I always find it amusing when someone calls our office and asks, “do you guys do free bids?” Are there actually any contractors that charge to perform bids?
The whole “free bid” thing is a curse on our industry that will probably never go away. Nevertheless, although this is what consumers expect and demand, we should always be analyzing who we are donating our time to. Because, while bids are free for them, they’re not free for us.
In a separate post, I wrote about our decision at our contracting company to get out of the residential homeowner market completely. But the process must extend beyond just big market segments such as commercial, residential, industrial, government, etc.
We recently built reports into our Job Management System (JMS) software that allows us to see sales metrics related to specific customers or accounts. The impetus for building this functionality was that it seemed certain customers were using us as a bidding service, but had no real intention to hire us.
One customer in particular was once one of our largest. But over time, it seemed like we were performing fewer and fewer projects for them, even though they kept calling for bids. While we were building the report, we sent one of our estimators on a reconnaissance mission.
What he found was that this company had had a change in corporate policy which now required every potential project to have three bids. By itself, this isn’t earth-shattering. Many companies have similar policies. But he also learned that they had gotten close to one particular contractor and were using the other two bidders to establish the lowest price, then giving all the work to him.
Once our report was all set up, the picture came into clear focus. Over the prior 18 months, we had bid 37 projects for that customer, and performed only one. Now when this customer calls, we politely tell them that we’re not interested in bidding their projects.
Sometimes when the phone is ringing off the hook and everything seems incessantly busy, it’s hard to notice these trends that are happening within the company. But with the right reporting tools within our software, we can see which accounts are trending up or trending down.
Because a particular account is trending down doesn’t necessarily mean that we should “fire that customer.” Perhaps they just need more attention, or maybe we haven’t been meeting their needs. But with the right data in hand, we can make forward-looking decisions about how to address these sorts of problems. Because preparing bids for customers who aren’t going to hire us is very costly indeed.
