Three Ways To Get Fewer Leads But Close More Remodeling Sales

If you have been getting business by providing free estimates for everyone who calls your business you are most likely wasting a lot of money making time. Are you really an expert in your industry if you have been letting those who buy from you tell you how to run your business?  If these things have been happening to you it’s time to recognize the value of your time and expertise.  It’s also time to limit offering them to only those who find value in what you offer, how you do so, and are willing to pay you well for your expertise. Here are three ways successful contractors reduce their lead flow, improve the quality of the leads they get, and sell more jobs at higher prices. Yes, it is true, read on!

#1: Describe your process on your web site and find ways to entice visitors to check it out.

Do you have a define process for how you do business?  If not, create it. If you do have a define process document it with words and pictures and put it on your web site.   By explaining how you do business on your web site you can save a lot of time and make more money because:

You won't have to explain it to everyone you meet, over and over again. If they have not yet checked out how you do business when they call your office send them a link to the "How we do business" page at your web site. Additionally mutually agree to when you will then call them back to see if they still want to meet with you.

Because the information is presented in writing at your web site prospects won't be able to interrupt you as the typically do when you try to explain your process to them at live sales calls. If written well they will either recognize that your process works as a solution for them, or they will know why it’s not right for them. This can help you eliminate defending your process as you try to explain it to them live and in person.  If they don't like your process after checking out your web site they won't waste your time.

#2: Charge for creating specifications and a fixed price proposal

Another thing to explain at your web site is why estimates are free but a fixed cost proposal from you requires paying a fee.  Think about it.  An estimate is just a guess. Any experienced contractor should be able to provide a best guess estimated cost range for project types he or she has past experiences with.  In a logical way explain why you charge to go past a free estimate.  If they still call you selling your services to create the proposal will be much faster and easier.  If you want some guidance on what to write read on below. If you don't have a web site read on anyway to find out how you can still do this live and in person.

If they want a fixed price why not help them recognize what it will take to get to a fixed price. Help them discover, say and agree that plans and or specification will be needed before you or any other contractor can determine a fixed price for them. Help them identify whether they will need plans to visualize the project before being able to confidently commit.  Help them decide if they need help finding and differentiate between product options and their price points. Help them recognize the effort and hours you and your trade partners will need to dedicate to preparing a proposal for them.  If they recognize the need for these things you can then ask them if they would like to discuss your design and specification process; as well as how you charge for it.

#3: Require a return visit to present your proposal and get their decision

Even if you are not ready to charge for them, before committing to preparing plans, specs and a proposal make an agreement with your prospect. Let them know that to prepare a proposal for them you require coming back to sit down with both of them to review, discuss and get a yes or no decision on your proposal and about working with your company.   Remember, you will have more time to do this because by being more selective you will be creating fewer estimates and proposals. Those who won't meet with you probably aren't interested enough in working with you anyway.  Perhaps they were just hoping for more free ideas from you before hiring the cheapest contractor or performing the work themselves. If they won't commit to meeting with you to review your proposal that's one less you have to do; freeing you up to concentrate on those prospects who respect you as a professional and value your process.

Related article: Is A Contractor Really A Salesperson If He Or She Hits Send?

I know there will still be lots of non-believers after reading this article.

By committing to fewer estimates and proposals you will gain the time you need to put together and present proposals that differentiate your business from other contractors. By being different you will attract clients who want different.  Consumers who want different know they have to pay more to get it. Those who don't want different buy from the commodity contractors who sell on price

It was definitely my experience as a contractor that the three pre-qualification tactics I suggest here help reduce leads, increase lead quality, and at the same time increase sales.  Please help me out. If you have had success using similar strategies please share your successes here. I am hoping that third party endorsements from those of you who have experienced similar success will help me win over a few more believers!

Protect Your Business and Your Prospects By Not Leaving Your Plans and Proposals Behind

The information you include in your proposal comes from your many years of experience and education. For this you deserve to be compensated. I would also suggest your proposal probably only contains a level of detail adequate for you and your team to build from. In reality your proposal may not have adequate detail for others to build from. This may be the best reason to explain to your prospect why you won’t leave it with them unless they buy from you.

If you leave your proposal and specifications behind and the home owner in turn uses them to engage with another business bad things may happen. Although you may not be doing it on purpose or for any devious reasons, by allowing the possibility that other contractors will work from your proposal, inexperienced contractors and homeowners may be making incorrect and costly assumptions. I am referring to assumptions about what is or should be included to do the job correctly, and to comply with building codes as well as safety requirements. By allowing such things to happen you may be putting other contractors, the home owners and or the success of the project at risk.

I also suggest you consider the possible liability you take on by creating specifications, in particular project plans, and leaving them with a prospect that does not do business with you. By doing so you may have put yourself into a position where the prospect or another contractor actually works from them. If they have challenges when building the project and decide those challenges were caused by your plans and or specs, they may have legal rights to sue you. Even if they technically don’t have legal grounds, what if they do sue you? Regardless of whether you feel you are innocent or guilty, you will need to cover your own legal expenses if you end up in court. Most likely you will not be able to re-coup your legal costs even if you are found innocent. If you are found guilty you may actually be required to pay the legal expenses incurred by the person suing you.

If you decide to take this risk, I highly recommend you obtain Errors and Omissions insurance coverage or Professional Design Liability coverage. Discuss these insurance policies and how they work with your insurance provider.  

Some big picture thoughts for remodelers to chew on before deciding to leave their work behind:

• I suggest you are in the business of selling remodeling, not giving away free designs.
• Some consumers will contact you just to steal your knowledge. Avoid being used as an unpaid consultant.      
• Don’t let your proposals, specifications and plans facilitate the ability for “Bubba” to get the job rather than you.
• Not every lead you get should or will be YOUR customer.
• If you think you have to leave your work behind because every other contractor does, you are wrong.
• If you have not had professional sales training you may be leaving your plans and a lot of money on your prospect’s table!

Other related articles:

All Plans and Specifications Will Be For The Exclusive Use Of …

Managing Risks With The Right Design/Build Insurance Options

Design and Spec Considerations for Remodelers Looking to Break $1Million

Four Considerations for Contractors Offering Design - #4 is Most Important!

Is A Contractor Really A Salesperson If He Or She Hits Send?

How to Keep Bubba From Bidding On Your Plans and Specification

Don’t you just hate it when a prospect you expected to do business with gives your detailed plans and or specifications to another contractor?   That’s bad enough, but isn’t even worse when they give the job to the other contractor and that guy would never have been able to offer the work or price the job without your specs?

Here’s a quick look at the simple process I share with my coaching clients to help them remove themselves from that frustrating way of selling.

Consideration #1: Do they already have them or do they need them?

If you have a good sales process and approach you can find out if your prospect has or even needs plans and or specifications. Simple projects may not require elaborate specifications to price them.   If your prospect’s project needs specifications to properly price it, and or if your prospect needs specs in order to make a buying decision, you will have to decide whether you will leave the specs if they do not buy from you or you will take them with you when you leave.

Consideration #2: Do they see a value in your expertise?

The next time your prospect needs plans and or specs to make a decisions try asking them something like this:

“Will you need help discussing and specifying the details and products to be used in your project in order to make good decisions about your project and how much money to invest in it?”

Assuming they say yes, you could respond with something like:

“That makes sense. If I were to help you do that could we set up a time for me to come back and review what I put together for you and get a decision from you about working with my company or not?”

Again, assuming they say yes, you can now let them know the information will remain your company’s property if they choose not to work with your company.

If you choose to not leave your proposal with prospects unless they commit to your company, it is imperative this policy be discussed with your prospects during the initial sales call. Your policy should not become a surprise to them when you come back to present your proposal. Surprising them will likely erase any trust or confidence they have in you and your process.

You are presenting, not emailing proposals, right?

Confirm your policy inside your proposal

Here is some sample language you can consider using inside the remodeling proposals you create for prospects. This information is for your reference only. Be sure you have it reviewed by your own legal council before using it.

Sample text:

This proposal and any related plans and specifications shall be for the exclusive use of; and will remain the property of “Construction Company” until a Construction Contract agreement for the proposed work is reached between both parties. The acceptance of this agreement will require the owners’ signature(s) and payment in full of the specified deposit.   If this proposal is not accepted at the time of presentation, owner(s) are welcome to view all plans and specifications at the contractor’s office at a mutually agreeable time.

This language is best used at the beginning of your proposal so you can remind your prospect about your policy very early during the proposal presentation meeting. If they have a problem with your policy, the one they should have already agreed to, you can discuss their concerns and both of you can decide whether it makes sense to continue presenting and discussing the rest of the proposal.

Four Considerations for Contractors Offering Design - #4 is Most Important!

With a well thought out strategy for offering design services contractors can differentiate their businesses and attract better quality clients and projects.  However if their offering is not well thought out contractors can lose a lot of money and waste a lot of time.   

If you want to offer design services consider these four important areas before you go for it.  If you are already offering design services, these same considerations can help you validate and or think a bit more strategically about your offering.

#1: Compensation

Nothing is free, neither is design.  Even if you offer it for free to prospects doing so still adds to your business overhead costs.  Charging each customer for their design is one option.  If you don't charge consider how many free designs you will complete to sell one job and add the anticipated costs for doing them to your overhead budget before you determine your markup.  How you choose to go forward with this consideration should be based on the targeted customer type you identify in your marketing plan.  

Offering design comes with risks. I also strongly recommend getting Design Liability Insurance and adding the cost of coverage to your pricing strategy. 

#2: Create a clearly defined process

To control costs and manage customer expectations you need to decide what level of service you will offer, and whether you will offer your design services at a fixed price or on an hourly rate.   At my business I used a fixed/defined process and price strategy limited to concept design.  This was because as a Design/Builder our goal was to quickly get to a contract for construction.  Completing the plans for permit application only happened if we built the project.   For our target customer type that process worked well and kept the upfront cost of making decisions and getting to a fixed price quote down for our clients.

The image below shows the first half of the Design/Build process I share with my clients.

#3: Ownership of the plans

Consider whether you are selling design services or plans.  If you sell plans your clients may see their project as a commodity and may want to use those plans to collect bids from other contractors. Allowing that to happen also definitely increases your design liability.  My recommendation is to differentiate your business by selling personalized design services, not plans.  Then, only offer design services to prospects who intend to hire your business to complete the project.  Plans for permit can then be created and shared with them after they commit to construction.

#4: Use a supporting marketing and sales strategy

After thinking through and deciding on the considerations mentioned above the business will need a way to market and sell their offering.  The right marketing should help define your offering so prospects can prequalify whether what you offer is right for them, or not.  Doing this will help attracted your targeted prospect and save salespeople a lot of time on sales calls. This is because by doing so prospects will only need to clarify and confirm your offering when they request to meet or speak with you, you will no longer need to introduce and explain your offering. 

Your web site is a great tool to use for marketing and explaining your design services. And, if the information is on your web site, you can direct prospects to it from the other marketing tactics you use, or when they first call your office to inquire about a project that requires design.

Other Design related articles you might find helpful

Managing Risks With The Right Design/Build Insurance Options

Design and Spec Considerations for Remodelers Looking to Break $1Million

All Plans and Specifications Will Be For The Exclusive Use Of …

As Designers, Are We Honest in our Business Dealings?

10 Ways Some Architects Do A Disservice To Contractors & Home Owners

Design Options for Design/Builders: Partnering for Design

Design Options for Design/Builders: In-House Design

Why Building a Backlog of Work Could Cost Some Contractors a Lot of Money

Builders, remodelers and lumber dealers often get in trouble with lumber framing packages by overlooking the obvious…the volatile lumber market. Most contractors and lumber dealers do not have the luxury of pricing a job today, signing it tomorrow and buying the required materials the next day. By the time a job is priced, signed and the lumber gets delivered to the jobsite 30, 60 or even 90 or more days may have passed and lumber prices may have changed as much as 20%. At the Estimating Workshops I did this concern comes up quite often and attendees often share how their profits are affected as a result.

An educated guess is much better than a Wild Ass Guess!

Matt Layman is the publisher of The Layman’s Lumber Guide. I met Matt through LinkedIn. His expertise is forecasting “when” lumber market pricing will change. Having and using the information he assembles through his research can help contractors and lumber dealers price future jobs involving framing materials with precision.

According to Matt lumber prices are reported twice weekly.

He says some weeks do not change at all. However he also points out that 70% of the time they do change by an average 2.5% each week or 10% per month.   Based on those realities a contractor who estimates a framing package using today’s lumber costs at $10,000 may end actually paying over $13,000 for that same package 90 days later. For those of you who understand how margins and markups work, not only will the contractor have lost the $3300 due to price increases, but also the gross profit margin on that difference. At a 50% markup that’s another $1650 of gross profit that could have been included in the sell price to help cover overhead and profit.

If as a contractor you buy a lot of framing materials you may want to consider subscribing to Matt’s monthly publication called the Lumber Market Blueprint. I also think lumber dealers serving contractors could share this information with their customers on a regular basis. Doing so would be a great service that could help differentiate them in the marketplace.

The image above is an excerpt from the February issue of Matt’s Lumber Market Blueprint. Notice that the information not only includes his predictions for the next 30, 60 and 90 days, he also offers some insight as to why he makes his predictions. I suggest by knowing the why’s behind his predictions you can consider your own pricing adjustments if for any reason conditions change dramatically during the month.

I appreciate Matt allowing me to share this information with you.

If you are a contractor do any of your lumber dealers share this kind of info with you?   If so, it would be great if you shared the name of the dealer with us as well as an example about how the information has helped you.

Selling Bathroom Remodels? Talk to Homeowners About These 3 Important Aspects

Bathroom renovations make homes more modern, but the return on this investment is lower compared to other home remodeling projects. The average amount recouped from a mid-range bathroom project (those costing around $16,000) upon selling is 70 percent of total costs, according to Remodeling magazine. Kitchen remodeling projects recoup about 80 percent of costs, as do siding and windows replacements.

Contractors can do themselves and their clients a favor by helping them decide on the particulars of their projects to maximize ROI and aesthetic value. Homeowners are more likely to close deals with contractors looking out for their best interests versus one simply looking to make a profit.

The Money Conversation

Most homeowners already have a budget in mind for their bathroom renovation. This is where a contractor's expertise can win the trust of prospective clients.

The National Kitchen and Bathroom Association recommends bathroom renovations cost between 5 and 10 percent of the home's total value. The bill not only includes materials and labor, but back-end expenses like supplies, legal services and secretaries. Thus, homeowners should feel comfortable and confident paying $25,000 for a bathroom remodel in a $250,000 home.

If another contractor is offering to do the same job for far less, emphasize to the prospective clients that they will ultimately get what they pay for. When contractors lower final costs simply to close deals, they are cutting costs elsewhere to make up the difference. Always provide detailed, itemized estimates, so prospects can compare your market-value offer to bargain-basement options.

No Rearranging

Some ambitious homeowners may envision moving the toilet where the tub once was and adding a second sink for a his-and-hers effect. But unless they have an unlimited budget, it's not a good idea.

Janice Costa of Kitchen & Bath Design News told HGTV that the quickest way to make final costs skyrocket is relocating the plumbing. A new sink in a different location means a new hot water pipe must be added. A new toilet waste pipe can add upward of $1,500 or more to the final bill. Moving the vent stack—which regulates air pressure in the drainage system for multiple-story homes—could add up to $10,000 to the final bill. Keep the existing plumbing to keep costs down.

Choosing Materials

Since most bathroom remodeling projects require ripping into the floor, new tile is inevitably going to be part of the job. Safety-conscious homeowners—particularly those with elderly family members—will want flooring that looks good and mitigates injury risk.

The Centers for Disease Control and Prevention estimates there are 85,000 bathroom slips and falls resulting in hospitalization every year. Tiles with textured surfaces and matte finishes are best to prevent these types of injuries. Smaller tiles with more grout lines are also recommended.

A common theme for master bathrooms these days is removing the tub altogether in favor of a spa. Of course, there are caveats when it comes to installing an indoor hot tub—for starters, they are large and difficult to get indoors, and many must be installed on a ground floor due to their weight. In addition, there could be problems with humidity levels when the spa cover is removed and floor damage if the unit leaks, according to Hot Tub Works.

When choosing faucets and fixtures, the quality comes down to the material they're made of. Brass is the most expensive but also the most durable, particularly in homes with hard water. Zinc-alloy faucets will corrode eventually and need replacing. Chrome-plated faucets are durable but require a lot of maintenance to maintain their shine. Avoid faucets with plastic cores altogether.

Homeowners know contractors need to make a profit. But the more information you give them upfront, the more they'll entrust you to do the job.

Guest Blogger: Brian Wilkins is an Arizona State University journalism grad who has worked as a radio broadcaster and banking industry professional. He is an independent journalist, blogger and small business owner who loves life. He lives off-the-grid and has not owned a TV in more than six years.

Design and Specification Considerations for Remodelers Looking to Break $1Million

If your goal is to grow your remodeling business past the $1Million installed sales volume threshold the business will need a design and or specification process.  That process must support the ability to perform a "handoff" between the salesperson and the production team that will build sold projects.  Without adequate plans and specifications the production team and a project's lead carpenter will be constantly contacting the salesperson for the information needed to build what the customer is expecting.

Even if you do not plan to offer design services, or even if you work from plans created by an architect, it is likely the projects you build still require design and or specifications at some level. For example replacing a back entry porch and stairs can involve designing the railing style, or specifying the decking materials your business recommends to the homeowner to serve their expressed purpose.

Here are several design and specification considerations remodelers should address if their plan is to grow past $1Million. 

Be honest about the level of design you can offer

Be honest not only to your customers, but also with yourself.   I fortunately recognized very early in the building of my business that I was not a designer.  I can build any design you give me, I just don't have the right talents to design renovations at the level my target customer expected and deserved.  So, if you do offer or plan to offer design services make sure you find the right talent to do so.  That person could be an employee, or as in my case, that person could be a subcontractor.  Don't risk having your client tell you they don't really think you or someone else from your team is a designer.

Manage your risks before you offer design

First, make sure you can legally offer design service where your business operates.  Next, make sure you and or your employees have the right construction, product and building science knowledge and experience to offer design and or specification assistance.  Value engineering for a prospect may help you sell a project, but what if you suggest or substitute products that compromise the design, the structure and or the purpose of the project?   You may own the end result and it could cost you a lot of money.  Consider professional liability insurance coverage; sometimes referred to as Errors and Omissions coverage, to protect you from such risks.

Make sure designs and specifications are complete

This may seem like an obvious point but here me out.  If your goal is to bust past $1Million your plans and specifications should include not just what might be needed to sell the job and or get a permit.  Your plans and specs should really be communication tools that your production team will use to build from.  Measurements, product sizes, rough opening dimensions, center lines and clearances all become critical when building, and even more critical if you want to protect your margins and project schedules.   With the right plans and specifications you can protect your profits and only have to build the project once.

Summary

As produced volume increase for a remodeler, that remodeler must decide between being a contractor and a construction business owner.  As a contractor you can do all of the above yourself, but breaking $1Million will be challenging, require lots of work hours and may not be practical depending on your target project types.  As a construction business owner your role will be to profitably run the business not the jobsite.  If that is your goal make sure your team members will be creating the information each department needs to successfully sell profitable projects and perform their assigned responsibilities.