Time and again I’ve heard the old refrain: contractors want to expand their customer base but are afraid of taking on middle market projects that could “harm” their premium brand image.
As a custom contractor you take pride in your high-end services. You’ve spent years building your reputation. Projects with higher budgets allow for longer timelines, which in turn allows you to develop a relationship and rapport with your customers. While this brand positioning has benefits, the main drawback is that you’re missing out on a significant percentage of the market.
If you’re a residential contractor specializing in custom remodeling chances are you encounter projects with budgets that fall well below your typical price range. While you want to continue to serve a high-end clientele, you may have reached a point of market saturation. Yet brand erosion is a legitimate concern. By taking on lower-priced projects you could jeopardize your company’s reputation as a premium brand. How can you widen your market without changing the public’s perception of your company?
When Branding Misses the Mark
Simon Sinek in his book Start With Why discusses the concept of brand perception through an automotive industry example: In 2002 Volkswagen unveiled a luxury car. The $70,000 Phaeton had both the features and the price tag of a luxury car, but when it hit the market sales were dismal. Volkswagen, which in German literally means “people’s car,” was created to be accessible to the average consumer. There was a disconnect between the brand image of an “every man’s” car and a luxury vehicle.
In contrast, Toyota launched the Lexus brand in 1989. By 1991 Lexus had outsold both BMW and Mercedes-Benz, making it the best-selling luxury import brand in the United States. The key difference was that Toyota created Lexus as a separate brand. Each brand targeted a different market and there was a clear distinction between the two.
Creating a New Brand
To successfully target two distinct markets the simplest solution is to operate two different brands. The thought of launching a new brand can be daunting as in some ways you’re starting a new company. One option for overcoming this “start-up” hurdle is via a franchise system.
For example, a kitchenCRATE & bathCRATE franchisee gets a complete business operating system when joining the CRATE network. This includes the lead generation, sales, design and construction aspects of the business. A CRATE franchise is like going to the “business model store” and pulling a product off the shelf that can be plugged right into your existing operations. Once a franchisee does this they can target $15,000 – $30,000 kitchen and bath remodels efficiently and without eroding their custom, premium brand. (Not to mention franchisees begin building a business asset with great value upon sale…) Marketing collateral is even customized to their specific territory, such as kitchenCRATE & bath CRATE of Pleasanton.
A CRATE franchise allows you to expand into a completely different target market using the same resources of your existing brand. Don’t give up on serving this middle-market customer out of fear of brand erosion. Sure, you’re brand can’t be “all things to all people,” but your construction company can certainly serve more customers by utilizing the CRATE system.
CRATE Franchise Systems helps existing contractors explore new opportunities and become part of a network of growth-minded individuals. We’d love to talk with you about a CRATE Franchise in your location. Click here to download our complete CRATE Information Guide, or click here to schedule a phone call with me at a time of your choosing.
Scott Monday is Co-founder + CEO of CRATE Franchise Systems, the franchisor of the kitchenCRATE & bathCRATE remodel products. You can follow him on Linked-In or email him at scott[at]cratefranchisesystems[dot]com.