Most contractors are spending 80 percent to 90 percent of their time chasing projects that they have a very low probability of winning. Sometimes the low probability is because the contractor found out about the project too late. In other cases, customers are not responsive to a value-based selection process. The bottom line is that too much activity is misdirected. And the net result is many contractors are spending too much time poorly aimed and generating results that are too low for the effort invested.

Effective contractors apply stringent qualification processes to both customers and opportunities, even though the qualifications may be modified by market conditions. Consequently, these contractors invest more time on the right opportunities and the right customers. They spend time with the customers where the contractor has been able to influence the decision-making process and communicate value.

Knowing Who to Chase
Knowing who to chase is as important as knowing how to chase them. Focusing on the right market segments is the first step. Just because a market is expected to grow does not make it a key segment for every company. If a contractor does not have a unique approach or does not offer something that is different from the competition, the new market will be nothing more than another opportunity to compete to win projects based on the lowest possible price.

The key is focusing on market selection factors that enable successful projects, not simply focusing on the biggest market segment. Focus where there is the chance of winning a project that the contractor can build successfully. Start with the end in mind, and results will soar.

Once a sector is selected, ask what is inside the sector. For example, a contractor determines it is not doing well at winning private work, so it wants to get into the public market. Obviously, chasing this market requires resources and expertise. Too many contractors try to penetrate a market without the requisite experience. If the firm does not have a team with deep experience in a new market, the chance of winning work drops dramatically. Approach the market knowing that the firm will need to bid more work to be able to win a single project until it has built credentials that underscore its ability to bring value to the project beyond low price.

Customers have the choice of working with the biggest and best contractors in their area. Why would they pick a newcomer with little or no direct experience in building the work? The only answer that comes to mind is price. To win work in that scenario, a contractor might find that it is bidding at margins the experienced contractors are not willing to match. Can the company afford to pay these dues?

Finding the Right Customers and Building on Facts
Finding customers is not easy, but it is very doable. Define what criteria makes for the most successful customers. The answer requires a lot of research and an understanding of where the firm has been successful with customers in the past. The contractor will have to do a lot of phone work and database searching to try to find the names of targets by sector.

Once a company is identified, then focus on calling the right people on the inside. Few contractors do an effective job at researching, qualifying and prioritizing customers. If the contractor is diligent at finding the right customers, it will have an advantage over other contractors looking to break into the market.

Building on facts means using some direct, but mostly indirect, methods of research. It means contractors need to establish mechanisms that can track current and future potential work. For example, consider maintenance in the food processing market. The contractor needs to know the engineers that service this sector, the key customers and the competitors. It also needs to know what the players in that sector are thinking, what trends are affecting the market and how customers’ buying practices are changing.

Some information can be gathered by direct mail, email and Internet research. But, at the end of the day, the contractor will need to talk to somebody directly on the phone or face to face to find out the information needed to break into the market and or to get the customer contact information.

Putting the Right Time to the Right Opportunity
All contractors need to have a realistic way to determine how much time and effort it is going to take to win work. A firm needs to know what level of investment it can afford to commit. Think about the gross margin return on efforts. Some contractors do a lot of budgeting for potential customers and do not get any return. At a minimum, generate some additional dialogue that will help in getting the inside track for the next opportunity. If a company is not getting that, it is simply a free budgeting service, and the return on invested time is poor at best.

Quantify the investment that the firm is making. Consider the costs of business development, estimating and senior management time to make better decisions. If costs are quantified, contractors have another opportunity to step back and examine the cost of pursuits, the potential gross margin return and how many people are involved. It is helpful to look at this information as a numerator and denominator. Use the cost to chase at the bottom and gross margin potential at the top. Then think about the time, out-of-pocket costs and soft costs.

Creating structure for a company’s sales process helps streamline the time and effort needed to meet new customers and convert them to raving fans. Systems allow for refinement and honing the approach into a high-impact, effective process that generates better results year over year.

Adding advance planning and deep thought to the sales process will create more opportunities for face time with customers to create unique approaches to win work and increase the likelihood of being selected over other contractors in the race for the project.  


Scott Humrickhouse is a director and shareholder of FMI. For more information, call (919) 785-9287 or email shumrickhouse@fminet.com. This is an excerpt from “Winning Work: Quit Chasing Your Tail and Close More Projects.” To read the full article on creating structure in the sales process, visit fmiquarterly.com.