When I first started as an electrical contractor in Atlanta in 1990, I thought my financial success would come from larger commercial jobs rather than residential customers. However, after a number of years with profit margins of only 1% to 2% — and general contractors who were still asking me to come in with a lower price — I finally realized there must be a better way. So I started looking at other industries like plumbing and HVAC. I saw there were a number of companies doing residential service work in those trades that had built strong reputations, grown strong brands, and become very well known. But no such company stood out in the electrical industry. This made me think — maybe I could fill that niche.
Marketing residential electrical service
I truly believe a key component to success in the electrical service sector is marketing.
First, you must understand it’s more expensive than you expect and that consistency in advertising is the key to growth. It’s important to remember that this is a long-term investment. I’ve come to realize whatever marketing piece (TV, radio, or magazines) you lean on, you need to give it a minimum of six month’s exposure to see any real results. Six months should be your absolute minimum commitment.
Most contractors stop advertising and marketing too early because of the cost, and they don’t have the fortitude to stick with it. If they don’t see a response immediately after three to four months, they end their advertising program. Now into the sixth year of my second electrical service company, I have learned to always commit to at least one full year on each new marketing program I bring out. Each new component takes at least that much time to take hold and establish your brand.
Consider this: The average homeowner has an HVAC tech in their home every year, a plumber every three years, and an electrician every seven years. One of the biggest challenges for the electrical industry is to build your brand with a customer base that might only need you once every seven years.
I believe one of the biggest reasons for my success is that I think long-term. When I put a new advertising piece out, I have to recognize it may not start to generate substantial calls until it is out there eight to 10 months — sometimes even a full year. That’s hard to stomach — when you’re looking at that bill every month and not seeing much of a return.
Another key to success is being willing to spend the necessary dollars needed to grow. Most electricians don’t charge enough to cover marketing expenses or other necessary operating expenses. In my opinion, your annual marketing budget should be based on the following:
• If you just want to maintain your existing service business, you need to spend approximately 7% to 8% of sales.
• If you want to grow your business, you need to spend approximately 12%.
• If you are looking for aggressive growth, you need to spend about 15% or more of your annual sales.
The question I always hear next is, “Where do I spend the money first?”
The Yellow Pages
When looking for service providers, we all know customers are turning from traditional phone book searches to online answers. In some markets, however, you still have to advertise in the phone book to succeed — especially in markets with older retirees like Sarasota, Fla. When I started here in 2007, I immediately took the lead position in the phone books. I looked at my competition, what ad they had, and what ad I needed to create to take over that lead position.
I do believe you have to be the first or second ad in the Yellow Pages to even become worthwhile. Based on market tests I have conducted since opening in Sarasota, I have been able to literally test the success of the first three ads in the book. I now know if I only have a limited amount to spend, it would be best to put it all on one major ad than several small ads in three different books. I still consider the Yellow Pages an essential part of my company’s marketing mix. Some contractors don’t agree with this line of thought, but I am confident I wouldn’t be where I am today without the Yellow Pages to get me started. However, that is changing quickly with online resources. That’s where web analytics come into play.
Online is essential
The Internet is constantly growing and a critical part of our business. Google owns the pay-per-click (PPC) world. I hire a company that takes care of all my PPC needs because I don’t have the knowledge or patience to manage it. I suggest you find someone who has experience in your industry with PPC to manage it for you. Your time and efforts are better spent elsewhere. Today, I can get a phone call from PPC for about $26 to $29 per call. Recently, my monthly average cost per call was a little more than $19 a month. I feel that’s a very inexpensive cost to get a new customer.
Other advertising platforms
After Yellow Page and online advertising, there are also coupon magazines and direct mail programs. Although these can be slow to catch on, after time, I have found they give us a little lift in calls each month. The next step in advertising is radio or TV. There is always the discussion, which one is the best?
I would lean toward TV because you have the visual and audio aspect to get your point across. Your decision on which one to use in your market will usually come down to cost. Some markets are cheaper for TV; some are less expensive for radio. The most important thing is to be consistent. Pick one and stick with it. Take the high-frequency approach; pick a portion of the day and own that time slot. Anyone listening or watching TV at that part of the day thinks, “This must be a great company, I hear/see them every day.” You want to get the highest frequency for the money you have to spend. I have found morning news is traditionally the cheapest, and it works. A lot of people are up getting the kids to school and getting ready for work so you can reach your target customers.
The challenge with TV or radio is that it’s next to impossible to track actual results to measure your success. For me, I use these mediums primarily for branding. I am not trying to drive business today. I am building the brand for tomorrow. Some advertising people say if you are consistent enough, you don’t even need to put your phone number in the ad. People will know you so well, they will seek your number out.
The exciting thing about electrical service is that there aren’t that many companies doing it. So, if you harness the power of marketing properly, you can still own your market and be the most well-known electrician in your area. Start today, learn from someone who knows the business, and be consistent in marketing your company to the masses. It’s a great business!
Kennedy started Mister Sparky in 1996 in Atlanta. That location is now one of the largest and most successful residential electrical service companies in the Direct Energy Services portfolio, based on sales volume. Kennedy currently owns and operates the Mister Sparky franchise serving the greater Sarasota, Fla., area. He can be reached at [email protected].
