This is the Pro Perspective from Houzz Pro, where home builders, designers, and industry experts share their views on running a modern firm.

Liza Hausman: What are the secrets to scaling a business? Join us as I explore how to grow your firm with intention with Mark Richardson, renowned business consultant, author, and industry leader.

Hey. Good morning, everybody. I'm Liza Hausman, and welcome. I hope you're all having a lovely day. I'm excited to welcome today, Mark Richardson. Mark has an incredible wealth of experience that we're excited to share today. Mark, you want to just share with folks a little bit about your pretty amazing background?

Mark Richardson: Sure. I think oftentimes when I'm introduced to different audiences, it's more about accolades with being Ernst & Young's Entrepreneur of the Year or my involvement with Harvard. When I look in the mirror, at least I look at more of my deeper roots, and they really come from more of a design background in architecture.

My thesis back in the late 70s in architecture school was design built. Specifically, I was working with my professors on how you can marry design and construction into one umbrella and create a pretty efficient process as well as a great client experience. With that, I was able to, with my partner, Fred Case, we grew a business in design build that was fairly significant.

Then we diversified into handyman services, bath division, kitchen, and then more of a handyman franchise business. When I stepped down, we had grown the business to just shy of about 100 million, and really with a fairly nice footprint. Since then, I've been out working with different organizations, sitting on boards, and trying to help people just to take their business to the next level.

Liza: Fantastic. You and I just got back from IBS, the International Builders Show for 2024. We were speaking, I think we did a session on sales and marketing best practices and some top tips. I know you spoke to a lot of people while you were at IBS, and you've been working with a lot of firms over the past few years. What are you seeing out in the market that folks should be aware of?

Mark: I think the best way I would try to help people to understand what's out there is, at least go back to the beginning of the pandemic. I think that there was a lot of fog, a lot of confusion coming right out of March of 2020.

Then, I think home remodeling clearly very quickly within three to six months became the silver lining or the Cinderella story in terms of the home remodeling or activities that were happening. All of a sudden with homeowners being hunkered down, their home became a top priority and they had a lot more time to focus on it. We experienced, I think, a surge of remodeling activity, both in lead flow as well as easy sales or order taking.

Then we started to see some supply chain challenges, interest rate wiggliness going on out there. It created some headwinds with backlogs of what was going on. That was pushed forward for a period of time by strong sales and certainly good lead flow. Today, I think, the headwinds are gone for the most part. You can get materials in a reasonable amount of fashion and people are back at work.

Also the tailwinds that really propelled things were also gone. I think we have an environment right now that we really need to focus on really, in my opinion, three things. One is we need to get the phone to ring. We need to put a lot of emphasis on marketing. Second is that sales skills need to be really sharp. Then third, operationally, in terms of our technologies and business flow and processes, we need to have our act together.

I think if we can focus on those three things today, 2024, while we may see some uncertainty, especially in the back half of the year, I think it's a good time. To your point, Liza, at IBS, record crowds, record attendance, that's usually a good sign that people are feeling pretty good about things. I think 2024 and beyond, should be fairly strong with the only caveat, the latter part of 24 might be a little bit wonky given some of the outside considerations with the elections and certainly with some of the global issues.

Liza: All great points. Maybe we can dive into these three things one at a time. I need to get to the phone to ring, I know one of the things that we discussed is that your competition is everything. I know I've done a lot of research and we're seeing that the competition isn't the firm next door, it's travel, it's going to concerts. It's all the other things that people want to do now that they're not stuck in their homes. What else are you seeing that folks should be aware of in terms of trying to generate more business?

Mark: I think this notion that we both have liked that or attached ourselves to that adage of your competition is everything, but I think long before the pandemic, my mantra is that your biggest competitor is the homeowner themselves.

I say that because most remodelers have a very, very small percentage of market share. I know we were one of the largest in the country and we had less than 1% of the market share in our region. What that tells you is something else is the competitor. As we drilled much deeper, it's really the client.

When you unpack the client, it's their ignorance about how to go about doing remodeling. It's their fears of making a mistake, or potentially choosing the wrong remodeling. Certainly they're overwhelmed and stressed. When you look at each one of those, ignorance, the fears and the overwhelm, what you have to do today, I think more than ever, is you've got to be a marriage counselor, a therapist.

You've got to be an investment counselor more than just a remodeling expert or peddler. I think if you focus more on those skills and that bedside manner, when it comes to helping and guiding the client through, the likelihood you're going to see more success is going to be much greater.

Liza: I think that's a great point. We're seeing a lot of research, and in our own data that shows that people are thinking about where to make trade-offs and they want an expert to help them think about where to make those trade-offs, but they also want to splurge.

There's a dual opportunity, A, to sharpen your sales skills and be able to have that conversation and understand how to help your client make the right trade-offs, but also be ready to offer them something that will boost your bottom line when they want to splurge, and be able to go into those conversations, not just expecting, oh, they're going to want to trade down, they're going to want to belt tighten, but understand there are places where they're going to want to spend more and places where they're going to want your advice on where to spend less.

Mark: It's interesting that we tend to judge the book by its cover oftentimes. I would at least caution today more than ever, don't do that. Back in 2004/2005, the go-go times where we were experiencing double-digit appreciation, it almost didn't matter what they were investing in their home. That was a time that they were fantasizing and they wanted to keep up with the Joneses and all that.

Today, I think it's a little bit different. I think oftentimes we think the baby boomers have all the money or they're the ones calling us, but they're very proud to conserve. You've got to focus, maybe on helping them save money. Whereas, some of the younger generation who have a much longer runway in terms of their housing spend and all of that, they are, to use your words, Liza, they're excited about splurging.

You've got to really get in the head of your client and not judge them so much just based on what you believe people should be doing, or what traditionally you would think based on home appreciation and other things.

Liza: One of the things I've heard you say, Mark, is that the customers are feral right now. Can you talk a little bit about that and what that means because I think an interesting psychological [crosstalk]

Mark: My friend, Pam Torrey, actually made a comment in a group call that, I think consumers have become feral. This was about a year and a half, two years ago as they were just coming out of COVID. I remember thinking about that specifically. Number one, first thing I did was Google it and said, "What does feral really mean?"

I certainly know what it means, but what is the formal definition? It means escape from captivity. When I looked at that definition, I thought that's exactly what's happened with homeowners. They were hunkered down and they were literally looking at their four walls. All they had to do was either remodel or take care of their family or be on Zoom calls. Then finally we let them out.

When they escaped from captivity, they escaped in such a way that they learned a different environment. Just like with a feral animal, when they want to do things the way they want to do it, not the way you want them to do it, they tend to be a little bit rougher and they occasionally will bite rather than cuddle up to you.

Then when you start to think of the consumer, now it doesn't mean they're better or worse or just different. You need to develop, I think, more techniques to be able to be more effective with them.

Liza: On that note, in terms of developing more techniques, there's certainly some science and research out there that shows that getting back to customers quickly is important. I think probably during the pandemic when there was such a backlog of projects, it was definitely a lot easier to take your time, but we're hearing more and more now that speed to lead and making sure that you respond within five to seven minutes is a pretty critical path. What have you been seeing on those lines?

Mark: That's so, so important. I know it's even frustrating to some because your cup runneth over and you have to do it faster. Greg LeMond, famous professional bicyclist said, "It doesn't get easier, it only gets faster." I think about that a lot when I think about what's happening out there today is oftentimes you're being judged, not just based on your ideas or your craft or your competency, but also based on your speed at which you react.

If you turn the clock back, maybe 20, 30 years ago, getting back to someone in a week was acceptable, and then it was getting back in three days. Now it's getting back to that client, that prospect the same day. If you don't get back to them the same day, to Liza, your point about your competitions, everything, it may not be they've moved on to other remodelers, they moved on to other interests in their lives.

It could be now they're thinking about their Europe travel, not a remodeling project. Why? Because you didn't get back to them quick enough. You've got to respond very quickly. Speed sells. If you can really make that prospect the most important thing and respond to them very quickly, you're going to get one more out of 10 to fall into your camp.

Liza: I think that's a great point about how your competition is everything. As we've discussed before, our industry doesn't necessarily have the best reputation in terms of customer service, even though there's obviously many, many firms out there that are excellent at it. You've got lots of consumers concerned.

I'm thinking about spending a lot of money on this project, I'm worried about it being a good experience. When they don't get a quick response, their first reaction is, that's what it's going to be like this entire project. I'm going to have questions and I'm not going to be able to work with somebody who's responsive to my needs.

Whereas we see that consumers really judge that initial response as how the project's going to run, how responsive are you to their questions and needs? They haven't even met you. They haven't had the first conversation, but they're judging, A, your processes and B, your customer focus based on that initial response.

Mark: Yes. I think there's a lot of interesting little data points. Certainly Liza and your friends at House have all of these things as well. I think a few that come to my mind is that, number one, about a third of the folks that contact you as an inquiry, according to Google or Jane Jelski, she said they're just curious.

How you respond to the just curious today is really, really important. 40% of the folks that are only talking to one contractor, another 20 talking to two. 60% of the folks out there are talking to one or two contractors. Your odds of getting it if you can just do it quickly are going to be much, much greater.

I think oftentimes too, with the price escalation, they may back off initially and say, "That's something I want to tackle myself." Additional data out there, about 32%, 34% of the folks that say they're going to do it themselves ultimately end up bringing in a pro.

Even the folks that you go in as their tour guide, as their sage and advisor, there's at least one out of three chances, even if they say, "That's going to be something I'm going to tackle myself," they end up coming back to you because they realize they don't have the competence and they don't have the time to be able to tackle something. Spending and going deeper with this and looking at the little bit more of the psychology and the data out there is really, really important to be more effective.

Liza: How important is it to develop a relationship with these prospects and customers? Is there value in spending time?

Mark: I think it's more important than ever to-- One of my mantras is you go deeper, not just wider, not just more of them, go deeper with them. What I mean specifically, if a typical in-home appointment that you go out with a prospect takes an hour, figure out a way to let it drift. Let it drift to be an hour and 20 minutes, an hour and 30 minutes.

In that extra time that you have, go a little bit deeper in terms of the relationship with the client. See what that does, is it they're making you and the project more of a priority? More than ever, you have to be more important, the project has to be more important to them. The best way to do that is go a little bit deeper, both in terms of time, but also in terms of relationships so that you can really, really help them in a much more advisory capacity, not a remodeling peddler.

Liza: I love that idea of being an advisor. I was talking to a design build firm in San Diego the other day, and they told me that even when they get a lead that isn't the right fit, maybe the scope isn't the right size, they still invest a decent amount of time to give that person some advice, help them think about the project, because they found that person becomes a salesperson for their firm and has a network of friends and family and ends up saying, "Wow, I had a really great experience with this firm, and suggest that you reach out to them." They find that building a relationship, even when that prospect isn't a fit, has turned out to be a really smart investment.

Mark: Taking what you're saying, Liza, really even a step further, you think about it, 10 folks that are prospects that call you, we have a tendency to want to qualify. We have a tendency to say, "In this 10, here are the four or five really good ones. Here's the ones that we really want to focus on."

What I really encourage is if you think about those 10 in the spirit of creating a relationship, there's probably of those 10, there's going to be probably two, maybe three that will proceed with you just because of the normal course of things. There's probably another two or three that quite frankly, you want to run from, that are going to be sharks, that are going to eat you up if you let them come into your net.

Then in between, there's about another five or maybe even six that while you may not be the right relationship today, you might be in the future. More importantly, if you leave a good impression, they are your best referral clients.

When I went back many years ago and looked at this data within our business, we got more, and I'm going to repeat this twice, we got more referrals from people we never did business with than our past clients. You think about where did that come from? That came from that six or that five in the middle that all we did was get out there and try to help them. We gave them good advice and we left a good impression. In some cases we created a new friend. That's where the referrals can come from, not just from your past clients.

Liza: I think it's more and more important, because those end up being the best referrals. They already have some strong desire to work with you because they've been referred by someone who had a good experience. I think that's fantastic.

Let's shift gears a little bit and talk about the operational side. We're telling folks, "Hey, you've got to sharpen your sales skills. You've got to get back to people faster." How do they do that in a scalable way and in a smart way that's going to work for the team?

Mark: Again, on a very practical basis, the lead comes in, I encourage that you make it a priority. For those that say, "Oh, I'm too busy. I can't make it a priority. I got to call them back in multiple days later." I think you're not looking at it the right way.

The reality is most remodelers might have three to five potential leads a week. Each one of those requires a phone call, phone call from you, the person, the owner. If the average phone call is 20, 30 minutes, you're talking a couple hours a week for those. You need to make that a top priority.

I know you're working hard. You've got a lot of other things, but if all that takes to do that effectively is a couple of hours a week, then just move that up the priority. Think of it like you're an emergency room doctor. When that patient comes in, you're dropping all the mundane things to be able to deal with that patient. Again, a similar subject we talked about before with speed.

I strongly encourage you then to have drips, have connections to keep that flame going, for example. If you can leverage some of your technologies to have the communication drips after you've gotten in touch with them.

Then have a really strong process, have a sales process when you go in the home, that's not just focused on a very customized a loose flow, but a very structured sales process so that you're moving them through a tour, you're taking the time to really present yourself in the presentation, you're discussing in a very consistent way levels of investment.

Then have a closing process that's really easy to help the client be able to proceed with you. You can leverage technologies in this, but also leverage your own systems and processes. Again, that carries all the way on into what happens in design, what happens in the handoff into production, and then the systems and processes all the way through production as well.

Liza: I think there's two sides to that. On the one hand, you've got the good listener relationship building side of this process where you want to make sure you are taking the time to gather all of the inputs from that potential client.

On the other hand, you need to establish yourself as firmly in the driver's seat because what these clients are looking for is that structure, that process, that confidence that's going to make them feel like you really know what you're doing, and there's a structure to this process.

I thought it was interesting when we were talking about this at IBS, we got a question from someone who said, "Hey, how do I get back to somebody quickly without looking like I'm too desperate for the job?" I thought that was a really interesting question because it really is that psychology piece.

You want to get back quickly because that shows that your process is strong, and you have the structure in place. However, what you say in the content of that response, as you said, whether it's drip or autoresponse or whatever you're using to get back to that person as quickly as possible, then you start to ask them questions.

As opposed to moving directly into sales mode, that first step can be, "What are you looking to do? Tell us more about your project." Things that help you screen those prospects and learn about them, but also position you as discerning in terms of who you take on as your clientele, but help you through the process as well. I think there's definitely an interesting balance between those two.

Mark: I think that, where some of this balance is, you can ask your own questions to find that balance, but ask yourself, "Am I being hungry or am I being desperate?" They sound similar in that you're responding quickly, but being hungry is about being able to help that client. Being desperate is something that's not a real appealing image that we have, and I don't think clients.

How you go about, I think, responding, whether, again, it's using technologies or even the language that you use when you're responding. If they know you're responding quickly, not just because you're sitting on your hands and have nothing to do, but you're responding quickly because you want to see if in fact you can help them as quickly as possible, or at least direct them to a solution that might be appropriate for them.

I think the more that you just say to yourself, am I being professional or am I an amateur? Amateurs are oftentimes, they're the ones that are the desperate ones. The pro is the hungry one, and it's usually going to be the one that, again, is going to see better outcomes and results.

Liza: Makes sense. I think on the technology side some of the things that we've seen as best practice is certainly if you're getting leads via email, having an automated response that's immediate, but that feels personal, that, again, starts asking questions and also starts educating that homeowner about your process. Maybe there's links to parts of your website that describe your process.

Again, these are ways to help educate them until you can get back with that phone call. If they do call, again, setting expectations, "Hey, this first phone call is typically 15 minutes," or whatever you have found is efficient as a firm to get through that. Then you say, "We'll set up more time after I email you more information to my questionnaire," et cetera, so that you, can make sure that you're balancing getting back quickly with the fact that you might be doing that phone call from the field if you don't have a huge team to field those calls all day long.

Mark: I know I experienced many years ago when I was ordering, not buying, but ordering my Tesla, they took me through a process that I ended up referring to as more drip selling. They started with just an initial impression and then every day I got something.

The key to me getting something though, it was they were all things that were helping me, not necessarily promoting them. The first thing I got is a little bit of videos on what they were doing in terms of the technology within the car that's very informative. Then it was about how do I get financing and financing approval? It was all done in a very automated fast way.

Then the third drip I got was really focused on, helping me to move on from my existing car. While they didn't take the car, they would help me broker it. Everything they did was all about either educating me or helping me in that process. I think if you can adopt some of those techniques, are your drips just vomiting more about yourself or are they helping the client?

For example, you might have an article about 10 ways to have a great remodeling experience. You might have an introduction, for example, to a financing relationship that might help them pre-qualify or understand a little bit more about levels of investment. You might also give them some information on what different remodeling projects are costing these days compared to other things.

You can figure out what those drips would be. At the end of the day, leverage the technologies, and don't necessarily let them drift off and follow, going back to the competition is everything, be focused on a European trip or new concert tickets rather than the remodeling project.

Liza: Amazing advice. Education, I think is underappreciated and how I think if everyone thinks about their own experiences with products or services and when you feel informed, you feel much more confident, much more empowered and you tend to trust that entity a lot more than when you feel like you're not getting good information. Whether that's before or even during the project. I think we can't emphasize that enough.

Mark: I think one more quick thing, Liza, to add to that opportunity, at least, that you have in communicating with clients is the whole notion of helping them understand on ways that they can save, not spend more. I think what's happened with price escalation is the rubber band is stretched, stretched, stretched and in some cases it's snapped.

Homeowners are saying, "I just can't spend $200,000, $250,000 for this kitchen. It just doesn't make sense to me." Part of what you can start to communicate or really position is start to help them understand ways they can save and not spend more. Don't just accept the fact that it has to go on and on and on.

I think just like with the waiter or server in a restaurant who points out, if you order this entree, it's quite large, it's enough for two people. Or I really like this particular salad that is half the price of this custom thing over here. Try to be that voice, and that advisor to help them save, not just allow the project to grow out of control from a budget point of view.

Liza: I think that comes full circle to what we were talking about earlier with tradeoffs and really understanding and being that expert to say, "If this is your budget, what are the things that are most important to you? I can come to you with ideas for a less expensive flooring alternative or the things that are less important to you so you can get the appliance package you want, or you can get that backsplash that you want," and help them understand that there are some choices that may they may be perfectly happy with that can help them afford the things that they want is they most want to splurge on, 100%.

We've been focused, I think, primarily on sales and marketing here. I know because of what's happening in the market these days, that's mission critical. I know you do a lot of consulting to firms looking to get to the next level and looking to up level their operations. I'm curious to see what in general these days is where owners and firms can get the biggest bang for their buck when they carve out time to focus on getting to the next level.

What are the areas that you see because I'm sure we have a lot of listeners out there who are looking to get to that next level of revenue or project size, et cetera, type of customer. What are the things you're seeing that are the gaps or the biggest opportunities?

Mark: I think the reality is that most smaller businesses, I would say smaller being $1million plus or minus businesses, they're really more little practices than anything. As much as you might think of it as a significant business, it's pretty much dependent on the owner. The owner is usually doing multiple things.

Moving from a million to a million five, oftentimes the owners just happen to do more and more. What that means is you're having less time to really focus on your marketing strategies, on business plans, on growth, on developing people that would allow you to take yourself to the next level.

I guess the thing I encourage most people I work with, and a lot of this is in my time mastery book, is trying to allocate more and more time, so that you can focus on the medium and long-term and not just the short-term. By carving out and making appointments to yourself, to focus on, let me have lunch with that $5 million remodeler and get in their head a little bit. Let me read a little bit more or study a little bit more about business strategies for growth and those things.

Start to invest more in yourself then you can give that back to the business. Also, I heard this from a friend of mine that changed my thinking when we were down, certainly not at that level, but a little bit smaller. I asked him what he was doing. Very successful guy moving on to the next stage in business. I said, "What are you spending your time on?

He said, "I'm looking for people to fire me. "When he said that, I said, "Oh, my God, that's a scary thought." Then immediately later I said, "That's the key to you growing to the next level." What it really forced me to do is turn a lot of my energy and calories into the people that reported to me to make them better so they could push me forward rather than me dragging them forward.

If you can start to develop one or two key members that can start to elevate you, you can take the business further and further to the next level if you have those skills. The last comment I would say is, I love the adage, "None of us are as smart as all of us."

I think joining communities, for example, like your relationship with the House community or relationship with your association, joining some communities so that you can actually learn much more effectively with them will help you to, not step in as many potholes as you grow the business moving forward.

Liza: I think those are great lessons learned, especially love the one about investing and hiring the person that will allow you to fire yourself, really, that you can get a ton of leverage from, because in order to carve out time to start thinking beyond, today, this project this month, you need you need someone who's going to help you with that day-to-day so you can take yourself out of that a little bit [crosstalk] longer term.

Mark: One last thing on that, Liza, too. A lot of people that I interact and work with is, I ask them, "Do you really see yourself as a pro or not?" You think about pro-musicians, you think about pro-athletes or you think about whatever, a pro-tennis player.

If you happen to like tennis, for example, and you watch any of the pro-tournaments, the cameras are always looking into the stands and then you always see, here's a skills coach, here's a strategy coach. Sometimes it's a therapist that is in the stands watching over that pro tennis player. Who are your coaches? Who are your coaches?

Most remodelers, they're out there slugging it on their own and they're not taking the time and energy to get that outside coaching and influence. I just encourage that. Some people are lucky enough to have that as a spouse or a family member. You've got to be proactive and have strong coaches if in fact you want to take the business to the next level.

Liza: I think that's a great point. It can be very lonely as a business owner when you're in charge of everything. Getting both coaches and building communities so that you have that support network, you have a safe place to get feedback, I think is mission critical.

Before we wrap up, any last thoughts, again, from your experience with firms over the last few years, just some common mistakes that builders or remodelers tend to make that maybe folks could be aware of or maybe they'll see in themselves if you share and how to address them?

Mark: I think that what's interesting in many of the groups and people I work with, when they're struggling, it's usually because they say or think it's usually because of the environment. I can't hire people in this environment. You can't hire people because you're not a magnet for talent. It's not the environment. You're in home remodeling. Home remodeling is an industry that homeowners will always need your help. You've just got to be smart about positioning yourself in the right place.

When you're struggling, it's usually someone else's fault. When you're exceeding or succeeding, it's usually because you're so good. I would encourage, try to get out there and not just wonder and look around what's happening. Put your stake in the sand and act on some of these little tips and techniques. I think you can control your own destiny.

I think this is probably one of the coolest industries and vocations that you chose. You're creating not only cool projects, but you're also creating a lot of joy in your clients' lives and your team's life as well. Try to get to that place where you can really see the gift that you've been given here on being in this industry, in this type of business, and really get out and make it happen.

Liza: Great words to leave on, Mark. Thank you so much for your time and for sharing your wisdom with us. I look forward to speaking with you out there soon and hopefully meeting many of the listeners here together. Thanks everybody.

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