I hear a lot of people claiming that plumbers, hvac contractors and electricians that over-advertise their services must not be good if they always need new clients. After all, if you were a great contracting business wouldn’t people just call you based on your great reputation? Why do you have to scream from the rafters about how great your service is? One plumber on a message board called the PlumbingZone.com said, “If your company is so good, why do you have to advertise like Coca Cola on crack?” This is a very good subject that cuts deeply into the vision of what the owner wants their company to become. The answer to your question is both yes and no – (sorry to sound like a politician) – The answer to your question really depends on a few things...
Your Goals For Growth & Market Share
If you are a one or two truck operation you certainly could sustain enough business based soley on word of mouth. So if you are happy with the status-quo than going to your current clients to ask them for referrals or waiting for them will be fine. However, if you want to dominate the local market with 20 to 50 trucks then aggressive marketing to inform your community about solutions you offer and also to stand out with bold promises are needed as well. It depends on whether you as an owner are more of a plumber who happens to run a business or more of a business entreprenuer that does plumbing. Both have value to a certain segment of clients in your area.
Do You Want More Service Or Remodel Work?
Also if you did more remodeling work instead of service work your jobs would be bigger and last longer so you could fill an entire week with one call instead of needing 2-4 calls per day (10-16 calls per week) like a pure service company would need. If your business is more of a remodeling based plumbing enterprise, word of mouth works great. If you need to fill a schedule with lots of call each week then get on the crack of pay per click etc. because you need calls to create revenue and keep your best employees working or you will lose them due to inactivity.
Because of this phenomena, this is what causes the divide in philosophy between remodel plumbers who shake their heads, waggle their finger and scream “ripoff” at pure service plumbers. Simply put, a pure service only plumber (that doesn’t take on remodel work) has higher costs and higher prices because the cost to get a lead in service and to SUSTAIN 3 calls per plumber per day is tremendously high due to the added marketing expense.
That is why remodel plumbers can charge so little ($120-$160 an hr) and still make a profit because they have sold an entire 40 hour week of hours to have their plumbers do the work and the efficiency is very good. Probably 80% of the hours that are worked are billed hours.
Whereas service plumbers have to drive to 2-3 calls per day, sell 2-3 new clients per day to sustain a 40 hour week. Service plumbers have to keep themselves employed while remodel businesses have one main sales point person with a bunch of worker plumbers. That is why they have to charge over $300 per hour for it to make any sense because service is very inefficient and that cost gets passed to clients. With service plumber it is pretty standard to see around 50% of hours worked that are actually billed to clients due to driving, talk time, paperwork etc. – Meanwhile you still have to pay a full scale licensed plumber for the unproductive time.
Amount Of Clients Who Need Service
Many times our market changes due to unique circumstances. For instance I had clients in Phoeniz AZ who worked in neighborhoods that went empty due to recent foreclosures (2008-2010) and so they needed to market their services to different clients to at least breakeven. So if you your current clients are moving at a high rate or their are new homeowners moving into new subdivisions in your market, you may want to welcome and inform the potentially new clients moving in that you are the premium plumbing provider for their area. You have to pay for marketing to do this.
EXECUTIVE SUMMARY: So whats the right answer? If you want to run a boutique plumbing business where you deal directly with the owner and you sell almost all of the work and even still do some of the work, that’s great. Congratulations! You can sustain based on word of mouth and referrals. Because of you being the center of your business, you clients will receive great service restricted only by your capacity to help them. Let’s face it, when you decide to hang it up the business will certainly change or maybe even retire/dissolve as well.
AND… If you are in the plumbing business to create a local plumbing empire that seeks to dominate your market by expanding your profit centers with more plumbers and the ability to serve your community with more trucks and capacity that is also great for you as well. Congratulations! You don’t need to scrape your knees in a crawlspace and you also keep the Yellow Page or PPC web guys employed as well! You have also created a legacy business that will out live the owner.
Yep, you got it! In plumbing, even when you think you got it all figured out, there are always challenges just around the corner. How much to spend on marketing is only one of them.