The Big Idea:
Building a marketing strategy can be tough. As owners and marketers try to drive more home improvement leads, we often spend most of our time thinking about tactics, and our strategy can get lost. In this post, I present a five-step process for developing a killer marketing strategy that will improve the effectiveness of all of your tactical decisions. Researching, segmentation, targeting, positioning, and differentiation allow you to bait the hook for the fish you want to catch and drive more of your best customers to your business.
At the core of every strong business is a point of differentiation that explains why someone should choose to hire or buy from you, as opposed to a competitor. Without differentiation, at best your business fails to grow as well as it could, and at worst, as famed marketing strategist Jack Trout says, you just die.
But how do you create differentiation? It’s more difficult than it sounds, but there are five steps which I will scratch the surface of below. However, oddly enough, I find it easier to explain by starting at the goal and working backward, so that’s what we’ll do.
Step 5: Differentiation
The goal of differentiation is to essentially give someone a reason to buy from you, especially if your price is higher, your timeline to start or complete a project is longer, or if there is some other aspect of your offering when needs to be overcome relative to a proposal from a competing firm. Consumers will happily pay more if they see the value, and they will happily pay less if costing less is your point of differentiation.
You can differentiate on all types of things: price, service, options, the speed of delivery, experience, reputation, etc., just to name a few. But which one should you use? That depends on your positioning, which is Step 4.
Step 4: Positioning
The easiest way to think about positioning is what headspace you want to own in the mind of the prospective customer. Are you the fastest, the cheapest, the most expensive, etc.? Do you have the best-trained crews, the best reputation, the strongest guarantee, etc.? Your positioning could be any of these or a combination of these, but you need to pick something for the customer to latch onto: Why should they care about YOU?
Positioning is all about picking a superlative. You are the most/least, best/worst, fastest/slowest, most likely to/least likely to X, and so forth. This is the headspace you want to own in a customer’s mind. When they think of X, they think of you, and that’s what they tell their friends as well.
However, you can probably already see the problem. Not all consumers care about or value the same things. Some people are looking for the “most reasonable” price (aka cheapest), and some people prefer to spend more because they think a higher price is a sign of quality. People with an active leak in their roof care a lot about the speed of delivery, and people remodeling a basement probably assume it is going to take some time to complete. How can you pick a superlative that is going to appeal to all of these people?
You can’t. Trying to be the best option for everyone is a rookie mistake. You can’t be all things to all people, so you’ve got to target someone.
Step 3: Targeting
There are lots of groups of people out in the world and a few of those groups (or maybe even one), are your ideal customer(s). Deciding which group is the best for your business, and choosing to focus on them, is called “targeting.”
Let’s start by defining “best for your business.” The definition of “best” in this case is the group(s) that you can most profitably serve. Whichever group buys at the highest rate and/or has the largest tickets and/or has the least recission, and has highest customer satisfaction at the end are your people.
Now, this is not to say that you are only going to sell to one group of people, but we do want to bait the hook for the fish we want to catch. You’re going to get bites from groups who are close to your ideal group, and even a few people WAY outside of your ideal group, but the point is that the more you can laser focus your message on a particular group in a way that is tailored and relevant to them, the more efficiently you will convert them, the more they will buy, and the more they will refer.
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Don’t fall into the trap of believing that you’re selling to everyone with a home. You’re not, and if you are, you shouldn’t be. I’ll say it again, bait the hook for the best fish, and you’ll get more of them.
Ok – so you’re ready to pick a group or a few small groups. Great, but how do you know which groups they are? How do you define them? That’s where the second step, Segmentation, comes in.
Step 2: Segmentation
Any population of people can be grouped into various demographic categories:
- males and females,
- adults and kids,
- people over 65, people 55-65, people 45-55, etc.
- republicans, democrats, and independents,
- people who live in County A, people who live in County B, etc.
- rich, middle class, and poor,
- blondes and brunettes,
- people who believe in ghosts, and those who don’t,
- people who exercise X times a week, and those who don’t,
- people who value craftsmanship, and people who think it doesn’t matter,
- and so forth.
The options are literally limitless. You can segment any population along any number of lines, at many different levels of granularity. Race, religion, buying habits, education, home value and more are all available to you in public records.
The goal of segmentation is to get a feel for who your best customers are, or should be, and then break up the population of people in your area along lines that matter to your business.
For example, millennials may not be old enough or established enough yet to be homeowners, or even if they are, they may not have owned a home long enough to have been burned by a bad contractor. If your positioning is that you are the best at doing everything on time to finish when agreed, and the homeowner has never had a project run long and frustrate them to death, they may not care about your positioning. But how would you know that? That takes us to the final step that must occur before anything else: Step 1: Market Research
Step 1: Market Research
I mentioned above that lots of demographic information is available in public records.
Take your best customers, the people who spend the most with you or otherwise add the most value to your business and profile them. Who are they? Where do they live? How much money do they make? What are their interests, etc.?
Many data providers offer an “append” service where they can supply you with TONS of data that links back to an email address, or physical address. Good match rates are about 70%, and you need at least 500 records or so to get a good sample.
You send them a spreadsheet, and they kick back a spreadsheet with dozens of new columns filled with everything you could ever want to know about your best customers. Many providers also offer extremely useful statistical reporting, so you don’t have to crunch through the spreadsheet yourself.
Looking through the statistics, you may find that your best prospects are generally older than 45, but younger than 75. Income might be all over the map, but you see you have very few customers who make less than $50K a year. You may also find, for example, that your company does well with homes that are worth more than $200K, but you struggle to close in homes worth more than $400K.
Knowing that information, you would break up the market along three lines: age, home value, and income. People who meet all three criteria would be your primary target.
Does that mean that you’re not going to sell to someone who is 42, or 80? Of course not. This process isn’t about disqualifying people, it’s about finding your BEST people, and you will then naturally also get people who are close to, but not actually in, your “best” group.
After you have your target, you have to position, and market research is useful here too. What do these people care about? How do they think about you? What is their process for hiring contractors? What are they afraid of? And, finally, what message resonates best (fastest, cheapest, lowest pressure, etc.)?
Once you find that out, you have a really strong positioning tailored straight to your best prospects, and you can bet it will differentiate you from everyone else in your market who only know how to talk about how great they are.
Research – Segment – Target – Position – Differentiate – AND WIN.
Please post any questions down below, and I’ll be happy to answer them!
Knowledge is power.
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