By Cory Smith
In the sometimes dirty digital age, it’s becoming harder for renovators and home builders to keep their reputations clean. Social media and blogs, in particular offer forums for angry consumers, much of it behind a firewall of anonymity.
Its effects have been widespread throughout the industry, especially in marketing, which has tried to constantly adapt to changing technology over the past 20 years.
“Today, with the internet and social media, it’s a lot more important to make sure every customer is handled with proper nurturing, because it takes a long time to build a good reputation and not a long time to destroy it. Everything is accelerated,” Carick Home Improvements owner Joel Scopeletti says.
Scopeletti was part of a group of industry leaders discussing marketing strategies at the OHBA’s Builder & Renovator Forum in Niagara Falls in late February.
The Toronto-based general contractor has learned first-hand the internet’s ability to make his job more difficult. It’s something he never had to worry about in 1991 when taking over the family business with his brother. “You need to know what people are saying about you,” Scopeletti says. “The most important thing is to respond. Tell your side of the story. If you rebut the complaint, people will respect it. But if you let it go untouched, they think you’re hiding something.”
For many in the industry, the best defence is a good offence. That means getting ahead of negative publicity, whether it’s in the media, online or word of mouth.
It’s what Jon Packer’s media and public relations firm, Idea Workshop, did in 2008 when citizens of Oakville were upset that a series of luxury townhomes was slated to be built on vacant heritage land. Instead of getting into a heated public battle—one the builder, developer and anyone else involved in the project likely would have lost—they hosted a roundtable discussion with local media. It was a transparent way to humanize the project. And it worked.
“The idea was to get in front of ideas certain people would have,” Packer says. “We got the community onside and everything went well. But it wouldn’t have happened if the community wasn’t onside.”
Conversely, sometimes focusing on negative publicity results in missing the compliments. “One of the mistakes builders and renovators make is they don’t do enough with the positive reviews they do get,” Packer notes, citing newspaper clippings and Twitter retweets as two examples of third-party endorsements. “These are great marketing tools that cost nothing and should be utilized.”
Scopeletti knows that good reviews lead to more business, having witnessed clients hiring his company based on what they heard or read. And he knows that consumers looking to hire a company are going to do their due diligence before they invite strangers into their homes.
“Society is overwhelmed and overhyped with information, and they don’t (invite contractors to their homes) without burying themselves in information,” Scopeletti says.
As part of their marketing plan, Kawartha Lakes Construction uses Guild Quality, a third-party survey company, to solicit reviews and gain feedback. “Bad reviews hurt builders and renovators equally, but good reviews can always be used to bolster better business,” Kawartha Lakes owner Scott Wootton says. “But you have to proactively use the reviews in your marketing.”
While monitoring the message can be difficult, there are many parts of the job builders and renovators can control, one of the most important being managing expectations. “This is where a good written scope of work and contract can really help, and we often add lines to clarify issues that cause a problem on a job (such as items being late or out of stock),” Wootton says. “It’s usually a lack of setting clear expectations that get people in trouble, so adding clarifying wordage around an agreement is always helpful to both parties and protects the bottom line at the same time. The more clearly things are initially explained, the happier and more predictable the experience is for all.”
In the battle for a consumer’s business, however, session moderator and Energy Matters president Gail Lawlor warned businesses against trying to be the cheapest option. The key is to under-promise and over-deliver.
“It’s important to note that we’re not competing on price,” Lawlor says, adding that builders and renovators need to educate the customer about the quality of workmanship they will receive. “There are lots of people out there with a pickup truck, ladder and measuring tape. There are so many customers who experience (unhappy) surprises and say afterward, ‘If I’d only known this or that—or that for another $100, I could have gotten these windows instead of those windows.’
“Remember that your job is to solve someone’s problem,” Lawlor explains.
Word of mouth
Before you can market your reputation to potential clients, however, you have to develop one. “Consumers want to know that the renovator has the credibility to do what they say they will do and make sure it’s quality work,” says Packer.
Ensuring that the process will be as seamless as possible begins and ends with communication. Whereas builders have the worksite to themselves, renovators have to share their space with sometimes-wary homeowners who, despite being warned, may not be prepared for the challenges of living within a worksite.
Explaining what is to come, even if it’s a one-sided conversation, is paramount. “The expectations of people today in the microwave society we live in are very difficult,” Scopeletti says. “There are so many intangibles involved in a renovation. It’s going to be a stressful experience no matter how smoothly it goes. People don’t appreciate what goes on behind the scenes.”
And those renovators are already being judged before the first nail is hammered. “There’s this perception from the beginning that things could go wrong,” Packer observes. “If the slightest (unexpected) thing happens—and all of us in the industry know things go wrong—our job is to make them right. That’s the nature of how projects go. It’s quite easy for a homeowner to visit the project halfway through and see something they don’t like, and then they’re talking about it on Facebook. Then it’s, ‘See, I told you—you can’t trust these guys!’ For builders, it’s ‘Let’s wait until the project is finished.’ I think there’s a more balanced assessment.”
Whether you’re a builder or renovator, “the lifeline of any business is repeat business and referrals,” says Scopeletti. “I think smart marketers invest in an existing client base and invest in relationships.”
Packer believes some builders and renovators struggle to identify their client base.
“They all know they need to do some marketing, but they’re not quite sure what the right things are to focus on,” he says. “We have to help them understand where priorities should be.”
Builders and renovators should tailor their marketing strategies to the size of their population base, Packer says. “For example, the good part with a small town is that your reputation can grow quicker by getting your name out. The downside is if you have a problem, it spreads quickly as well. In a big city, you have a ton of competition and you have to make the case that what you do is better than the next guy, and be very aware of what others are up to and have a well-defined point of difference.”
Wootton, whose business is located in Lakefield, just north of Peterborough, has seen many builders and renovators swallowed up by the small-town syndrome during the last 25 years. “In a small town, you can’t hide when things don’t go right and people talk, so how you handle the hurdles of a project can work for or against you. It’s a major threat to a small-town builder or renovator to develop a bad reputation, and it usually finishes them off pretty quickly. I’ve seen lots come and go.”
Scopeletti says it comes down to treating each client the same. “As much as it’s a global world, it’s also a village,” he says. “I believe any good marketer or advertiser does not try to (appeal to the masses). It’s very hard for a renovator, especially in a big city, because they’re not going to be the Coca Cola. You don’t have the branding to connect everywhere. What’s important is to have a target. You choose that target (by neighbourhood, demographic or social scene) and work that target. In a big city you will waste your time trying to market to everybody.”
Ultimately, while builders and renovators figure out how best to market themselves, it’s important to make sure there is a return on investment. Dollars need to be spent wisely as modern marketing continues to evolve. “You can spend money on marketing, but if you’re not paying attention to whether there’s any return on it, then you might be chasing your tail,” Wootton says. “It’s a hard thing to do, but it’s a necessary thing to do.”
Making sense of taxing issues
Builders and renovators are notoriously meticulous in their attention to detail, but there’s one area that is prone to being overlooked away from the jobsite.
“A lot of times, when it comes to items of finance or tax, it’s portrayed as something that’s technical or complex,” says Enzo Quattrociocchi, a senior manager specializing in real estate tax with Deloitte. “Once somebody starts speaking about it, it’s intimidating, so nobody wants to deal with it. The people who sometimes benefit the most from it—the entrepreneurs—don’t bother with it. But builders should make an attempt to understand it, or at least have people within their company who perhaps are accountants or have financial backgrounds take the time to bring in qualified tax planners. It could make all the difference in the world.”
Quattrociocchi and Deloitte co-worker Stuart Cottrell tried to break down the finer tax points during one of the OHBA Builder Renovator Forum sessions in February at the Hilton Niagara Falls Hotel and Suites. The duo touched on some audit issues, but primarily focused on opportunities that exist for builders and renovators. “Sound tax planning and taking advantage of tax opportunities are about awareness and understanding that there’s an opportunity,” says Quattrociocchi. “Once you understand that, the implementation is actually fairly simple.”
For example, Quattrociocchi said while many builders are cognizant of soft costs, such as site investigation, tenant inducements and certain administrative expenses, too often they aren’t giving sufficient consideration to potential expense write-offs to make their businesses more profitable. “The tendency when you’re developing a building is oftentimes to simply put the development-related costs into capitalized building costs, which do not provide the benefit of a tax deduction in the current year,” Quattrociocchi notes. “When you add them up, spend the time and do a detailed analysis of all the costs when you are developing a project, there are actual, obvious tax savings.”
Other costs, such as obtaining permits, legal, consulting and architect fees, may in some cases be deductible in the current year as well, Quattrociocchi adds. “When you get a deduction in the current year, it offsets income. You may be developing one property, but (a builder might think), ‘What’s the big deal if I get a deduction now?’ Well, if that deduction can be applied against income that you’re making on other developments, that’s the easiest thing in the world.”
The biggest challenge Quattrociocchi and Cottrell faced at the session was fitting enough relevant information into one hour. Much of it can be complex, they acknowledged, but there are practical, simple ways to save money, and that can be passed down to the consumer. Like a jobsite, it comes down to paying attention to detail.
“There’s lots of opportunities (for tax savings),” Cottrell observed. “It’s about fitting the opportunity with the individual.”