Two things are happening simultaneously in the construction industry:

1) Software adoption slowly but surely continues to become more mainstream, in part due to the pandemic, while

2) new hungry bidders are popping up daily. There are 3,759,710 construction businesses in the US in 2022, up a staggering 3.3% from 2021.

New bidders on the block with the latest and greatest tech helping them to be leaner and meaner (okay, okay, we’ll stop rhyming) empowers them to bid lower, tightening profit margins more than ever for builders. The ultimate effect on the software side: general contractors are desperately looking to maximize the ROI on their technology to account for the loss in net profit per project.

Tech adoption up, profit margins down

For general contractors, spending cuts are easy when the ROI of a piece of tech is difficult to justify. The more novel and niche the software, the less aggregated data there is to help calculate if using the software is more profitable than the old way (you know, Excel, pen and paper, “it’s in my head,” cave drawings).

Ever-tightening profit margins for general contractors are one of the critical reasons why tech adoption has been so slow-going comparative to every other industry—the window to prove a novel software’s ROI gets closed too soon for the sake of tightening one’s budgetary belt.

Predictably, the types of construction technology that tend to beat the rest (ie., the types that become more universally adopted) are the types of technology that have a proven ROI in alternate industries. Thankfully, those thoughtful industries did the grunt work for construction, allotting the necessary leeway to measure said proven-ness. Thanks, other industries!

CRM: the ROI cash cow

CRM, or Customer Relationship Management software, is one such “proven” technology that continues to gain a foothold in the construction industry with the help of ROI data from other industries that speaks for itself.

Salesforce, Microsoft, and Oracle collectively own the lion’s share of the world’s CRM market, a market that was valued at $42 billion in 2019 and is projected to reach $94 billion by 2027. The massive snowball effect here can be attributed, in part, to just how valuable client data continues to reveal itself to be.

Healthily maintaining client relationships is important, sure. But the ability to collect and continually progress from the learnings of client data—to grow ever-smarter and more efficient in the process of growing one’s client base—that is where a CRM proves its ROI many times over.

The snowball effect is even more compounded when smaller contractors—moving quicker than the big dogs when it comes to tech adoption—continue to seize on the competitive advantage they can have when it comes to customer retention and satisfaction aided by a CRM.

Maximizing the ROI of your CRM in construction

ROI, or return on investment, is a vital performance measurement that calculates the net profit (profit minus cost) divided by actual cost. The ROI on CRM grew from $5.60 to $8.71 for every dollar spent from 2011 to 2014 and has only continued to gain value in the last 8 years as companies continue to learn more about their customer base and manage more of them at scale.

When it comes to a cloud-based CRM, the lean UI, straightforward implementation, intuitive learning curve, low degree of needed technical support, and comparatively limited amount of users (compared to other construction software services) means that adoption of a CRM is likely not going to put a huge dent in a GC’s wallet. This is especially true when we take into account the financial upswing directly attributed to optimizing one’s use of a CRM.

Let’s get into those optimization methods, shall we?

Shortening time to implement.

Time is money (this is the first and definitely not the last time we’ll be making this point). When deciding on which CRM to employ as a general contractor, it is of utmost importance to understand the time to implement between all of them. A hidden cost of a software is how long it takes for you and your team to move from “this is a type of software we use to help us with our clients” to “this is how we help our clients.”

Swiftly aggregating and uploading your already-collected client data is one thing. The other is learning and gaining buy-in from your sales team. Your CRM should be easy and intuitive, otherwise you’d be buying software to make your life a bit more cumbersome. And what’s the point in that? ROI-vey!

One must also take into account that team implementation is always regenerating as coworkers come and go. And they’re definitely coming and going, as another effect of the pandemic is the pronounced enthusiasm to job hop with 1 and 4 workers in America planning on switching jobs post-pandemic. Instilling a client management process that can be quickly taught and re-taught is important; your business development department is likely to look very different in 5 years.

Increasing organizational efficiency.

Your sales team’s time costs money (there’s the time = money thing again). Proper utilization of a CRM should result in less meetings because everyone is already on the same page with every client. Speaking of time savings, the more client data collected and the prospective client DNA is honed in on, the faster the sales cycle will be.

A question we always ask is “What’s the first thing you do when you find a new pursuit?” Ask ten GCs and you’ll get ten different answers. There’s no need to start from square one with every new pursuit—have a central location where your data is stored that is accessible to your whole company.

With reliance on a CRM to harvest client data, being able to find client information quicker is a godsend. With increased collaboration, tag-teaming business relationships means less toes being stepped on. A welcomed bonus is that when your bizdev team is spending less time on menial administrative grunt-work, idea generation naturally increases. More business, more growth. A CRM with the ability to integrate workforce management, is another welcomed bonus.

What is finally measured will only be improved.

You’ve likely heard the familiar tenet, “what isn’t measured can’t be improved.” Well, the remix of that is “what is finally measured will only be improved.” Once you start using your CRM to get a baseline for your sales statistics, it’ll shed light on where improvements can be made. That’s the pesky thing about cringeworthy numbers: they rise to the top of priorities to be transformed into something not so cringeworthy.

Through utilizing a CRM, improvements can much more effectively be made to your win rate percentage, lead volume, lead conversion rate, and level of client satisfaction. Think of this as like if you had never gone to the gym before and you resolve to start today—you weigh yourself just prior, and take solace in the fact that it’s all uphill from this moment.

When highly specific data gives you answers to questions like “what’s our win rate of x sort of project?” It means you know where your strengths lie and where you should be focusing your energy on go/no-go decisions when it comes to pulling the trigger on a company’s inherent expertise.

Paying for the volume of features you’ll actually use.

It’s the bells and whistles that cost you a fortune. They’re just so pretty and shiny! When we talk to some of our clients that used a feature-saturated CRM in the past, the general consensus was twofold:

1) The general contractor wasn’t even using 80% or more of the firepower of the CRM, but still paying for it.

2) The GC’s business development/sales workflow became siloed because only one person knew the in’s and out’s of the CRM. It’d be too cumbersome to teach another, defeating the collaborative plus of using a CRM in the first place!

If maximizing ROI on your CRM is important (and it must be if you’re reading this blog), then you should only be paying for features that you’re going to use and your team can use too. Sidestep the upsell.

Increasing forecast accuracy and revenue visibility

For general contractors implementing a CRM with construction cash flow visibility, a bird’s eye view of the future of their business means finding and filling gaps in work. Filling gaps means smart business efficiency and having all hands on deck without anyone sitting around waiting to be put on a job.

Circling back to the earlier point of improving what is finally measured, it’s much easier to plot your company’s success a year to five years to even ten years from now when your true build volume is fed into your CRM. It’s revenue forecasting that separates the horizontal CRM one-size-fits-all solutions from a construction CRM like Buildr.

Conclusion

In the end, an investment in a CRM is an investment in the health of your client relationships. Due to the necessity of repeat business for general contractors, the be-all and end-all of success rests on the strength of builder-client relationships.

What separates the best GCs from the rest won’t be which one uses a CRM and which one doesn’t—they all will be using one within the next couple years. The separation will be be which GCs best understand how to maximize the return on investment of their CRM.