building process. The building process is so strategic, and it has to fall into place and there's a flow for it. It's highly detailed, and if you break that, you're going to have a problem. So, inevitably something happens on the job site that goes wrong. You can go back and look and say, “We didn't follow the process, and this is the result of it.” So there's no overall strategy for client acquisition.
Risk Storlie:
Number two is there are no organic lead magnets. A lead magnet is just an offer that you would give on your organic platform, which is your social media and your website, and that offer is going to be based on what your target market is interested in. As I mentioned before, hit them before they're ready to call. If you go on most builders’ websites, you can fill out a form or you can call a phone number, that's it. There's nothing else.
Risk Storlie:
What we have developed over the years, painstakingly, are lead magnets galore, and we know these lead magnets are a way to start that opt-in permission-based relationship where we have that exchange that means, “Yes, you can start a relationship with me. You can follow up with me in exchange for something.” We will give them some sort of resource that they're after.
Risk Storlie:
Once we have that resource together, we use list segmentation, which means we'll categorise that lead into a certain segment. As an example, let’s say here's a lead who wants to get a budget put together for their project. All of our follow up is based on them getting a budget and our call to action is simply, “This is what you're looking at. The next step for you to do is to schedule a call with one of our new home advisors or remodelling advisors and they'll help you narrow that down.”
Risk Storlie:
We give them just enough to get their interest, but if they want more, then they have to take that next step. So not having organic lead magnets is a common mistake. The database is underutilised. This is usually what happens, Bosco. "Oh, I got a lead. I called them back. They didn't return my phone call. So then two days later I shot them an email. They didn't reply to my email. Next." You have no idea what happened. Maybe they went on holiday. Maybe they got busy at work. Maybe there was a family emergency, but the database is underutilised.
Risk Storlie:
You have this database full of people who have already raised their hands, and who already said, “I’m interested,” and you’ve even given them some information. We do something called database reactivation, so we’ll just go back in, and we’ll try to make sure we get as much business out of that database before we even spend a cent on ads because we also know that organic leads convert so much better than paid ads. It doesn’t matter what the platform is for paid, they never convert as well as organic. Never.
Bosco Anthony:
Yeah. It’s interesting you say that because I recently went to a display home and I walked in, looked at this display home, got greeted by someone. As I walked out, I picked up a brochure, went to the website, looked at the pricing. There was no retargeting. There was no emailing. There was nothing that basically was a touch point. While I probably fit the profile of someone who potentially could be a lead for them, there really wasn’t any engagement online or even a follow-up. It sounds like there’s a lot of companies out there that organically don’t do much to attract clients or develop relationships.
Risk Storlie:
What you experienced is very normal. Time to respond is the next common mistake that builders make, which you just hit. So, even if clients do put their name in there, it takes hours, even days. Response times should be under five minutes, and you can’t do that manually. You have to automate part of this process. Part of this is the number of times you respond. I see builders giving up way too early, or they say, “Oh, I don’t want to bother somebody.” I answer, “No, they came to you, and they raised their hand. You gave them something. They gave you permission to follow up with them." If somebody tells you to stop following up with them or unsubscribes from your email, I say, “That's great news. You just figured out that's somebody you don't have to chase anymore. Go to the next one.”
Risk Storlie:
That's why we have those things in place. Then the last mistake I would say here is not utilising all available communication channels. By that I mean that builders should be texting, emailing and calling – and using voicemails, doing voicemail drops. You can get into social media too, but mainly just those three. I see an over-reliance on email, not enough texting. I also see people who are calling and not leaving voicemails either. Email is easy and everyone wants to send an email, but it's probably the least effective of all the follow-up methods.
Bosco Anthony:
What does the future of lead generation, sales and marketing for building companies look like? What do you anticipate is going to change the landscape moving forward?
Risk Storlie:
Speed through systems. When CoConstruct and Buildertrend came on the market, there were all these guys out there doing manual estimates. They had no scheduling built in. They had no client communication platform, and it was just a mess. There were all these people who were building these custom homes and the experience was horrible.
Risk Storlie:
Essentially, the industry, for the most part, had a really bad name. So, a couple of guys who went through this process and were software engineers said, "There's got to be a better way to do this." So, they built CoConstruct and they built Buildertrend. Now pretty much every builder is using that software or a variation of it. What it has done is now completely change the way builders provide estimates. It's streamlined that. It's allowed builders to use scheduling and it's allowed them to have client communication with their trades and with their customers. They have an app, they have a login, they have a portal.
Risk Storlie:
We actually have a schedule that we're working off and something that we're sticking to. We're all working together. It revolutionised the fulfilment process of going from contract to completion. On the front end, what we are doing is trying to do what CoConstruct and Buildertrend did. The fulfilment process we're trying to do on the front-end process, have such a good experience that we can very quickly get that lead to see the value in what you're offering, build that trust in that relationship.
Risk Storlie:
This is a thing, Bosco, that I remind builders of all the time; you're not being compared to your competitor. When that prospective client reaches out to you and two of your competitors, you're not being compared to your competitor, you're being compared to their favourite place to do business. That could be a clothing store. It could be their local coffee shop. It could be their grocery store. It could be their auto dealer, but wherever their favourite place is to do business because of the customer experience that they get, the way they're taken care of and followed up with, the way that they feel like their needs are being met and exceeded. That's what you're being compared to.
Risk Storlie:
We just want to go above and beyond everything else by covering all of our bases and making sure that we can very quickly determine if this is the right fit and either say "Next," or move them into our pipeline. Definitely speed through systems is where I see the future.
Bosco Anthony:
It's interesting you say that. We actually had Dan Houghton from Buildertrend on our podcast episode a few seasons back. It was an insightful interview about how technology and systemisation are changing rapidly and it's moving a lot quicker than builders anticipated.
Bosco Anthony:
What should the building companies be focusing on when it comes to growth as well? We talked a little bit about marketing and sales and everything else, but when we talk about growth long-term, how do they sustain themselves moving forward?
Risk Storlie:
It's counterintuitive, but it's specialisation. You need to stop doing what is not profitable, what you don't enjoy doing, what you're not good at, and you need to specialise in those things that are profitable, you do enjoy doing, and you are good at, so less is more when it comes to growth. It's completely counterintuitive. But if you have a menu item of 10 services you do, and you're really good and profitable at four of them, six need to go. I remember when we were building homes, I think at one point we had almost 60 floor plans we were offering.
Risk Storlie:
We did an analysis once: “What are we selling? What are we making money at?” We figured out we were selling 13 out of 60 floor plans. We were spending all this time and energy to maintain pricing and design on 47 floor plans we weren't selling. So, what did we do? Got rid of them. We got rid of those. We took the 13 that were selling, we did some tweaks to them, maybe a couple of extra elevations, and that's where our bread and butter was. You need to stop trying to be all things to all people and just focus on what you're good at and also what people appreciate. You target those people who want to work with a builder like you.
Bosco Anthony:
I could talk to you about sales all day long, Rick. It's been a very insightful interview. But I'm going to ask you my final question and this is around one of your key strengths. You talked at the start of this interview about the fact that you do strategy really well. So holistically, if we tie together this whole entity of building an effective sales strategy, what's the one thing builders need to be aware of when it comes to growing an effective sales strategy?
Risk Storlie:
I think the first thing you have to do is to forget everything you think you know, and I'll give you an example of that. Prior to March 2020, it was pretty much business as usual. You would have a little bit of innovation here and there, but it was still pretty much business as you knew it. I remember in July 2020 talking to a client and they told me, "We just sold a $1.2 million custom home where we didn’t eve meet the buyers." Everything was done on Zoom. The pandemic and the lockdowns and the need for innovation hit so hard and so fast and not just of course in our industry, but in every industry.
Risk Storlie:
Now, when my kids need to go to the doctor, half the time it's a telehealth call. I can just call the doctor. I'm on Google Meets or something with them and I don't have to go in. Everything has changed and it's gone so fast. I think the first thing you need to do is forget everything you think you know, and you need to really be open, have your eyes open to what the market expects today, as far as speed through processes, speed through systems, and also what's no longer going to cut it.
Risk Storlie:
Again, what hasn't changed, Bosco, is the way people shop and people still shop by process of exclusion. If they're going to consider a builder, what they're trying to do is to cross you off their list. If you make it on the list, their first goal is to cross you off the list, so you have to differentiate yourself by how you treat that prospective client from the very first time they make contact with you. You've got to be differentiating yourself and doing things that your competitors are not doing. Like I said, you're trying to emulate their favourite place to do business.
Risk Storlie:
The second thing is you have to use case studies to build confidence. This is an industry that is so visual. What do you do? You build these beautiful homes. You remodel these beautiful kitchens. You take something that is just this ugly duck home and you put this beautiful portrait across it with your renovation. That is a case study. But what builders don't do is they just think, "Oh, it's done. Okay, next?" But you have a story there of someone who came to you and said, "Here's my problem. This is what we can't do. We can't visualise what we want to build." You came in with the expertise and the know-how, you worked within their budget, you designed this beautiful new part of their home. They're thrilled with it.
Risk Storlie:
That is a case study that you need to capture, and you need to get that on your social media, on your website, because that is a confidence builder. Your next lead might be someone who says, "Oh, our kitchen looks like that. And you know what? Those guys live in our community, and if they can do it for them, they can do it for us."
Risk Storlie:
I think the other thing is to think long-term. Your best leads aren't ready to talk right now. This is still a long sales process. And as much as you would like that lead to call you up today and be ready to start tomorrow, more often than not, that lead is already in bed with somebody else. They're just using you to try to justify going with that person. So you’ve got to get your mind off, “I want someone ready, willing, and able,” start thinking, “I want someone who's able to do a project, but not ready and not willing.” Then develop that relationship and that value and that trust over time.
Risk Storlie:
Then I'd say the last thing, as far as building an effective sales strategy, is that you've got to have three paths. If you're a home builder, three paths; for a remodeller, it's really two paths. But number one is you’ve got to show people the path of what they can build, what they can design, because they can't visualise it. Number two is you’ve got to give them some idea of how much it's going to cost before they have a conversation with you. That's a huge one. They don't want to embarrass themselves and figure out, "Well, I want to do this, but my budget is this," and then for you to tell them that, "Oh no, I'm sorry. We can't help you. You're crazy. You can't do it for that."
Risk Storlie:
You've got to work them through that and there are different ways to do that. Then finally, if you're a home builder, it's location. You need to help them find where they can build their home or offer them feasibility studies on their lot. Those are the three paths that you want to build for an effective sales strategy. You work everything through one of three of those paths and you will be successful.
Bosco Anthony:
Well, that was very insightful, Rick, and it was a pleasure to have you here as well. Thank you so much for your time today.
Risk Storlie:
Awesome. Thanks, Bosco. I appreciate you having me on.
Bosco Anthony:
Cheers.
Bosco Anthony:
Thank you for listening. Remember to subscribe to Professional Builders Secrets on your favourite podcast platform and leave a review. To learn more about how the systems at APB can help you grow your building company, visit associationofprofessionalbuilders.com. See you next time.
