The Design Builder's Blog

Three Ways To Handle “Your Price Is Much Higher Than The Other Guy”

Any contractor who has worn the salesperson hat has experienced the “Your price is much higher than the other Guy” objection.    Some contractors freeze up when they hear this, perhaps falsely assuming all prospects are only seeking the lowest price.   On the other hand there are contractors who look at objections as opportunities.  These contractors, rather than see the objection as ending the sales call, see it as an opening to take advantage of.   A no may mean no, but an objection means “I am still thinking about it and haven’t made a decision yet”.

Next time a prospect tells you your price is higher than someone else’s try these tactics to keep the conversation moving and see if your prospect could justify paying more.  Notice I said “tactics”, not responses.  If you memorize the responses you may miss out on understanding why the tactics work.   The response is not a tactic, just a way to accomplish the tactic.   Make sure your responses sound like they are coming from you and fit the context of the conversation you are having with your prospects.  

Tactics contractors can use to address the higher price question

Tactic #1- Find out if you are you being compared to a business the prospect would never hire?

Many home owners collect bids from contractors even though having met with them they would never hire them.  Then they still use that contractor’s bid as a point of reference.  This is like comparing the cost of a Ford to a Dodge pickup truck even though you would never buy a Ford.  To find out if your prospect is making a false comparison try asking something like: “Is there a reason you haven’t already hired that other guy?”  Depending on their response you might want to move to tactic #2 below

Tactic #2- Find out if they are still looking for something they haven’t yet found

For many home owners choosing the right contractor to work with is just as important as the quality of the workmanship.   Consumers who have already done remodeling and had a bad experience with a contractor are great candidates for this tactic.  The purpose of the tactic is to get them talking about what happened last time, how it affected them, and how they will feel if the same thing happens again.   With this prospect first ask something like: “Is there a reason you aren’t working with the contractor who did your…?”  If this reveals you are on the right track says something like “Why haven’t you already hired one of the other contractors you have met with so far.”   Then, depending on their answer and the context, consider saying something like: “Were you hoping I could do something different than the other guys?”  Now, at least with this prospect, you’re back in sales mode!  Move to tactic #3.

Tactic #3- Help them discover that getting something different comes with a different price.

No one wants to pay more than they have to for anything.  Take gas for example.  It’s a commodity; you can get the same thing all over the place so why pay more for it if you don’t have to?  If you have been successful with tactic #2 above, to get tactic #3 started ask something like: “But you probably couldn’t justify paying more to avoid those disappointments, right?” 

If they say no, or they say yes, ask them the same thing: “What do you think we should do at this point?”  By asking this question you will either give them opportunity to pay more and close the sale, or you give them the opportunity to say it isn’t going to work so you don’t have to be the one to say it.   Using this tactic can help you avoid the risk of being accused of not wanting to work for them.

Think about this next time you are worried about your price and your prospect’s reaction. 

People who buy on price hang around with a lot of other people just like them.  When you get referrals from customers who buy on price it’s likely their referrals will want to buy on price as well.   When you get referrals from people who are willing to pay more to get something different, it’s likely their referrals will pay more to get different as well.  You just have to help them discover the difference they are looking for.  

That’s why you need to learn tactics; not memorize responses!

How and Why Contractors Need To Create Powerful Testimonials

Testimonials can be the most effective marketing tool a remodeler has and they are free!  They provide credible confirmation of your marketing message because they come from people who have actually experienced working with your company.   Fortunately, with some planning and the use of simple strategies, powerful testimonials can also be very easy to get. 

Selling and working on fun projects makes sense.  But working for the wrong clients can kill the fun in a project for its entire duration.   In this article I want to share how you can get and use testimonials as a powerful and effective way of demonstrating your company’s differences so you can attract both the right clients as well as the right projects for your business.

Think about what you are or should be selling

In his book “Selling the Invisible” Harry Beckwith talks about outside perception and inside reality. 

• The outside perception is what prospects come to think about your business by what they observe, much like looking at a picture. 
• The inside reality is what they come to know about you and your company by actually experiencing working with you and your team. 

I can personally share with you that understanding this difference and putting it to work within our marketing strategy caused a significant improvement in lead quality and lead quantity at my remodeling company.   By sharing testimonials that revealed how we did business we attracted customers who wanted us for our way of doing business, not just for the quality of our work.

A picture may be worth a thousand words but a well written testimonial can paint a specific picture that has the value of gold.

Four important considerations for creating powerful testimonials

1. I found that the best testimonials are short and concise, getting right to a main point.  Most importantly, they include the true emotions experienced by the customer as they worked with you and your team, and or as a result of how your company’s processes helped them achieve their true remodeling goals.
2. They are told like stories and include concrete examples from the customer’s experience that back up the main point and make the testimonial memorable.
3. I found that it is best to get testimonials in writing from customers sooner than later, while the thoughts are fresh in their minds and they are enthusiastic about what they are sharing with you. 
4. Always be sure to get written permission to use their testimonials.  If possible, get permission to use their name or initials with the testimonial, as well as the town they live in.   Including the source makes the message all that more credible.

 

Summary

In a lot of ways testimonials are like referrals.  If contractors wait for them to happen they will get some referrals and some business.  On the other hand, if contractors are proactive in causing them to happen and are strategic about causing the inside reality they include, contractors can get great customers and a lot more business.

In a future article I’ll share some examples and some specific strategies you can use to cause and secure powerful testimonials.

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Guest Blogger: Beth N. Davis is the owner and operator of BD Contractor Services where she and her team create and implement dynamic marketing plans and trainings for home improvement professionals nationwide. Visit www.bdcontractorservices.com or connect with her on Facebook.

Creating A Referral System At Your Remodeling or Construction Business

Referrals have long been the lifeblood of the remodeling industry.  To ensure a steady stream of referral business, you need a system. Follow the steps below and you will be on your way to creating a simple and manageable referral system.

Lay Your Foundation

Before you begin to build your referral system, you must first take stock of the relationships and connections that you can leverage for success. Take some time to list all of your current and past clients, individuals with whom you have a personal relationship (friends, family, etc.) and those with whom you have business relationships. Be thorough.  The quality of this list will affect the overall quality of your referral system. 

You will likely want to access information about these individuals in the future so be sure to create a database in a format that you will use whether that be a Rolodex or an app on your smart phone. I have used an Excel spreadsheet for this task for over a decade and update it weekly. From this list, go ahead and delete the names of those you would not choose to work with. Identify 2-3 characteristics of the remaining individuals that highlight their importance or relevance.

Take Action

Making the ask, that all important action item that takes you from plan to procedure, can be the most difficult part of a referral system for many people. This is when you begin contacting your network and directly asking for referrals. There are many ways that you can accomplish this, but, for the sake of consistency, I recommend that you rank all of your prospects and contact 5-10 per day with a personalized version of a templated message. Whoever handles your administrative functions will be able to assist you with this. 

If you want to contact all of your prospects at once, I recommend doing a physical mailing and being sure to personalize the letters. For best results, make sure that you cover three specific things in your letter: Where the person knows you from, what specific traits about them make you think of an ideal client and what type of clients you want to connect with.

Asking for referrals is like planting seeds. You may not see immediate results, but people will start to think of you as they move through the world and the results will begin to show over time. This method is meant for steady and dependable referral income.

Exceed Expectations

It isn’t enough to secure a referral and sign a contract. Once you have sealed the deal, you need to deliver. You and your staff should always shoot to meet client expectations but it is even more important when that client is a referral.

Remember that it is not only your reputation, but the reputation of the person who referred the client to you that is weighed here. There is no faster way to lose credibility with a client than to provide poor service for someone they have referred to you.

Don’t Forget to Measure

Find out where (and who) your new customers are coming from. Ask for feedback on service and quality and make sure that you integrate the feedback into your business practices if they prove to be relevant. Committing to constant improvement shows your current and past clients that you care.

Follow Up

Always thank people for their referrals. Part of your referral system should include following up with individuals who have given you referrals in the past.  Gifts and points are nice, but the real reward for these customers is your heartfelt appreciation and the ability to connect someone they care about with quality service. 

Everyone in the remodeling industry wants to work with dynamic clients who pay on time while creating beautiful projects in the process. Doing this without spending a fortune on advertising will be a reality when you look around you and leverage your relationships for maximum results.

Finding the Perfect Customers For Your Remodeling Business

Most contractors I meet are attracted to the trades and running their own businesses because they love the work.  But, when contractors allow the wrong customers to buy from them those customers can quickly take all the pleasure and reward out of being in business and working with the tools.

At the Remodeling Show last year I asked a group of seminar attendees if they had their choice of customer types who they would prefer to work for.  One contractor said he only wanted to work with “nice people”. 

His answer drew some laughs, but we all agreed it would be nice if all customers were nice.  I also asked him what he meant by nice.  His response included characteristics like pay on time, make and stick to decisions, and being kind to him and his employees; treating them with the respect and dignity they deserve.  Wouldn’t that be nice!

There are many characteristics about customers that can be used to differentiate between them.  

Each characteristic can make a difference regarding who they are and what it will be like to work with them.   If you think back on past projects you can probably identify a variety of characteristics that make up the ideal customer type for you and your business.  Who they are as people, and their personality traits, are definitely important.  Also though, just as important as the personality of customers, can be other differentiating characteristics called demographics.  Used in combination with personality traits, demographics can help contractors target market prospects who are also most likely to buy what they are selling. 

Demographics are the quantifiable statistics of a given population of people.  Smart and strategic business owners seeking to work with a specific customer type will combine several demographic variables to define the demographic profile of those customers.  Then, using that profile as a guide, they do marketing in ways and places where their target customers can be found.

Here is a partial list of customer demographics contractors can use to target their ideal customers

• Marital Status
• Gender
• Age Ranges
• Number of People in Household
• Income Information
• Actual Home Market Value (predefined ranges)
• Home Equity Loan and Amount
• Year Home Built
• Owner vs. renter
• Family Composition
• Length of Residence
• Fuel type
• Dwelling Type: Single vs. Multi-Family
• Occupation

So, give me an example of how to use customer demographics:

Here is an example of a fictitious remodeling company’s target customer description using demographics. For this example we will assume the remodeling contractor is looking to offer smaller repair type projects at high margins.

The goal of this marketing campaign is to build a customer list of people who will continually need more work due to the age of the home they live in, and or will refer the company to other people just like them who are willing to pay more to get the comfort and quality offered by a professional and legal business.  We want and will use this customer list so we can market additional services to the same homeowners in the future.

To accomplish this goal the company is looking to work with married couples who either have very young children (no time to do the work themselves) and or empty nesters (been there, done all that, want to keep my free time for outdoor activities).  Combined household income should be at least $150K so we know they can afford the work.  Target home must be built after 1977 so the RRP rule will not apply.  Target customers must either have no mortgage or a home equity loan with at least a $100K available balance so it is likely they have money to do larger projects in the future.   

Oh, and we don’t enjoy working for engineers who want to tell us how to do our jobs so will eliminate them from our mailing lists.

I'll be back at the Remodeling Show again this year. 

If you come to my sessions be sure to say hello!

"Choosing and Targeting The Right Customers and Project Types for Your Business"

"Success Starts With a Business Plan"

Helping Lead Carpenters Become Managers Benefits Them And The Business

As a construction company moves into a true Lead Carpenter system, managers and lead carpenters may become confused and insecure with the idea that the lead carpenter isn’t always “working” or “productive”; at least in the traditional sense.  Knowing in advance that this can actually happen is a great way of avoiding the confusion and insecurities.  A lead carpenter in training might not necessarily like what’s happening, but being forewarned and understanding that this is a typical side effect helps to relieve the stress and speed up the transition.

Motivating them to make the changes

It’s a fact of human nature for any of us; being required to leave our comfort zone for a new way of doing things creates resistance.  You can defuse that resistance by helping your leads discover the new opportunities this change can bring about for them as well as your business.

For them: A chance to create their own destiny:

With the right manager and company, a good lead carpenter has a huge opportunity for personal and professional growth. Proper training as well as the ability to implement what is learned creates many opportunities for a lead carpenter. As we implemented the system at my remodeling company, our leads discovered that this new role generated a variety of benefits for them. For example; our leads discovered that they could delegate to others those activities that they preferred not to do.  At first this included activities like roofing, insulation and siding. Soon they discovered that if they could find a landscape subcontractor to supply laborers to dig footing holes, they no longer had to dig those holes (provided the cost was within the project’s budget, including the lead’s management time).

For the Lead Carpenter it created a way to control what they did and didn’t do on each project. They also recognized that they had more physical energy left on Friday afternoon. This was an immediate benefit to their social and family lives, but was also a long-term benefit in terms of their careers. Mastering a lead carpenter system certainly can prepare that person for future management roles, or simply allow a carpenter’s body to make it until retirement.

Benefits to the business:

As a company, we discovered that these personal benefits for our leads had created other residual beneficial effects we had not originally anticipated. This type of delegation quickly became a way of doing business.  As the company grew, the need for more subcontractors grew as well. Soon our leads were finding, qualifying and developing relationships with new subs.  They were also helping us find good carpenters to hire who also wanted to become lead carpenters.  The benefits to the business were many…  

Some of the benefits my company came to realize included:

1. The ability to grow the business quickly but with control
2. More sub contractors to choose from, particularly when current subs can’t meet the scheduling requirements of a growing company
3. Higher volume of production without increasing the number of production employees
4. Fewer risks of losing and replacing in-house production employees
5. Subs observe your company style and culture, like it, buy into it, and might even consider becoming an employee
6. Provides a great way to discover and observe potential employees
7. Might unleash hidden talents in your current employees
8. Customers will love the efficiency and quality of an organized and talented production team
9. Customer satisfaction is easier to achieve
10. Customers want “their lead carpenter” to return for their next project
11. The business makes more money
12. The owner and management staff can concentrate their efforts on other pressing issues or new business opportunities

 

Sell Naked, Then Put Your Clothes Back On To Get Your Product Samples

I bet the title captured your attention and curiosity.  I’m glad because I think selling naked is an important consideration if remodeling contractors want to (1) differentiate themselves and their businesses from other contractors, (2) be strategic about who they will get referred to in the future and (3) make more money in the process. 

I recently discussed selling naked with a great group of remodelers who were attending an event call a “Remodeler Summit” sponsored by Marvin Windows and Doors and held at their Warroad MN Training Center.  During the two days I spent with these remodelers I shared the theory of selling naked and used what they learned about Marvin products and product options to help them take advantage of the three benefits I listed above.  The discussion went over well so I thought I’d share it here on my blog with you.

First some set up and then we’ll discuss 1, 2 and 3

Don’t take me literally and show at up your next sales call without any clothes on.  When I refer to selling naked I am suggesting that you do not take any product samples in with you when you go to a sales appointment.   Rather, before you bring anything in to show your prospect, spend time to find out what your prospect wants, why they want it and what they need to see to confirm you have what they want.  Then, if you have the right sample or information in your vehicle, go get exactly what you have that you feel will serve your prospects’ purposes and desires for why they are remodeling to begin with and try to close the deal.  If you have to get something other than what you brought with you, don’t try to close the deal yet.  Schedule a return visit to do so as soon as possible.

Marvin Windows Remodeler Summit Attendees, August 2013

This strategy is important because prospects only need one reason to say no.   If for example, they want a high performance window product, but you start out showing them a low end product, (or vice versa) they might just shut down right away.  They might be thinking the window sample you brought in is the only one you sell and as a result they may think you will try to convince them to buy something they don’t want.  That’s a reason to say no!

Differentiate yourself and your business from other contractors

Selling naked will definitely make you stand out!  Doing so forces the salesperson to have a thoughtful and meaningful conversation with the prospect. On the other hand most contractors make the false assumption that their prospects only want to save money.  This may be true, but what if they want the new windows to help them save money after they are installed.  That being the case they may want more expensive windows. For example, baby boomers may want windows that will last them through their retirement years without the need to replace them ever again in their lifetime.  Or maybe they want windows that will help them reduce their energy costs for heating and or cooling when they are on a fixed retirement income.  Also, if they haven’t considered the long term benefits of a better window, selling naked helps keep their attention on the discussion you are having instead of the product sample. 

They may not know it yet but you are doing them a favor by selling naked!

Be strategic about who you will get referred to in the future

By practicing the art of selling naked you will, over time, start to see a change in who buys from you, and even more importantly, who you get referred to by those who buy from you.   People who buy on value rather than price usually hang around with other people just like them.   Use selling naked to help you find prospects and sell to customers who want solutions rather than low price.  Selling naked can help you find people who value a trusted adviser, people who want someone who can help them buy what they really need, not try to convince them of what they need.  If you do get referred be sure to ask the prospect what the referring party said that motivated them to contact you.  That’s probably a great place to start when you show up naked at their home!

Make more money in the process

When I owned my remodeling business it was always my experience as a salesperson that when prospects really understand their options for solving their problems they spend more money than they originally thought they would.   Armed with good information they stay away from the low cost options.  If, as a contractor, you markup up all your labor and materials by the same markup percentage, then material intensive jobs bring in more gross profit than jobs with a low cost for the required materials.  Selling a more expensive window and or adding options to windows that help make them solutions to the prospect’s purpose in replacing their windows means more money on every job, often without needing any more labor to do so.

Is your prospect buying new windows or a better view?