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How to Win More Construction Contracts at Higher Margins

Here Are A few Tips On How You Can Improve Your Profit Margins. ... Bottom Line: Don't Sacrifice Profit Just To Win More Work

Does your proposal differentiate you and explain why you dominate the market, or are you just another bid?

Many homebuilders face the problem of entering a race to the bottom.

Let’s paint the picture: you’ve spent weeks, maybe even months with a client trying to give them everything they want, only for them to get a cheaper bid from another builder. This prompts you to trim your margin a little, believing this will surely land you the next job. Over time, your company starts taking on bigger risks on smaller and smaller margins. This is a residential builder’s nightmare, and it happens to many companies in the homebuilding industry. Luckily, CLB Network has the solution to get you your ideal profit margin: a formal sales process, data driven decision making, and a quoting solution. Read on to learn more.

Formal Sales Process

According to Process Street research, home builders who use a formal sales process report a 28% increase in revenue compared to those who do not. With a formal sales process, your company will also enjoy an 88% increase in hitting your goals, use trained salespeople to bring in 9% more revenue, and use a sales playbook making you 33% more likely to close sales. The best luxury home builders and remodelers have a repeatable sales process which they follow for every new prospect, allowing them to build real relationships with best-fit clients and strategic partners. So stop wasting time chasing prospects that will never build with you, and keep reading to learn how to win more home building contracts at higher margins with a formal sales process.

The first step your company needs to take is to create a documented sales process. Identify the milestones that can be used to mark where a prospect is on the buyer’s journey, and write them down. This will allow you to drill into each milestone, and formulate a step-by-step process to get to the next stages with a prospect. After you’ve finalized your process, upload it onto a software like Lucidchart or Google Docs. That way, you can start linking to follow-up emails, phone scripts, and other marketing assets. Now that you’ve created a formal sales process, we’ll cover everything else you need to do to win contracts at higher margins.

Data Driven Decision Making

“What gets measured gets improved.” It is essential to create measurable goals and start measuring them with KPIs in your sales process. Using data allows you to review your numbers quarterly and set new targets. Moreover, data driven decision making is the difference between having a successful company versus chasing cash flow. Using DD-DM, you’ll be able to identify your company’s number one weakness and focus all your efforts on fixing that problem, rather than trying to improve other things that don’t even need fixing.

Charge for Quotes

Do you find yourself wondering “What’s a good profit margin?” One way to improve your construction profit margin is to start charging clients for home builder quotes. Builders that charge for quotes are eight times more likely to win the job than those who don’t. Don’t waste your time and money with the ‘quote and hope’ option. Clients that aren’t willing to spend money on your services aren’t the best-fit prospects for you, so start charging for quotes, work with the clients that value your services, and win those construction contracts.

Position Yourself to Win Jobs at a Decent Margin

Don’t spend your time trying to give free quotes out to as many prospects as possible. Instead, use the racking the shotgun process, which involves you qualifying every prospect before you spend your time and energy on them. Once you find your best-fit prospects, be clear with them about the entire estimating and quoting process. You want to make sure they’re prepared to pay to get their job professionally quoted in order for you to produce a fixed price contract. If they are prepared, then you have buy-in and should give your 100% to these clients in order to wow them with your communication, professionalism and skills.

Achieve Higher Margins by Attracting the Right Audience & Demonstrating Value

Asking questions and maintaining communication always helps build the connection between you and your clients. By questioning everything you see on the plans and documenting the answers, you can impress your clients with a very detailed custom quote that can’t be matched by any other builder. Remember, you can’t deal with everyone who asks for a free estimate, so rack the shotgun and work with the hottest prospects. This way, you’ll be signing contracts at higher margins than you ever thought possible.

This is a big opportunity for your brand and solution to stand out. Don’t spend time wondering what a good custom home builder profit margin is. Instead, create a formal sales process, use data driven decision making, and start charging for your quotes. This way, you’ll be sure to connect only with the clients who are a best-fit for your company and your standards, and you’ll surely improve your profit margins.

To begin assessing your marketing and sales processes, click here to fill out our builder business benchmark. Then, download our latest ebook for an in-depth lesson on winning contracts at higher margins. Finally, contact CLB Network to learn how we can help you implement a formal sales process and win more construction contracts at your ideal profit margin.


How To Win More Home Building Contracts At Higher Margins

What's the ideal profit margin for luxury home builders? Download this guide to learn how to win more home builder contracts at higher margins.

The Certified Luxury Builders Network leads luxury builders to greatness. Since 2016 CLB Network and builders across the nation with annual sales ranging from $5M - $50M have worked together to deliver a 5-Star experience and become market-leaders. Working with one great company at a time, CLB gives builders the tools, training, and support to achieve success in Quality, Profit, and Pipeline freeing leadership to work on—not in—their business.

We're here to help builders. Experience and expertise is just a click away. Contact us today to see how your business measures up to our builders' benchmark, learn what "GREAT" looks like, and see how CLB can take your business to the next level.

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