Customer Qualifying

casey344

I recently bid and lost a $40,000 pier job.

The clients (both doctors) asked me for a non-wood alternative. I cautioned them with a $45,000 ballpark number and they asked that I proceed to put an estimate together based on this more expensive material.

So I proceeded to come up with an estimate.

They had been fairly easy to get in touch with all along when I had design and idea questions, but now that I've submittted our bid they are impossible to reach and won't return my calls/emails.

We decided it would be a good idea to pickup the material samples talk to them in person about whether they'd made a decision. After all, we've got 4 days into this job already, at least they can talk to us for a few minutes. Miraculously they're home, after a quick discussion they inform us they've gone with a competitor We had a suspicion they weren't getting anything near what they asked us to bid but we didn't know for sure.

Well a few months have passed and we built a pier for their neighbour, so while we were at the neighbours house we walked over to see what type of pier they bought and it's just a plain ol' pressure-treated wood pier, exactly what they told me they didn't want because they were tired of seeing people in their ER with splinters. They did however decide to use our design, which was a real slap in the face.

Do clients not understand the amount of time we invest putting a proposal together? I realize we should find a quicker way to put together a proposal, we probably had 40+ man hours in this bid, we figured we were giving them what they asked for and given their combined incomes and the new million dollar house they moved into, surely they afford it. We weren't gouging them in any way, we gave them a competitive bid for what they were asking for.

I just can't get it out of my head, it's only been a week since I saw what they bought but I can't stop thinking about and it really upsets me. They didn't even give us a chance to provide them with a scaled down version of our original design. Should we just assume everyone is cheap and give them the least amount of product for their application? There outta be a better business bureau for customers too!

I'm interested to hear how some of you deal and have dealt with people like this and what you do to qualify your customers to improve your own productivity.

Scottsdale

Casey,
When I do a remodel or new construction job I charge a "design retainer". Alot of customers will use different tradesman just for information to use against another unsuspecting salesperson. The retainer is usually 5% of the job. I get this on the first appointment. This weeds out anybod who is not serious. With the retainer I do a full cad design and produce samples. If they decide not to use me they still have received something of value in return for their retainer. Works very well for me and lets the customer know I'm more than serious about their project.

DecksEtc

Not being a smart a$$ but what did you charge for the estimate you provided?

If you don't charge for estimates you have to accept the fact that you're going to be providing a free service for "tire kickers" and the like. You may have scared these customers off with charging up front but then again maybe not. Charging for estimates has been debated many, many times in these forums. IMHO, it boils down to one of two things - charge for estimates and risk not even getting in the door but get paid for the estimate work you do do OR two, don't charge for estimates and provide a free estimate service and not get a percentage of those free estimates.

The bottom line is that you will never get ALL the jobs you provide estimates for, you just have to determine how you want to run your business/time.

red_cedar

What i do when there are mulitple options of materials, is start with a base price. In your case pressure treated wood. Then upgrade material for the additional options. Then it becomes a matter of how much they want to spend.
As far as your time with design, scottsdale idea sounds good.
I often read from a particular salesperson who says stop giving away your knowlege and time to those who dont buy.
They may have given clues that you failed to pick up on, to say you where out of the game.
But it seems like a cetain amount of time wasted is to be expected.

noreast05

We charge a design/ consultation fee. Why should I draw a sketch and give you ideas for free. The problem here is the one who came up with the free estimate concept. Sure that works great when time are tough. I put our clients through the same interview process they are putting me through. I also go with my gut. They have to be right for me just as I must be right for them.

My landscape contractors weeds out them out with this approach: He will not talk to you for less than $500/ an hour. When you hire him he will apply it toward the contract. A bit tough but it works for him and he is in high demand.

copusbuilder

That does it! I am becoming a landscaper..I will even be a gay one for $500 and hour

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cdac

F%$KING AMEN!!!

Flimmer

Your first problem might have been what you said in your 1st sentence "I cautioned them" this sounds very negative, and may sound as if you don't do many of these because of the price tag. So maybe the customer decided to go with the cheapest guy seeing how they were going with the cheapest pier!

I found that when I first started in sales and estimating, I put myself in the catagory of "boy that is expensive" before I found out if they thought it was expensive, I believe I lost alot of customers this way, even though I thought I was doing them a service to let them know that it was more expensive.

What I would try next time, when they ask for a particular product that cost more, say, what a great decision you will be very happy with the beaty and quality that this product is known for.(positive) When you give the actual estimate do what Red cedar suggested, have all their options sitting right in front of them when you give the price you should see the reaction and can start to quote the differences in price for the other products. When someone asks me a price ballpark, I give the answer that you start here and goes up from there, depending on the options the customer chooses.

The one thing I have learned in sales is to try not to use negative words to much, the customers want to here what we can do to help them get what they want..

Flimmer

Mike Finley

Anything that I had to spend 40 hours on I wouldn't be doing for free. Not to be a jerk but WHAT THE F- ARE YOU THINKING? 40 hours???!!!!??? for free?

An estimate that takes 40 hours to do isn't an estimate, it's a weeks worth of work.

Flimmer

Do you think that maybe you got the nieghbors job because of the past people you did the estimate for. I mean think about it, you bid the job and go the extra mile for these cheapskates and they decide to go the cheap route and in my opinion got burned. Why do I say this? Well, because If my company gets a bid to build a project and we don't get the nieghbors job after, then there is something seriously wrong with this. We all talk about how important it is to get referrals, well sounds like your cheapskates had nothing nice to say about the competitor you lost the bid to when the neighbors asked them where they got their pier from(And they Probably did). I am willing to bet they probably told them they wish they would of gone with you. So in the long run you got what you want in a sense, and learned a lesson, never put 40 hours into a bid that you don't have yet, WOW!

Flimmer

casey344

This sounds like a great idea. We've paid an architect for drawings on a few larger contracts and passed this cost along to the client without any problems.

As far as I know, none of our competitors are charging for estimates or design work. I wonder if we could get away with it?

casey344

The neighbour was a referral, we built a pier for her brother. This could have easily gone as you've suggested though.

Thank you and everyone for your comments. Keep them coming.

Flimmer

Hey Casey, quick, maybe dumb question? Is a pier, a dock for a lake, where I come from we call them docks, I think.

Sound really sure of self.

Flimmer

casey344

Yes, pier=dock.

See, www themastersco com ... site needs work but photo gallery is up. We build primarily on Lake Wylie, SC. My father-in-law started this company in 1979, I joined 2 years ago.

specwood

You are right on there! My wife and I just said the same thing yesterday!

Flimmer

Hey Casey, Nice work!
I like your website, you have a unique product there.
I don't even think the DNR would allow us to put docks like some I see on the website. They are sticklers about the lakes here. I know that there are noone in this area that does this type of work. mostly removable docks I believe, but I could be wrong. But then again the lakes freeze around here.
Flimmer

casey344

We're fortunate here in SC to be able to use wood pilings, we have on occassion had to piledrive schedule 40 pipe because of pit gravel and it's no fun.

Luckily my father-in-law has been building on this lake for 30 years and knows where we need to use steel before we try wood. This is certainly one advantage we have over our competitors.

casey344

Tony, thank you for your comments.

I hope to find some way of speeding up our estimating process. In the 2 yrs I've been here I've managed to gather some field data to simiplify the process a little for common jobs.

There just seems to be some many variables, I understand why some contractors (for houses mainly) offer cookee cutter solutions only. I wish it didn't take so long to complete an estimate.

I can figure common items quickly. Most of our material is brought in by water, some of these places are 3 hrs away, some are across from the marina where we keep our equipment.

The dock and deck building business seems to be fairly similar, how are the rest of you doing it? How do you deal with options for the customers who wants prices on PT (nailed or screwed), Composite, IPE, PT handrail, cast handrail, no handrail, floored on a diagonal, dock on a hill v.s. easy to access.

Mike Finley

I don't think offering a cookie cutter solution is the answer, nor is it the only alternative.

You might want to qualify your customers more and get a starting point with ball park percentages for upgrades. There is absolutely no reason for you to have to give a customer an estimate with every contingency and variable covered in it. Ask the all important starting question "What is your budget" with some sort of budget you probably have enough experience to be able to say to them at that point, "well, Ipe is way out of your budget, so is this, this and this... but what we can do is probably something along the lines of this... now tell me what features are the most important to you..." With enough qualifying you will get what your biggest hang up in this process seems to be lacking, which is a place to start. If they say $10,000 you can then work backwards and give them an estimate based on something concrete, then you can add in if you want Ipe add 50-60% more, custom hand rail add 10% more, diagonal add 15% more... by this time you should have some formulas and percentages worked out. For decks I know exactly the square footage labor increases for pluging and sanding and Ipe deck is, I know how many stainless steel screws per square foot it takes for a 12, 18 and 24 inch framing, you have to have some of this information in your business by now or you need to assemble it.

The first time you heavily qualify a customer and get some kind of starting number I think you are going to have a much easier time of it and probably be amazed at how fast the customer will narrow down exactly what they want.

I do bathrooms and sometimes customers have no idea what things cost, a lot of times they will say "I really like those frameless glass shower enclosures." I don't run out and spend 2 hours redoing the estimate, instead I simply tell them "Those European style enclosures are beautiful and will make a great design statement, they are also extremely expensive, the last one I did which was close to the size of what yours would be cost about $2900. We have a budget of $9000 so far do you want to take it to $12,000?"

Very quickly the customer will tell you "no, no, I just didn't know what they cost, I like the one you have in the design just fine." or "Yeah, we really like those types of showers, lets add it in."

Only after all this would I go back and do a final, very defined quote and design. Most of the time customers don't have any idea what something will cost so they want to see all the options so they can weigh what is important to them. You will find it much easier if you help them find out what is most important to them with some ball park numbers for features and upgrades, they and you will be able to narrow down what is really important and you will waste less time. Even if you have a hard time in the beginning getting a budget out of people by asking them lots of questions about what they want, what is the most important features and being able in your head to know some of the broad costs associated with them you should be able to eliminate much of the variables and get a pretty tight starting point for your estimate and designs.

By the way - everybody has a budget number to start with, everybody! Test yourself the next time you are in the market for anything, you will have a number in your head. Most contractors have a hard time asking customers for budgets because they themselves buy into the false belief that the customer doesn't have a number. Believe me they do, the wife might not, but the husband will have a top figure that will make him sweat and squirm if the wife goes over it.

The way to get it is not to ask sheepishly and accept "I don't really know, we are just starting out and don't know what anything costs". That maybe very well true, they don't know what much costs, but they sure as hell know that no matter what things cost they aren't going to spend $1,000,000 on the new dock. They have a figure in mind, believe me.

ProWallGuy

Post of the day!!!

Great advice Mike.

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