We constantly hear about Remodelers making proposals to prospective clients only to be undercut on price. Here is the solution, presented by Ted Dubin, our Director of Business Development and in-house Sales Trainer.
Creating the Need
As Victoria mentioned, one of the most frequent topics of discussion in our conversations with Remodelers is the issue of price competition. Our Remodelers Advantage members are constantly presenting their best proposals to prospects, then shortly thereafter, finding out that the prospective client has found some outfit that promises to do the work for a lower price. Sometimes you don’t even get to make a true proposal because you immediately hear “xxx can do it for less”. There are situations where you know the other guy’s quote is so low that they can’t even buy the proper materials for the price they’ve quoted, much less perform the work. Other prospects decline to move forward because the cost of the project they’re asking for is more than they expected.
You know you do great work, you know you’ve priced the remodeling work fairly, and you know you can’t lower your prices beyond a certain point or you’ll go broke. What you need to learn is to sell and compete on value, not price.
Price is not the object
People don’t buy price, they buy value, from the person or company they perceive as most likely to deliver the best value.
Don’t believe this? Look outside in the parking lot . All types of cars are out there, but very few, if any, are the cheapest model available. Why doesn’t everyone buy the cheapest car possible? If you can get a new car for $10,000 then why do people purchase more expensive vehicles? People buy products and services based on their expectation of the product or service’s ability to deliver what they need.
It’s the same in the Remodeling industry. No one brags to their friends or family “Nice job, huh? I went with that company because they cut the price of my new toilet $5″ or “They discounted my lumber $500″. They say “I went with them because they really seemed to care about the needs of me and my family” or “I went with them because they really took the time to understand what was important to me”. But, if you haven’t educated your prospects properly and helped them discover their true needs and desires, they will always go for the lowest price.
Now, you say “Yeah, I’ve heard this before. I deliver a great value but nobody cares”.
You need to show the world why they should care. Prospective buyers will always purchase from those best able to explore and draw out their wants, needs, and desires. The problem is too many Remodelers are, by nature, terrific problem-solvers. They just can’t wait to show the prospect the great design they’ve come up with and get started. Unfortunately, simply proposing your great design solution is not enough. If you show your product to your prospect before you’ve helped the prospect discover the need to buy from you then you’re just wasting your time. You’ll lose out to the first competitor that promises to do the work cheaper.
How do you teach your prospects that you will deliver real value and convince them that they should work with you instead of any other firm?
Asking your prospects open-ended questions creates the need to buy only from you.
Why I paid $3000 for a pebble and was happy about it
Let’s illustrate with a real-life example: Years ago I wanted to buy an engagement ring. So I did the natural thing and went to the mall (lots of jewelry stores at the mall, right? So I’m sure to get the best price). I went into the first store and announced “I’m here to buy an engagement ring”. The clerk went to a display case, opened the case and took out the little velvet tray with diamond rings on it. Of course, like most jewelry stores, the price tags were upside-down. As the clerk stood there (silently) I flipped the first tag – $1500? No way! I thanked the clerk and left. I proceeded to the next store where the (also silent) clerk opened his case, took out the tray (with the price tags upside-down) and laid it on the counter. I flipped the tag – $1750? That’s even more than the last guy. No way! I left that store too.
I went to a third store and announced my intention to buy an engagement ring. The gentleman running this store did NOT take out any merchandise. Instead he asked me “What do you know about diamonds?”. I told him I really know nothing about diamonds as it’s my first time buying any jewelry of this type. He then spent the next hour teaching me about diamonds (you know: the 4 “C’s” – Color, Cut, Clarity, and Carats. I still remember this 20 years later). He asked me lots of open-ended questions such as “What kind of style does your fiancé enjoy i.e. traditional or modern” , “How often does she wear her other jewelry?”, “What sort of work does she do?”, etc. We then looked at an assortment of diamonds through a loupe (a jeweler’s eyepiece). He showed me diamonds of different colors vs. pure white and an assortment both with and without flaws, all the while asking me “How do you feel about flaws in the diamond?”, “How close to completely white do you think your ring should be?” and “When you buy the ring how do you want it sized?”.
Only when the jeweler was thoroughly convinced I was really feeling the need to make a great purchase did he bring out his merchandise. By working with me he was able to say “Here’s what I recommend”.
I bought from him. The ring I chose cost $3000, twice as much as the competitor’s price in the store that I walked away from as too expensive. And I was thrilled!
Equally important, here’s what didn’t happen: I didn’t try to bargain because I now understood I was getting a good value. I didn’t walk away and try the next store. And, I didn’t go back to the first 2 stores and try to comparison-shop. No, this was “my guy” and I was buying from him and only him.
How to create the need for the prospect to only buy from you
Remember, unless your customers understand value, they’ll see it as their duty to select the Remodeler with the lowest bid.
You must ask a series open-ended questions BEFORE you make any product presentation.
As a refresher, open-ended questions are those that cannot be answered by a yes or no. Open-ended questions begin with “Who, What, Where, Why, How” and “When”. These questions make your prospects think before answering. They naturally lead to further conversation.
Think back to the jeweler in the example. Now, apply this to your Remodeling business. Do you work on kitchens or baths? OK, ask your prospects “What do you know about how cabinets are made?” or “When you choose your faucet, how long do you want it to last?”, then explain your use of only superior products from reputable suppliers. Building an addition? Ask “How will you and your family use the room?” or “What do you know about framing?” or simply “How do you want the room to feel?”, then sell your expertise at great design and solid, weathertight construction. Set up the opportunity to sell your better-than-the-competition practices: “When the work is in progress how important is it that the crews maintain a clean environment?” or “How important is the reputation of the company you choose to work on your home?”.
Every good Remodeler should have at least 30 open-ended questions ready to ask without hesitation. Of course, you’re not going to use all 30 in every meeting. But a few smart questions asked with confidence will make the difference between trying to justify your bid against a lower price and making magic happen with your clients.
When do I ask these questions? Again, after you’ve qualified the prospect to make sure they can buy what you’re envisioning but BEFORE you present your proposal. NEVER make a presentation until you’ve firmly established in the client’s mind that they need to buy only from you.
Your Task: Develop a minimum of 30 open-ended questions that demonstrate the value of your company and its great work to prospective clients. Practice so you can deliver these questions with confidence. Keep a list of what works best for you. And, use the questions you’ve perfected with every prospect every time.
Watch your sales increase and your price competition evaporate!
If you’re serious about improving your selling skills, join us at the Remodelers Advantage Community Meeting this September 26-27 in Austin, Texas. Seats are limited so reserve your seat today.