We recently asked 18 custom home builders and remodelers to help settle a debate by answering this question:
If given the choice, which of the following would you prefer for your business?
- To generate as many leads as possible, or
- To generate fewer leads, but better qualified
We expected the responses to be evenly split, but we were surprised to find that not a single person preferred generating as many leads as possible.
This result was unexpected given how common it is for construction companies to spend thousands annually on home service marketplaces like Houzz and HomeAdvisor to generate leads. These marketplaces often commoditize construction work, driving homeowners to evaluate contractors primarily by price.
Clearly, generating numerous leads who are only interested in the lowest bid conflicts with the preference for quality over quantity. If the project and client aren’t a good fit, no budget is large enough to make it worthwhile.
Understanding What Contractors Want
Upon further investigation, we found that contractors prioritize profitable projects that run smoothly, starting with finding the right clients to work with.
“The right client” can vary for each business, but there are common criteria that apply to everyone. The main difference is how much weight each contractor gives to these criteria. Whether you’re building custom homes or remodeling kitchens, the qualifying criteria can be broken down into three main categories:
- Project
- Client
- Budget
Qualifying the Project
The first fundamental question is whether the project itself is right for you. Here are several questions to consider:
- Is the size and scope of the project within your ideal range?
- Consider whether you want to take on a project that is too small or beyond your existing capabilities.
- Will the project be something you’d add to your portfolio?
- Evaluate if the style of the home or remodel aligns with the type of work you want to represent your company.
- Does the project excite or inspire you in any way?
- Passion for a project benefits you, your team, and the client. However, ensure excitement doesn’t cloud your judgment over other criteria.
Qualifying the Client
Even a qualified project can become a nightmare without properly qualifying the client. The client can drag out schedules and financially hold you hostage if they choose, so consider these questions:
- Does the client see this project as a partnership or a business relationship?
- Understand how involved and emotionally invested your client will be in this project and how they view your role.
- What is their biggest motivating factor for choosing you?
- Know why they chose you—whether it was due to your previous work or because you were the cheapest option.
- What’s the personality type of the client?
- Gauge the client’s personality during conversations to determine if they are someone you can work with.
- Will the client be around during the project?
- It’s better to know ahead of time if the client will be frequently on-site to avoid potential issues.
- Does the client have a clear vision of what they want?
- Ensure that their vision aligns with their budget and time expectations, and that you are confident in delivering on it.
Qualifying the Budget
Budget should be the last thing to qualify for an important reason: if the project and client aren’t a good fit, no budget can change that. If the client is great and the project is in your wheelhouse, you might consider working with a smaller budget. However, don’t let a big budget tempt you into overlooking an unqualified project or client. Consider these questions:
- Is the expected cost aligned with the expected result?
- Clients might have different perspectives on what their budget can achieve, so ensure there is alignment.
- Is the client financially sound?
- Verify that the client has the means to pay, whether through a loan in escrow or a funded account, and check for any liens on the property.
- Does the budget account for unexpected costs?
- Ensure there’s a buffer in place to cover any unforeseen expenses without affecting your profit.
- How are payments going to be handled?
- Avoid issues by establishing clear payment terms to prevent delays and financial strain.
- Is this going to be profitable?
- Ensure that every project contributes to your bottom line and is worth your time.
