A profitable marketing plan for home-improvement retailers is a composite of five important elements. You have to sell the right product at the right time in the right quantities to the right people at the right prices.
The Right Product
This is more than selecting quality, environmentally sound products with great warranties from manufacturers with excellent support. Remodelers need to sell products that allow your firm to establish some unique position, some element of differentiation (i.e. quality, unusual durability, design, appearance, etc.) that can be justified value-wise.
Ask David: Developing A Marketing Plan
Q: You state that price should not be based on what our competitor is charging and you imply that we should be using upscale products, which of course creates a higher retail price. With a good many of the contractors in the industry not operating by these methods, why is it that more of them don’t do what you suggest?
A: There are many causes; start with the manufacturer. Usually they make a range of products, frequently they have A, B, C, and the builder’s model. The contractor is mostly guided by what he thinks the customer is looking for (i.e., a better price). Consequently, the contractor never examines the complete need of the customer and simply acquiesces to what he thinks is the consumer demand (i.e., a better price). So it’s not really the price, it’s the matter of deciding to have a better quality product then learning how to sell the value.
Q: You state that contractors rely on the seasonality of their market. Isn’t it a fact that air conditioning systems sell better in the warmest climates or the warmer months? People buy roofs when they leak, so the rainy season produces leads for roofers and waterproofers.
A: What you say is true, but the HVAC system that breaks down in the summer was not operating properly in earlier months. A roof may leak long before it is apparent (stains on walls and ceilings) and the same is true of waterproofing. The smart marketer creates an inspection system and convinces people to look at this project before the apparent need turns into the immediate need, offering inspections and soliciting prospects before the immediate need requires the sophistication of a marketing plan; most highly successful companies do that.
Q: As a remodeling contractor I have spent my adult life staying abreast of the newest innovations in construction, architectural, and engineering needs. In addition, my business was built around hiring people who think and feel the same way. I see most sales methods, which are utilized by people who sell smaller contracts or specialty items as pushy—overbearing and quite frankly high pressure.
A: Your feelings are not uncommon. The word “selling” may trigger a less than glamorous picture of someone attempting to purvey goods or service to the consumer. Without being critical of your perception or opinion, I would remind remodelers, “You cannot know what you do not know.” Most successful interaction, whether it be physician to patient, architect to consumer, lawyer to client, or contractor to customer, contains a series of behavioral interactions, which when analyzed contain the same tactics taught to successful salespeople.
We often call this the ACID test: [A] Arouse their interest; [C] Cultivate their interest while developing rapport; [I] Develop a flow of Information which enables you to acquire insights into where the prospect’s needs really lie; and [D] Determine how to best present your services or product to customers, patients, clients based on their needs and the value system they present to you (if you listen more and talk less).
For more answers to these and similar questions go to the Dave Yoho Associates blog at www.daveyoho.com/wordpress.
Most sales representatives will tell you it’s always about price. Sometimes it is—but it’s always about value as well.
Interestingly enough, most remodeling contractors believe a business philosophy that isn’t necessarily true. They believe carrying more products gives them more opportunities to sell and more opportunities to own customers.
Here’s the reality report: The most profitable companies sell fewer products and establish stronger brand presence in their markets.
Most successful organizations and people become known for one specific thing, not many.
The Right Time
Too many remodeling contractors rely on the seasonality of their markets and on traditional sources of lead generation. The right time is every day. Few contractors work the neighborhoods around their jobs, establish presence at congruent events, sell up to people who love their work, or understand how to solicit and ask for referrals.
The Right Quantities
This may sound funny—it’s not—but let’s call it ironic. The average remodeling contractor works hard to obtain enough trust and credibility to earn someone’s business. But then they settle for a lot less.
They can sell larger jobs, add-ons, or change orders, but many don’t make the attempt to do so. Ironically, the harder part is owning the relationship—once accomplished, obtaining an agreement to do more work is easier than finding another new customer.
We know this is true from helping companies understand it’s a matter of selling to people’s needs.
Sometimes, you can obtain a larger order on the day you bring in the first piece of business. Sometimes, you can increase the job size during the production process. Once an installation is finished and they love what you’ve done, customers are “higher” than at any other time. Yet few companies follow through at any or all three times.
Many remodeling products lack romance—these products may be roofing, siding, waterproofing, and windows to name four. While people want the benefits, they tend to put off these investments as long as they can.
Simply put: People need to be sold. Ironically, they’re open to buying more but don’t admit it. The homeowner needs advice but won’t admit it.
The sad part for many remodeling contractors is when they finally go back or call back—could be a proactive call or a service call—they learn the homeowner had work done by another remodeler.
The Right People
Have you ever attempted to identify your best customers? We’ve asked this question of hundreds, perhaps thousands, of remodeling contractors.Some of the answers included: “anyone, anywhere,” “Bobby Joe Lunchbox,” and “residents of the nicer neighborhoods,” among others.
The downside of any answer is that it’s often a personal preference, not a well thought-out business strategy.
The fact is you can try but cannot be all things to all people. Most companies are a better fit for certain kinds of consumers. Once you know who they are, it’s easier to target, attract, and do business with them.
While it’s unwise to refuse doing business with anyone or to pre-judge 99 percent of your prospects with some over-qualifying criteria, the right answer is determined by a variety of factors, including product line, job size, financing options, economic conditions, your location, the contractor’s attitude about modern sales techniques, and the quality of your sales personnel.
The Right Price
Despite investing a lifetime in this business, I’m still amazed at how many remodeling contractors don’t know how to calculate the right price. Your price should not be based on what your competition is charging because the average remodeling contractor undercharges and earns insufficient profits. It’s not based on a formula you learned from someone you believe to be successful. Often, they’re merely repeating something they heard or something they’d like to do but don’t.
Worse, if you don’t know your exact costs and then structure your price accordingly, your formula will deceive you even if the formula itself provides an accurate method of mark-up. More so, you need to consider the amount of cash required to operate your business, including needed deposits in order to sustain the many costs you pay in advance of receiving money.
Stop looking at gross profit—it’s a number invented by accountants to make you feel better about your insufficient bottom line.
All of this reduces the sophisticated title of marketing down to simplistic terms, which any remodeler/home-improvement company can adopt and make work with a little planning and lots of endeavor.
David Alan Yoho is a senior account executive with Dave Yoho Associates in Fairfax, Va., www.daveyoho.com. His client base consists of large- and medium-sized companies who manufacture, distribute, and sell retail home-improvement projects to consumers. He is a popular speaker at industry functions and has authored numerous articles on the subjects of marketing and selling. David is featured in an easy to use Web-based training program entitled Super Sales Training, http://supersalestraining.com.
5 ways to establish the right marketing program for your business.