Anytime the economy slows, interior design firm owners—like all entrepreneurs—are faced with difficult decisions, such as cutting staff and eliminating or significantly reducing operating costs. During this recent economic downturn, some firms cut operating costs, froze pay increases and pared down their staff sizes instead of raising prices and markups.
During times like these, when operating costs are compressed, some businesses also choose to reduce spending on marketing. Unfortunately, the result is nearly always a drop in future sales.
Marketing is one of the last investments that should be cut, no matter what’s going on in the wider financial landscape. If you want your firm to break out of the low-value cycle—where you’re serving a client that is not ideal, or at a price that is unsustainable—and increase revenue and profit, here are five strategies to employ:
- Create a new ideal client profile: Document the demographics and psychographics for the type of client you want to work with in the future. Stretch your thinking, and know that in order to serve higher-level clients, you need to improve your marketing and services to attract them—your work has to be appealing to them, and your ability to sell yourself needs to improve. Decide what types of clients and what size projects are right for you, and then create a plan for bringing them into your firm.
- Start looking for your ideal client: It takes focused effort to attract better projects. Waiting for your phone to ring will result in more projects like the ones you currently have. Attracting your new ideal client requires outbound marketing—our rule of thumb is that small firm owners with revenues of less than $1 million should spend at least 10 hours per week building their pipeline. Once you’re generating $2 million or more, you’ll want to outsource your marketing, or hire a marketing coordinator or manager for your firm, so that you’re not doing all of the work yourself.
- Refine your referral strategy: Most firms get the majority of their business from referrals. If you’re one of them, do you have a documented referral strategy that you execute consistently? This is your best source of warm leads—cultivate them by letting your clients know that your business is built on referrals when you initially engage; as the project progresses and they are happy, you can remind them that you would welcome referrals to people in their circle. Build this into your onboarding, and then ask for a referral when you do a big reveal, or even when the client expresses their appreciation.
- Tap into your network: The second-best source of leads is business-to-business referral partners such as architects, builders, general contractors and other service providers that work with affluent clients.
- Reconsider how you budget your time and effort: Social media and advertising are the least productive sources of leads for many firms, and yet this is where many designers spend the majority of their marketing time and money. You do need to keep a presence online, but keep in mind that unless you’re at least a micro-influencer with more than 10,000 followers, your project leads will be minimal.
When money is tight, focus on personal relationship building with the sources who are most likely to refer business to you. That’s how you break out of the low-value cycle.
When business is strong, most firm owners are so busy running their businesses that marketing is the last priority on their daily task list, even though it should actually be their first. (Any time you experience a lull in prospective client calls, there was probably a gap in your marketing efforts months before that result.)
If you want to reduce the roller coaster effect in your business, develop a marketing plan that you or a member of your team execute consistently. Continue to spend on marketing even when money is tight. You can’t afford not to market for future business.
If all of this feels like a sunk cost, take a moment to measure the return on investment of time and money spent on marketing. For example, if you spent money on a party for a recently completed project, how many dollars’ worth of projects did that investment generate? If you spent $5,000 on the event and it helped you land a $50,000 project, your ROI was 10:1. That’s well worth the investment.
If you spend two hours a day on social media and your hourly rate is $200, your investment is $2,000 per week, or $100,000 across 50 weeks. How many dollars in revenue did you generate from that marketing activity? The saying “What gets measured gets improved” is important here. Measure your results and make decisions based on the data. That’s the most consistent way to build your pipeline.
For insights and analysis on how designers across the country run their firms, download the 2023 Interior Design Business Survey report, presented by Pearl Collective, Interior Talent and Business of Home.
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Gail Doby is co-founder of Pearl Collective (formerly Gail Doby Coaching & Consulting), an interior design business consultancy that helps designers, architects and other creatives increase their profitability. Doby ran her own design firm in Denver for nearly 20 years and has a degree in finance and banking. Since 2008, she has been helping designers scale their businesses profitably and reach financial freedom. As a coach, mentor and business transformation specialist, she shares innovative ways to overcome the roadblocks, challenges and detours creative entrepreneurs face. She is also the bestselling author of Business Breakthrough: Your Creative Value Blueprint to Get Paid What You’re Worth. Her goal is to empower design industry clients to differentiate themselves, drive measurable results, achieve business projections, and create personal satisfaction through game-changing strategies and business practices.
