The Ultimate Guide to Growing a Residential Construction Company
Thinking about taking your residential construction business to the next level?
Maybe you're running a small crew and feeling the itch to expand. Or perhaps you've been in business for a while and looking to enter a new market.
Here's the tricky bit though - most construction business owners are so caught up in the daily grind of running their business, it's like they're in quicksand. Stressed, overwhelmed, and lacking a roadmap for growth.
But hang on, because what I'm about to share with you is a digital marketing machine that's going to work tirelessly to pull in fresh prospects, turn them into loyal customers, and squeeze every ounce of profit out of each relationship.
Why is this important? Well, all leaders and entrepreneurs find themselves stuck in a rut at one point or another. There's a heap to learn, and the business landscape is shifting quicker than a cat on a hot tin roof - it's near impossible to stay on top of every minor market fluctuation.
But once you get the big picture...
Once you see how all the pieces of the puzzle fit together...
You'll be able to build a construction business that's nothing short of a bulldozer - unstoppable.
Sound like your cup of tea? Well, buckle up because we're about to dive right in.
The System
This is the same system that companies like Coca-Cola and In-N-Out Burger used to rule the soda and burger domains. It's the very playbook eBay uses to dominate the online auction world.
This method has also catapulted companies like IKEA, Peloton (selling high-end home fitness equipment), and National Geographic into the category of household names.
Whether you're running a small business, a mid-sized company, or a sprawling enterprise, this system fits like a glove. It's just as effective for local stores as it is for mega-retailers, and works just as well for construction services as it does for tangible goods.
Why is this system so effective? It exploits each and every part of the irrefutable law of business growth detailed by legendary marketer Jay Abraham.
Abraham offers three simple ways to grow a business:
1. Increase the number of customers.
2. Increase the average transaction value per customer.
3. Increase the number of transactions per customer.
When you give it a moment's thought, the logic is crystal clear.
And the system I'm about to share with you - we call it Customer Value Optimization or CVO - brings all three growth strategies into play. That's what makes it such a potent game-changer.
So, take your time with this page. Read it thoroughly. Then read it again and etch it into your memory. This is the wisdom that the world's top marketers and entrepreneurs have in their toolkit—it's the kind of knowledge you won't find in a conventional business school syllabus.
The Steps to Customer Value Optimization
This is your big-picture treasure map to building an unstoppable business.
Anytime you’re learning a new tactic—whether it’s Facebook marketing, Google Analytics, search engine optimization (SEO), and so on—you’ll want to check in to see which part of the Customer Value Optimization process that tactic fits into.
Otherwise, you’re liable to end up wasting your time and money.
When you break it down, there are 7 steps to Customer Value Optimization:
Determine Product/Market Fit
Choose a Traffic Source
Offer a Lead Magnet
Offer a Tripwire
Offer a Core Product
Offer a Profit Maximizer
Create the Return Path
These 7 steps when executed correctly will work to skyrocket your business to levels you have never imagined.
You will be able to anticipate what your sales will be and scale with confidence - no more dependency on unpredictable sales driven by referrals
You will maintain trust and brand integrity throughout the sales process - no pushy salesman tactics and sleazy deals
Your business will be PROFITABLE. - no more throwing money away on marketing that does not work
Let’s get straight into the first step.
Step 1: Determine Product/Market Fit
Before I define Product/Market Fit, allow me to tell you a short story.
Let's rewind a bit, back to November 2017. There's a spunky little six-year-old named Wrenn, and she's setting off on a trip with her mom. They're hopping on a Southwest Airlines flight, making their usual commute from Orlando to St. Louis.
Wrenn's a seasoned flyer at this point, despite her tender age. You see, she's been a regular on this route ever since she was diagnosed with a critical health condition that required a double lung transplant when she was just six months old.
And so, Wrenn and her mom, Nicole, have been routinely shuttling between their home in sunny Orlando and the St. Louis Children’s Hospital for ongoing medical treatment.
They're Southwest Airlines fans for a few good reasons. The airline's warm service and no-nonsense, wallet-friendly experience resonate with them. Plus, with plenty of flights crisscrossing between the two cities, they've got the flexibility they need in their travel schedule.
The tale of Wrenn and Nicole isn't just heartwarming. It shines a spotlight on how Southwest Airlines hits the bullseye when it comes to delivering the right product to the right customer.
From day one, the folks at Southwest picked up on a gap in the market. They saw a group of travelers who'd happily swap out fancy perks like champagne and fully reclining seats for reliable service and a budget-friendly price tag.
By fine-tuning its offerings to match the needs of this group, Southwest has rocketed to its spot as one of the most profitable airlines around. Talk about understanding your customer!
So, what's Product-Market Fit? It's all about knowing your customer and offering them exactly what they need.
Remember, your business exists to solve a problem for your customers.
It doesn't matter if you're offering consulting, design, or construction services – you're there to solve a problem.
But here's where some businesses go wrong: they focus too much on their product and forget about who they're selling to. If you want your business to grow, you have to know who your customer is.
One way to do this is by creating a customer avatar, or an ideal customer profile. Here’s an example of what that looks like.
There are four things you need to know about your customer:
Who they are and what they're interested in (Demographics and interests)
What drives them to make a purchase (Key purchase drivers)
What bothers them or worries them (Frustrations and fears)
What they want or dream about (Wants and aspirations)
The best way to get this info? Ask your customers directly.
If you're a new business, you'll need to chat with potential customers to figure out who they are and what they need. Try to use their own words to describe them and their problems.
When you understand your customers and can offer them the right solution, your competition becomes irrelevant.
Start by building a single avatar—but don’t stop there. Your business almost certainly has more than one ideal buyer.
The Before/After Grid
At its very core, your business exists to move your customers from an undesirable “before” state, to a more desirable “after state”.
In the “Before” state, the customer is discontent in some way. They might be in pain, bored, frightened, or unhappy for any number of reasons.
In the “After” state, life is better. They are free of pain, entertained, or unafraid of what previously plagued them.
In the construction business, people buy transformations. Since we do not sell tangible products, the bigger the transformation, the higher the impact it has in our customer’s life.
This transformation does not merely refer to the transformation of the space that we worked on. This refers to the transformation in the life of the customer both physically and emotionally.
What has become possible for them in the “after” state that they did not envision before? How do they see themselves in the “after” state and what new vision do they have for their families?
Needless to say, getting clear on the desired outcome your offer delivers is fundamental to the success of your business.
Here’s how to get that clarity…
The 10-Question “Before & After” Grid
What does your prospect HAVE in the “Before” state? What does your prospect HAVE in the “After” state?
How does your prospect FEEL in the “Before” state? How does your prospect FEEL in the “After” state?
What is an AVERAGE DAY like for your prospect in the “Before” state? What is an AVERAGE DAY like for your prospect in the “After” state?
What is your prospect’s STATUS in the “Before” state? What is your prospect’s STATUS in the “After” state?
What is an EVIL that is plaguing the prospect in the “Before” state? How does your prospect conquer it and bring more GOOD to the world in the “After” state?
For a residential remodeler, your grid might look something like this:
The power of documenting the before and after grid is in how it helps you articulate the transformation. Your marketing content basically writes itself.
“Turn your dark, old and outdated kitchen into a modern entertainers paradise that your guests will swoon over”
“Tired of having to fix up your broken appliances day after day? With Prime Remodelers, you’ll be free to put on your culinary master hat and whip up delicious meals in no time”
“Just imagine feeling like the hostess with the mostest, knowing that your guests are comfortable and having an amazing time”
Did you notice the way this marketing feels authentic and is speaking directly to a customer that you know and understand?
This is what makes the difference between a barely surviving business and an UNSTOPPABLE one.
Pricing Your Services
Understanding how you will transform your customer's life also impacts how much you can charge. The distance between the “before” and “after” state is called VALUE.
Take for instance a piece of candy. The value you get from having a temporary sweet taste in your mouth is very little compared to the value of having a full meal that satisfies your hunger.
Therefore candy is priced a lot lower than a plate of food.
The same applies to your business. The greater the distance between the before and after states is the value that you get to charge for.
In the construction business, we may be tempted to only account for materials and labor, but that does not represent the whole picture.
We must also include intangible aspects of the transformation such as convenience, speed, and expert consultation.
If you want to charge more for your remodeling services, you want to create a greater distance between the “before” and the desired “after” states by either:
Offering a better product/service or
Articulating the distance from “Before” to “After” differently or more clearly (better marketing)
In summary, the difference between a dying business and a thriving one is highly dependent on whether they are offering the right product/service to the right customer.
In order to offer the right product, you need to know your customer almost more than they know themselves. Know where they are today and where they desire to be in the future.
Your ability to articulate the distance between the “before” and “after” states determines how much you get to charge for your services.
The bigger the distance, the more you can charge and the more your business grows. Take your time with this step, it is extremely valuable.
Now that you have zeroed in on your customers, the next step is to find a way to reach those people and bring those people to your website.
Step 2: Choose a Traffic Source
There are two main ways to get people to visit your website.
Organic traffic - This is where people search the internet for a product or service and your website pops up in the search results. They could also be browsing social media and happen to land on some content that leads to your website.
Paid traffic - This is where you pay to advertise your content from your website shown to an audience that you choose. These ads come to customers through a variety of channels (websites, search engine results, pre-roll videos, etc..) but they all attempt to do the same thing: Increase awareness.
In this step, we are going to focus on paid traffic and here’s why:
Paid ads are targeted: You control who sees what ads. Because you have already gone through the process of identifying the right customer for your product, it makes sense to put your ads in front of that audience and no one else. You will convert more, sell more and have better conversations with them.
Paid ads can be turned ON or OFF, UP or DOWN: You can control how many people you are attracting. This is particularly important if you want to scale gradually while maintaining the quality of service and workmanship
Paid ads are relatively predictable: You put money in, you’ll get leads out. Being able to measure and predict outcomes is extremely valuable for growing a business. You can prepare for future staffing, resources, and materials based on the data you get from your marketing today.
A lot of business owners avoid paid traffic because they see it as a risky gamble.
Let’s take for example Ricky. Known for his integrity, quality work, and friendly demeanor, Ricky enjoyed a steady stream of customers through word-of-mouth referrals.
However, he couldn't help but notice the world becoming more and more digital, and he decided it was time to grow his business by venturing into digital advertising.
His first foray into digital advertising was to create a Facebook page for Ricky's Reliable Builders. He spent countless hours designing the perfect logo and uploading pictures of his best work.
He then decided to run Facebook ads, targeting people in Hammersfield who were interested in home improvement. Ricky was excited to see the number of page likes grow, but he quickly realized that likes didn't necessarily translate into leads or sales.
Next, Ricky decided to try Google Ads. He created a campaign targeting popular keywords like "construction company" and "home builder." He set his ads to run on a cost-per-click basis, but he didn't know how to optimize them effectively.
As a result, his ads were displayed to a broad audience who might not have been interested in his services, and his budget was quickly depleted without any significant leads to show for it.
Feeling frustrated, Ricky turned to Instagram. He thought that showcasing beautiful before-and-after images of his work would surely generate interest. He invested in sponsored posts, targeting people in the Hammersfield area, and eagerly waited for results.
While his posts gained a few followers and likes, the engagement was superficial and didn't translate into actual business.
Before he knew it, Ricky had spent over $3,000 on digital advertising and had nothing to show for it. Sound familiar?
Let’s be clear. Anything that you go into without a clear strategy is in fact a risky gamble. Here’s how to approach paid advertising the right way.
Google, Facebook, Pinterest, Twitter, and LinkedIn… these platforms are all essentially traffic stores. And they would love to send more people to your website.
When you look at it that way, the question of traffic comes down to cost.
And to generate a return on investment for your paid traffic, you simply need to understand 2 things:
How to measure what traffic is worth
How to extract maximum immediate value from that traffic
For example, pretend that you got $10 in profit every time a visitor came to your website. Would you be able to get traffic to the site? Heck yes, you would!
You could pay up to $10 per visitor and still break even.
In fact, you’ll be able to pay MORE than $10 to get a visitor to that page when you truly understand the whole Customer Value Optimization system—because you’ll be able to extract even more profit from those leads later on.
This is why this system we’re setting up is so powerful because we aim to earn more profit per visitor so we can turn around and spend that money to acquire more visitors
In the end, if you are out-spending your competitors to acquire customers and doing so profitably, you win.
The best way to win the paid traffic game is to become a master of a single traffic source. Pick one and stay focused on it until you are getting maximum profit. Then you can move to diversify your traffic sources
These traffic sources include…
Email marketing
Social advertising (Facebook/Twitter/YouTube ads, etc.)
Display advertising
Content marketing
Organic social media
SEO
And so on.
You won’t make a huge profit right away, but that’s not the point. The profits will come later IF you use the CVO system.
Step 3: Offer a Lead Magnet
The next 2 sections (Offer a Lead Magnet and Offer a Tripwire) show you how to grow your business through the first of Jay Abraham’s methods: increase the number of customers.
First, let’s talk about Lead Magnets.
A lead magnet is an irresistible offer of value given to a potential client in exchange for their contact information. A little bait that hooks the big fish if you will. This allows you to continue to follow up with them and engage them in a sales conversation.
The Lead Magnet is typically offered on your website’s landing page or special page that is optimized to convert visitors into leads.
In order for your Lead Magnet to be effective, you need to provide tremendous value with it. For example, a residential remodeler might offer a 17 Point Checklist to help Homeowners set a Budget for a Kitchen Remodel.
This strategy works fantastically to not only attract leads but also qualify them. The idea is to attract clients who would actually benefit from, and therefore likely to pay for, your services.
If you're a commercial construction firm, a checklist for building dream homes probably isn't going to reel in the right folks.
Lead magnets are not a new concept, but trust me, they're still an underutilized goldmine in the construction sector.
But not all lead magnets are created equal. The key is to make sure your lead magnet is specific. Inviting people to join your mailing list for homeowner tips is not specific enough.
The key here is to provide real, undeniable value. The more valuable your offer, the more inclined your prospective clients will be to provide their information.
Now, I understand that you may be thinking, "Isn't that giving away our expertise for free?" It's a fair point, but let me counter with this: Would you rather your prospective clients see you as a generic construction firm, or a knowledge leader and trusted partner who knows the lay of the land?
The answer to that can make all the difference to your bottom line.
In the end, a lead magnet isn't just about increasing your number of leads; it's about increasing the number of the RIGHT leads. In an industry as competitive as construction, this can be a game-changer.
Step 4: Offer a Tripwire
You've attracted a whole crowd of potential leads with your super valuable lead magnet, and now you're wondering, "How do I turn these interested folks into actual, paying clients?" Enter the tripwire.
A tripwire is a low-cost, high-value offer that you provide to your prospects after they've taken up your lead magnet. The strategy here is to lower the barrier to entry by offering them a micro-commitment.
Typically, a tripwire is a super low-cost offer. In the home construction industry anywhere between $120 to $500 might be considered a low-cost purchase.
The goal of the tripwire is to fundamentally change the relationship from prospect to customer. The conversion of a prospect to a customer, even for $1, is magical.
The key is to make a Tripwire Offer that your leads are unable to resist.
The most common way to make the Tripwire irresistible is by selling it at cost and, in some cases, at a loss to you.
That’s correct—you are not trying to make a living from selling Tripwire Offers. You are trying to acquire buyers because there is nothing more valuable than a list of buyers.
Services that might fit into this category include:
Minor Plumbing Work: Fixing leaks, replacing faucets or shower heads, unclogging drains, installing new toilets or sinks, etc.
Light Electrical Work: Installing or replacing light fixtures, changing out light switches or outlets, fixing doorbells, installing ceiling fans, etc.
Painting: Interior or exterior wall painting, fence painting, small touch-up jobs.
Installation Services: This could be anything from installing a new doorbell, to mounting a TV on the wall, installing shelves, or assembling furniture.
Maintenance Tasks: Changing furnace filters, replacing smoke detector batteries, gutter cleaning, power washing decks, etc.
Drywall Repair: Many homes have minor holes or dings in the walls that a handyman could quickly repair.
Caulking: This could be in the bathroom around tubs and showers, in the kitchen around sinks and counters, or outside around windows and doors.
Weatherproofing: Installing weather stripping around doors and windows, insulating pipes for the winter, sealing gaps where drafts can come in, etc.
Landscaping Services: Trimming hedges, mowing lawns, cleaning up yards, mulching gardens, etc.
Tile Work: Replacing cracked tiles, re-grouting existing tile, sealing grout, etc.
By purchasing your tripwire, these leads haven't just bought a product - they've bought into your company.
They trust you enough to invest their hard-earned money, which makes them significantly more likely to consider you for their larger, more expensive construction needs.
Step 5: Offer a Core Product
Alright, let's roll up those sleeves and get to the real heart of our business: the core product. We've talked about lead magnets, dived into the power of a tripwire, and now it's time to introduce our grand masterpiece, the core product or service.
In our construction world, this is like moving from breaking the ground to actually erecting the steel structure. It's your main offering - the product or service that best represents your business, and of course, where the real profits lie.
So you're probably wondering, "How do I effectively present my core product to those who've just bought the tripwire?" Good question!
The key here is to offer your core product to these warmed-up leads in a way that feels like the next logical step for them.
Remember, these are clients who've already made a small purchase. They've seen the quality you offer, they've started to trust you, and they're likely ready for more.
For example, if you're a residential remodeling company, your core product could be an extensive home renovation package. Or if you're an actual builder, it might be the construction of a custom home or a residential complex.
Offering them your core product—your construction services—comes across as a natural extension of the value you've already provided.
The journey from lead magnet to core product is like constructing a building. You start with the blueprint (lead magnet), then pour the foundation (tripwire), and finally build the actual structure (core product).
It's crucial to remember that while the core product is where the profits are, each previous stage is indispensable. Without a valuable lead magnet and an effective tripwire, the path to selling your core product could be as shaky as a skyscraper without a solid foundation.
The CVO process is about building relationships, one brick at a time.
And in this journey, offering a valuable core product is the capstone.
Step 6: Offer a Profit Maximizer
This step focuses on increasing the average transaction value per customer. As you recall, we spent money on paid traffic to acquire customers, now we want to make sure we get the most value out of each one of them.
This is what the profit maximizer is for.
Most businesses don’t have Tripwire Offers and they don’t have Profit Maximizers. They live and die selling cold prospects on their Core Offer.
This is why they struggle… but you won’t.
Would it shock you to find out that McDonald’s makes almost no money on the hamburger? The hamburger is the Core Offer, but it’s the French fry and soda Profit Maximizers that built the Golden Arches.
This type of Profit Maximizer is called an immediate upsell…
Any offer made after the initial sale is a Profit Maximizer.
They’re called Profit Maximizers because the revenue you get from these sales will be much more profitable than your Tripwire or Core Offer sales.
Think about it. These clients have already demonstrated they value your service enough to invest in your core product. They trust you, they have faith in your expertise.
Offering them a premium service or product isn't just a chance for you to increase your profits—it's also an opportunity for them to get even more value.
So what does a profit maximizer look like in the construction industry? Let's say your core product is the construction of residential properties. A profit maximizer could be an upsell to a premium finish package, or a cross-sell to a maintenance and upkeep service contract.
Or it could even be a top-of-the-line home automation system installation.
Upselling is only one way to offer a profit maximizer. Other ways include enhancers to the customer experience. These are some examples that you can offer for an additional fee:
Speed - Offer faster service by increasing crew members, skipping to the front of the line if there’s a waiting list, or compressing the timeline to finish faster.
Expert consultation - Interior design consultation, specific design style consultation, material expert, smart home expert or architectural style consultation etc.
Technology - Use of the newest materials or methods, smart home installation, automation software etc.
Access - 24/7 access to customer service, project managers, or other experts
Remember, your profit maximizer must always add value for the client. It's not about squeezing every last penny out of their pocket. It's about enhancing the client experience and delivering greater satisfaction.
Step 7: Create a Return Path
This step focuses on increasing the number of transactions per customer.
The goal of the Return Path is to have frequent, strategic communication with your buyers and prospects that cause them to buy again and again.
Because you have received their contact information through the Lead Magnet, you can continue marketing online to them.
You can offer new Lead Magnets, Tripwires, Core Offers, and Profit Maximizers because you have permission to market to them or bring them back to the Tripwire, Core Offer, or Profit Maximizer that they didn’t buy the first time around.
The Return Path is anything that brings the customer or prospect back more frequently, including…
Email marketing
Exit offers
Organic social media (like Twitter, Facebook, and LinkedIn)
Loyalty programs
Content marketing
Outbound sales calling
Ad retargeting (More on ad retargeting here)
And that, my friends, is the system used to grow businesses in multiple industries.
It’s worked for single-member businesses and giant corporations like McDonald’s and Starbucks.
It works because it takes all the jigsaw pieces of digital marketing and fits them together in a way that fits.
Can the CVO system help to grow and scale your company? You Bet.
Customer Value Optimization is a sure way to increase sales and grow your business.
It helps you reach the right audience, target them at different stages of their buyer’s journey, and ultimately nurture them so they’ll be more likely to eventually convert and make a purchase.
With the right implementation and optimization techniques, it’s possible for any business to reap the rewards that come from an effective growth strategy.
BUT — if your marketing is on life support, kiss those dreams of sales goodbye.
You can still turn it around, though! You just need the right strategy.
That’s what I help my clients implement in the Double Your Sales Accelerator - a program that will put you on a path to double your sales within 90 days.
Get the strategy, systems, and skills you need to grow your business through rock-solid marketing systems. (These are the exact ones global companies are using to continue to grow even in a slow economy)
Let’s build your business together! Schedule a consultation with me to learn more.
