This month, the Remodeler’s Exchange features two Dallas-area remodeling professionals who provide critical tips and strategies to sell successfully for your remodeling business. Professional Remodeler’s Tom Swartz spoke with Carol Longacre and John Todd, about the most effective methods they incorporate in their businesses to sell remodeling projects.
TOM SWARTZ: Besides the owners, who is involved in your company’s sales team?
CAROL LONGACRE: My business partner Dan [Longacre] takes some of the older clients we’ve had for more than 20 years. Liesel Herrera, sales and marketing, typically takes all the calls that come in and uses a CRM software system called Sendpepper to schedule appointments. Liesel and Simon Hodson, design and estimating, will go out to discuss the project with the potential client. Simon will do the design agreement or the proposal if he is working off someone else’s design. Liesel will then take the proposal, review it with the client, and have the client sign the proposal. Because of liability issues, I will then sign the contract from the owner’s perspective.
JOHN TODD: We are similar to Carol’s company in that we assign all of the sales to Kelli Parker, vice president of sales and lead designer. She looks at her workload to determine whether or not to bring Staci Hayden, design and sales, on-board to parcel some of the leads her way. If it’s structural in nature such as a room addition, concrete, or structural framing, the leads will come to me. We won’t do anything without a signed design agreement for these projects. We will then hire an architect or draftsman to draw the plans and hire an engineering company to oversee that aspect. The difference between our approach and Carol’s is we have a retail showroom. We are in a very heavy commercial and residential area of Collin County, and we have a storefront of about 1,700 square feet that features kitchens, baths, custom cabinetry, floor work, islands, countertops, and lighting. There is nothing for sale in the showroom; rather it is intended to showcase the type of work we do. Our sales process is a bit different from Carol’s as well because of the showroom. What we do very heavily is position the company through our website, print ads, direct mail, yard signs, and truck signage to drive the homeowner to our website first. I want them to go to the website to find out who we are, what we do, how we do our projects, where we work, and look at some of our project pictures to see if we are the type of company they would want to do business with. When they pick up the phone to call us, I hope they have been to our website first because they will be better informed and know more about us. Our process starts whether that phone rings, an email comes in from our website, or by chance someone walks into the showroom. We start the qualification process—where we talk to them and try to understand the requirements, scope of the project, and hopefully, we can get them to tell us what their budget is for the project.
This month featuring:
Carol Longacre, CGR, CAPS, CGP
CEO, Longacre Construction Co., Lewisville, Texas
Established in 1991, Longacre Construction is a design-build remodeling firm. The company generates approximately $2 million in annual revenue and currently has 10 employees in both the office and the field.
John Todd, CGR, CAPS, CGP
President & Owner, Elite Remodeling, Dallas, Texas
Established in 2002, Elite Remodeling is a full-service remodeling firm that focuses on kitchens, baths, and room additions. The company generates approximately $2.5 million in annual revenue and currently has eight employees.
SWARTZ: Do you charge for design work?
TODD: We do not charge for design on every job. We assess what the requirements are going to be, if the customer is going to reconfigure a bathroom or a kitchen or even add square footage, and then we will do a design agreement for that particular work. If we are going to redo a bathroom but the footprint stays the same, we will not charge for cosmetic work. If I have one of my employees use a software program called 20/20 for kitchens and bathrooms, then we charge for the design work. Typically, we charge a percentage of the overall fee, usually 5 percent.
LONGACRE: We follow a plan similar to John’s. We get whatever information we can over the phone whether it’s budget, what other remodelers they’ve spoken to, how they found us, that type of information. Our design charges kick in when we have to complete a design for a project. Our fee structure is similar to John’s, a percentage based on the overall price of the project.
SWARTZ: Where do you find qualified sales people? Do you want great salespeople who do not know construction or are you better off with someone who knows construction and you can teach them sales?
LONGACRE: I operate under the idea that you cannot teach sales, so I want someone that has a very strong sales background that is interested in construction. I do not necessarily want someone who knows construction that I can teach sales to over time. My husband Dan and I have had this discussion for years. He believes I am the best salesperson we have, but I do not like to close sales. I will go out, tell you about the company and our projects, but I prefer not to be the one who asks the client to sign the contract. I’ve found that networking with people from all industries works very well, that is how I found Liesel. Dan and I decided we needed to hire a salesperson. Liesel had been working for one of the local magazines trying to sell us advertising, and I knew I wasn’t going to buy an ad, but she was so persistent and clever. I ended up at a meeting with her and I asked, “How did you get me here?” I had no intention of buying an ad but she got me to agree to a meeting. I told Dan that I wanted Liesel to be our salesperson. I saw her at a Chamber of Commerce golf tournament the next day, and I asked her if she was interested in coming to work for Longacre. I was very impressed by her sales ability even though she had no background in construction sales.
TODD: I follow the same path as Carol when it comes to hiring salespeople. You can’t teach sales; you want to find a good salesperson that inherently enjoys sales and is motivated by money. We’ve been successful because the best people we’ve hired over the years have been sales-driven people that have a construction background. We don’t put ads in newspapers; instead we find them through referrals. My two project managers came to us for work. The story with Kelli is very similar to Carol’s in that Kelli was a rep for a high-end cabinet company. She called on us and tried to get us to take on her line of cabinets. Given the market and demographics we were selling, we just couldn’t see how their line would fit into our market—it was just too high-end. We really liked Kelli, and we met her again at a golf outing, we talked about business, sales goals, her background, and more. I told her that if she ever decided to change jobs, we would like to talk to her about joining our company. Ultimately, her cabinet company closed their showroom in Dallas, she knocked on our door, and we hired her immediately. Eventually, we ended up selling the cabinets in our showroom.
SWARTZ: How do you train a salesperson who does not have a construction background?
LONGACRE: We do team-selling at Longacre. Simon has a ton of construction knowledge. Liesel has been selling for us for a few years and her construction knowledge is amazing. Her mother is a salesperson for a local builder, so she has been around the industry. However, the team-selling concept gives her the confidence she needs on sales call. Even if there is a technical question, Simon is right there to answer it with her. We were doing team-selling previously; it is not a new concept to Longacre, but the team-selling between Liesel and Simon works out as a very good combination for us.
SWARTZ: How do you successfully handle the design/sales process to actual production? What happens on the sales end when the contract is signed, and it appears there will be one percentage of gross profit, but that number is not the same at the end of the project?
TODD: The post-mortem meeting is designed to find out why we came in under or over budget. If we came in under budget, it’s because we overestimated something or construction found ways to save money. If we came in over budget, it may be because we missed a cost element. Our objective is to sell and deliver a project for the same gross margin. Having been members of Remodeler’s Advantage, we know there is slippage. This means you sell at one gross margin and you deliver at a different gross margin. In the Remodeler’s Advantage world, their rule is if you can come within 1-to-2 percent of what you sell a project, you are doing a pretty good job. Our objective is to hit the number.
LONGACRE: We do a pre-construction meeting so the salesperson, design person, and lead carpenter meet with the client for the official handover. We walk the project, talk about how the project will progress, we ask where the dumpsters need to be placed, the in/out to the project site, ask about the children and pets—we discuss all parameters of the project at the official handover. Liesel, our salesperson, stays involved from the perspective of selections. She does all of the allowance items, ensures they are chosen and, financially, she is still part of that job. At the end, we send a thank you note and gift to the client together so she is never really absent from the project; she just steps back during the construction phase.
SWARTZ: What is the expected annual sales revenue for your sales staff?
LONGACRE: This year, we expect to generate $2 million but we also look at what we can generate with the people we have on staff. We are at a point where have to decide: Can we produce this much revenue with our current staff or do we want to go larger and hire more people or hire more subcontractors? That’s where we are as a company, and as we make our business plan for next year, these are the questions we will have to address in order to determine how we are going to move forward as a company.
TODD: This is an interesting question because I would say a good salesperson in our industry with an appropriate number of leads ought to sell $1.5 million per year. We are constantly re-tooling our processes and systems to find the better fit for our people as well as our customers. One of the things we’ve implemented in the last three months is we are taking Kelli and Staci and twisting them slightly. Kelli now has the point for all the sales. Once a sale has been made, she brings Staci to the table. Staci then plays the role of interior designer, and she is going to interior design school in addition to working for us. She makes all of the selections, such as allowance items, and lays out the design work. When that is done, she gets the customer to sign off on the selection sheet. Once that is signed, we true up the costs—sometimes we owe the customer money, sometimes the owe us. At that point in time, Staci creates a Redbook—a red three-ring binder with our logo on the front that includes a copy of the customer agreement with pricing information blacked out because no one needs to see that data, a copy of the signed contract spelling out everything that was sold, copies of the signed selection sheets, and a project schedule. Once the Redbook is created, Staci sets up a meeting between construction, sales, and myself. We all sit down to review the job internally in our showroom. We bring up the pictures we’ve taken of the job, review the job line-by-line, and create a transition from sales/design to construction. At that point when construction has reviewed and approved, we then call the customer to set up a kickoff meeting at the home. We take the Redbook with us and there is a checklist in the very front with 20 to 25 items. We take the client through this checklist line-by-line discussing the project, subcontractors and their contact information, scheduling, trash, lock-box codes, kids, pets, and everything else. That is the formal transition from sales/design to construction. The construction manager is present as well, but the project manager coordinates with the customer through daily face-to-face, text messages, phone calls, and/or email. They work day-to-day to discuss what’s going on, and either Friday afternoon or Saturday morning, the project manager sends an email to the customer that defines what was accomplished during the week, what is targeted to get done next week, and the scheduled completion date. We always want to be in sync with the customer, and we want to communicate with them if something ever changes in the construction process.
SWARTZ: What kind of education is involved to keep your sales team up to speed on the latest design ideas and products as well as any sales training that may be necessary?
LONGACRE: We just got back from the Sun Belt show in San Antonio. Liesel does the local shows with me as well as IBS. She is working on her CGR designation, so for now that’s what we are focusing on. She also attends other sales seminars as well as NAHB education, but we do need to expand beyond those areas.
TODD: Education is the foundation for success whether it is sales, design, or construction training. Everyone in our company has some NAHB certification whether it’s remodeling, green, sales and marketing, aging-in-place, and even EPA lead paint training. We had some staff members that just came back from a one-day sales training for cabinets. In September, we have two people that are attending Professional Remodeler’s Extreme Sales Summit in Chicago. One thing that is very important to note is that there is no real, good sales training curriculum for remodelers. To me, that’s the Holy Grail. Everyone in this industry figures out how to do it himself or herself and in their own style.
SWARTZ: What advice would you have for a remodeler who wants to build a successful sales team? What are the best sales strategies you could offer?
LONGACRE: Definitely get involved in your local remodeler’s associations. I serve on a national remodeler’s board and I know there is not a remodeler’s council for every remodeler. There are benefits that include having people come in to discuss sales and even learning from your peers. My relationship with John started at our local association, and I feel like I can go to John for anything. Building relationships, getting educated, going to local and national trade shows, those are all very important. Networking is critical because you get to know people through conversations and they can help you solve your business problems.
TODD: You have to know what your product is, position that product properly in your marketplace, make sure your employees are educated and trained, and the key employees should know how to sell, design, and deliver this product. Give your employees to the tools to be successful, get out of the way, and let them do their jobs. One of things I learned from Carol and others is that you as an owner, you have to work on your business and not in your business. The more we can focus on the business, the more we can look at different ways to help improve the business. PR
Carol Longacre and John Todd, about the most effective methods they incorporate in their businesses to sell remodeling projects.