Mike Damora is vice president of sales and marketing at K&B Home Remodelers, in Succasunna, N.J. Reach him at madamora@kbhomesnj.com. Follow him on Twitter @madamora.

What Things Cost—Home Improvement Sales Are Retail-ish

When it comes to selling, home improvement is a retail business, with one important difference

October 12, 2017

Before I ever sold a home improvement job, I sold cars. This is how far back it goes: When I sold a car, the customer and salesperson sat in the showroom office and negotiated exactly what would be included with what was called “a standard car.” Air conditioning? Check. Radio? Check. Push-button windows? Check. Power brakes? Check.

I could only get them to that stage if they’d taken the car for a test drive. “Whatever you do,” my first boss said, “get ’em in that car.”

You wanted them to feel ownership. Get them in the car and then when they get back to the showroom, work them over.

If a station wagon full of kids pulled in the lot with Dad at the wheel, I knew I’d hit pay dirt. The kids would do your selling for you. I’d get on the phone and order pizzas. This wasn’t a transaction so much as a game of attrition. And in a game of attrition, you want to play out the clock.

How to Buy Anything

We don’t buy and sell cars that way anymore. It became obsolete the day the Internet happened.

Today I can go online to any auto manufacturer, choose a car, add the accessory items that I want, get a price, and go right into a dealership to pick up the vehicle.

Home repair? Same thing. My central air worked perfectly for 18 years. A month ago I walked in, hit the On button … nothing. So I called an HVAC guy. He came out to the house, looked at my system and said it’s no big deal. A valve has to be replaced and the system’s low on Freon. He was at my house for an hour. When he was done, he handed me the invoice—for $411. I said: Wow, that’s a lot!

He explained every item, which included the service call, the valve, and the Freon. He took my credit card and processed the payment. He asked if he should email me the invoice. A minute later: Ding! INvoice in my inbox.

That’s how things are done in the Maintenance and Repair segment of the housing market. You don’t negotiate with the plumber or the electrician for labor, parts, and service. You’ll know what it costs when the service person is finished. If you need a new toilet, you call the best plumber anyone you know knows, and you pay what he charges. It works that way because that’s the only way it could work. It’s like buying a box of pasta at Trader Joe’s. You don’t take it to the register and start negotiating. There are 43 people in the line behind you waiting to check out. You pay the price that’s marked on the box and you don’t even think about it. This is retail.

Time to Haggle

Unfortunately, it still doesn’t work that way in another part of the housing market, that is, home improvement. Here the homeowner in need of, say, roof replacement, solicits bids. Each—surprise!—comes with a different dollar figure. Everything that the contractor will do is bundled into a single price with a (likely vague) scope of work (“replace shingle roof”). Let the selling begin. It’s all about perceived value. As Phil Rea used to say, when value exceeds price, people buy. So to sell the job, home improvement companies inflate the value by means of absurd discounts to make the homeowner think he or she is getting a deal.

What it has done, in time, this system, is to make homeowners as apprehensive about home improvement contractors as they once were about auto dealers. Truth be told, we have no one to blame but ourselves. Remember par pricing? Salespeople charged as much as they could get for a job and then split the difference with the company. If you can sell that $10,000 job for $18,000, there’s that much more money in the salesman’s pocket and on the contracting company’s bottom line.

So, rather than acting like the facilitator of a construction project, the salesperson goes in like a hungry shark, looking for meat. Everything is about getting the homeowner to sign tonight, not about creating a long-term customer, building rapport, getting referrals, strengthening brand. The salesperson’s not thinking tomorrow, he’s thinking tonight. Tomorrow he’s somewhere else.

remodeling sales like a shark hunting-photo-Flickr user-Elias Levy-CC by 2.0

Since it’s all about attrition, if the homeowner who knows how the game’s played knows how to hold out and holds out long enough, he may be able to get the company to sell him the job at cost or less. Then, when the contractor doesn’t show up and the job’s half-finished, the homeowner finds out that it’s not a great idea to have a contractor working on your house who isn’t making any money.

Pretend We’re in a Store

We don’t find too many people who want to haggle over price anymore. They’re rare. And when it comes to anyone under 35 or 40, none of them do. They want a solid, reputable contracting company—as evidenced by reviews on multiple platforms—with proposals that break out pricing piece by piece so they know they’re getting what they’re paying for. We look at the house, what the homeowner wants and needs done, and then we provide multiple options, starting with what it would take to get the house to where that homeowner wants it to be.

I ran a call the other day. It was going to be a combination job. I broke out the proposal and explained it. Here’s what the siding costs, the soffits cost, the fascia costs, the trim wraps, the gutters and leaders. Everything itemized, just like your receipt at Trader Joe’s. “The other contractor says he’d throw the gutters in for free,”  the homeowner says.

I suppose there are people who think gutters are manufactured at no cost and that installing them, under certain circumstances, is voluntary labor. But there are fewer and fewer such homeowners, a fact that the home improvement industry is only slowly coming to terms with, and only then because it has to. 

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