question for BDiamond --sales related

1. 1)homeowner says they don't want anything expensive,they don't need the best. ==This is typically a defense machanism. They're already 1. afraid they can't afford what they want and 2. It's a way to tell you that you're not going to try to upsell them on all the bell's and whistles. Why do they feel this way? Because they know they want the best and they'll buy a window with the bells and whistles!!

"Fred (Homeowner). EVERYONE wants the best. However it doesn't matter what you want. Your pocketbook tells you what you get. I only have 1 window that will probably work for you so if you like it great. If you don't then we were dead in the water before we even started (ha ha). That should make this pretty easy don't you think?"

You've addressed his concern, lightened the mood, and gave the impression that this isn't a big deal.


2)anything is better than the windows they now have,even a cheap low quality window will be better.

After typing and erasing I'm finding these are hard questions to answer without dialogue and more to the story. This might end up a huge post.

"Sure it would. You have the best example of the worst efficient window you can have. A low quality window is what you have. That's why you're replacing it. Soooooo you want another one?"

Challenge people on those statements. It's just roadblocks. "Well no. I'm just saying ANYTHING would be better."

Then I educate them on the differences in a builder grade to an upscale. I show them corner pieces of a $300 window and a $1200 window. I go through the frame (cinyl, extrusion, corners), glass thickness, spacer systems, etc. A side by side comparison. When I'm done NO ONE wants a $300 window. It's the "Too poor to buy cheap theory."

3) John from down the street only paid 300 bucks per window installed and he is very happy,he's had then for 3 years. so why 750 per window?

The earlier demo eliminates that question. I've built a ton of value in my product. Then I tell them "Every step of the way there is a markup. The installer usually gets around $75 a window to install. Of course you're charged $150. That means the window was $150. So the company bought it from the distributor for $75. The distributor bought it from the manufacturer for $35. Now I'm not one to judge but would you be willing to put a $35 window in your $150,000 investment?"

There's other ways to do this but this was the easiest to type.

4)before you start your presentation we just want to let you know we are NOT buying tonight

"Not a problem. What I'm gonna do is get these numbers together and give you an option. I can only take so many jobs a year because of the numbers of crews and the time it takes for install. I have a project going on down the way. If I can get this thing put together for you where I can have my installers make it part of the other project and have the product delivered at the same time I can same everyone a bit of money. If it's something you need a little more time on then that's not a problem."

I get my numbers together towards the end. "If you'd like me to leave you with bid or estimate your 10 windows will be $10,000. If we can make this part of the Johnson project I'd be able to do the project for around $7500. I'd rather slide this in the calendar then have another job for $7500 than not have one at all because I don't have the slot for another 6 months. No pressure. Which do you think would be the best option for you?"

If someone gets mad or says "high pressure" I just tell them. "High pressure sales is when you tell someone you want to think about it and they stand in your living room for the next hour telling you why you should do this. I don't have the time or the ambition to go through that. I have plenty of projects to worry about. If you say no I'll be clicking my heels down the driveway and leave you guys with our regular bid at $10,000. If you want to get moving I'd rather have an extra job for $7500 than wait 6 months for $10,000. So if you feel any pressure tell me NO."

Then we talk about what they'd be looking for in other companies? why do they feel it's not quite for them?

These really aren't questions that can be addressed because I don't get these alot. I deal with these throught my presentation so when I get this up front I just say, "NO PROBLEM" and by the end I've already addressed these issues and they become Non-issues. So I hope some of the wording helps but without the whole demo it seems disjointed as I write it.

*shrug*

abacab said:

For me, if a salesman makes any attempt to close on the same day, he's out the door.

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Why? Don't you need to buy something? Isn't that why you have a salesman in your house? Wouldn't you expect him to ask you to buy what you told him you wanted?

We as consumers buy same day all the time. There has to be an incentive to. "BIG SALE! ONE DAY ONLY! DeWalt Combo Pack $499! Reduced from $649! Come in and shop......TODAY!

Well, you've been thinkin about gettin that. So you go down, look at it and say, "That's exactly what I've been wanting. AND the price sounds fair. Hmmm, I wonder what Sears is sellin this for. I'll swing by tomorrow and look at their price." Well, it has a combo pack but it's a little different than the one you saw but kinda the same. (Just like contractors) Sears has it for $599.

"Gee, guess that was a good price. I'll go to the other place cause I liked the Pack better AND it's cheaper." So you go back and what do you find?

Either the pack is sold out, or the price is higher. If the pack is there you might say, "Hey, this was $499 yesterday. If you make it $499 today I'll buy it." The guy says, "Sorry sir. Sale was yesterday."

"Well. Obviously you don't want my business then." And you storm off.

I'm just doing the same thing. You want to buy a pack. I have the one you want at the price you think is reasonable. If you want to look around I'm not upset about that. By all means. However, it DOUBLES my work load to follow-up on EVERY estimate. So I'd rather save you money if you save me time.

So when you kick the guy out he may have been the best solution for your need but you refused to acknowledge that all because he asked you to buy what you said you wanted to buy.

*Plus you have to sit through all the estimates of people who aren't right*

Interesting though. Different strokes for different folks. That's why we're individuals.

The thing about one call closing is we are not selling battery packs. We are selling, many times, a major ticket item that will disrupt the clients lives while we are there and have a lasting effect after we are gone. And if done wrong that impact can be very costly to the consumer. If they want time to weigh options they deserve it.

I have no real problem with closing on the first call. It does lend itself well with certain products such as windows and siding, which would be inline with what the OP does.

To me though, the idea that I can give somebody a 25% discount for signing today is crazy talk. Our jobs are priced fairly, meaning we will make decent money and bring good value to the client. It does not cost much at all to follow up on the first call. In real costs it is a phone call to set an appointment and a few hours for your presentation. In your example (BDiamond) you have hypothetically set the value as $2,500. You would be hard pressed to sell me on that value for the money. Try to close me later on that higher price and it will near impossible without a huge price concession on your part.

Using a discount to make a sale undercuts the value of everything you do.

You've just told me you overprice your work. Now you are in a position where you have to close me on that first visit because a second chance is not likely. Better off in my book if your one visit close results in a fee to properly prepare a detailed quote that meets my needs exactly while letting me know you care as much about the outcome of the job as you do making that sale.

Good Luck
Dave

The numbers were just for the example but that is kind of the point. The 2nd visit isn't likely. I don't want a second visit. I know statistically I can close 68% first visit. But on every sale the customer's needs are put before my own. We've thoroughly outlined every detail and cost of the improvement. I only close the ones I think we are the right match for each other. Others I'll walk and tell them I'm not the right guy.

Siding and windows is an easier scenario than general contracting for sure. Don't think I would try to one call close a $60,000 kitchen remodel.

As far as time vs. money goes it's all perception. If I have 4 appts a day I have the potential for 4 jobs. That's going to be a 10 hour day. Now if I have to follow-up, make a call, go through the details again, maybe stop by...when am I going to do that? I have to give up the potential for 2 NEW customers while I'm working on 2 MAYBE customers.

4 Leads a day 5 days a week 50 weeks a year = 1000 leads a year. See 60%, close 60%, 50% are approved for financing = 180 jobs a year @ $7500 = $1,350,000.

Let's just say I'm following up on 1 "estimate" a day.

3 fresh leads a day 5 days a week 50 weeks a year. Same percentages = 135 jobs a year.
1 rehash a day, 5 days a week, 50 weeks a year. 60% WANT a rehash, 35% close, 50% approved = 26 jobs a year

Total is 161 jobs. 135 @ $7500 = $1,012,500. 26 @ $10,000 = $260,000. Total = $1,272.500.

"Yes, Mr. Homeowner. $2500 may seem like a lot to pay just because you're telling me no today and yes on Monday. But as wee look at the numbers it looks like even at an extra $2500 I'm STILL losing $77,500! We agree that I've given you everything you are asking for and you've admitted the price seems reasonable. So I'd rather have you as a customer now at $7,500 then HOPE you will later at $10,000 and potentially cost myself money down the road in in the lose of NEW opportunities. No one is trying to pressure you or take advantage. It's just simple economics. So wo you like to get this written up for the $7500 and finally get this project put to rest?"

It's not easy to post on the Blackberry and there's a whole lot to say to validate the position. But using what were random numbers of $10,000 and $7500 once it's outlined it's an economical and logical fact that I can just a $2500 swing in today versus tomorrow to a homeowner and get their commitment.

You post made good sense and was very insightful. Thanks!

BDiamond, I only know you from your posts in this thread, so it's fair to say I don't know you. I may be presupposing to much about your techniques. And for the record, I think your advice to Davinci is reasonably sound.

But the only reason you've given for signing today instead of Monday is to save 25%. That is a huge chunk. If the offer is genuine then your selling an overpriced product and then offering a fake incentive to entice someone to buy today. In your example of the DeWalt combo pack, a consumer is apt to visit a given store on a regular basis and actually see that combo pack on the shelf for $649 time and again. When it goes on sale for $499 it is a real sale item. Our clients don't see us on the shelf with price tags very much. We drop our price to get a signature tonight and it becomes suspect quickly, and rightfully so.

I'm sure you know if you try your explanation of losing $77,500 to a prospect you will be met with a glazed look of bewilderment. That is an in house calculation and serves no purpose to your customer.

Obviously the one visit close is not my style but I have no objection to those that use it. (Specially if they are successful.) My objection here is giving the advice to drop your price to close the deal. If that ammo is even in your arsenal it is a false offering and degrades what we do when it's brought to the table. You have gone from salesmanship to brokering a deal by buying it.

Give the OP another method to close tonight.

Good Luck
Dave

It depends I guess.

My first reaction is to say, "I give everyone my best shot first time around. I know what I need to do the job and this way all my customers are priced equally and fairly across the board so I'd have to say I can't do that. Where does the number $10,500 come from?"

Maybe he wants to pay cash and that's all he has, maybe that'ss he feels it's worth, whatever the situation at least now I can address it and maintain my integrity.

For a joke to lighten the mood I might say, "Gee Fred. If you wanted to haggle a bit all you had to do was tell me. I could of stuck another $1500 in the job and let you beat me up a bit!"

However, if I've room to do that, the company will make a profit, and I can make some money as well then why not. The important thing is that when you're pricing you SHOULD be giving your customer a fair pricing and anything less throws off your margins. I sure we've ALL dropped our pants on a job only to be SCREWED in the end.

The important thing is get a concession from the homeowner so your drop has value. "Sure. As long as you can provide me 3 referrals before I leave." That type of thing.

By definition a fair price is one that leaves all parties feeling they got a good deal. (From Dave's book of The Explanation of the Universe and How to Raise Sheep) It has little relationship to what goes into the price. Two contractors might have the same hard costs and still sell at different prices. Either contractor can be said to offer fair pricing when properly sold.

But if you are going to lower your sell price to make the sale you must remove something from the offer to maintain your balance.

Sell your window job for $10K on one close, rinse and repeat. Life is good. Meet one prospect that won't close in one night and you drop to $7500 as an incentive, prospects radar clicks on. You've just admitted that you were trying to sell at a falsely higher price. Unless you are taking something off the table of equal value.

Are you taking something off the table or just dropping to a price that's still good?

I'll get off my soapbox for awhile and give somebody else a chance.

Good Luck
Dave

NormW said:

I think Im starting to see a pattern in our sales approach.

I notice that most of the posts I don't agree with, are people selling more of a "product". Were I think more in terms of a service.

David, Your listed as a remodeler, I consider myself a builder/GC.

I think You and I, are forced more into a design/build approach, were one shot closes just aren't possible. Even in situations, were I could close the sale in one visit, I take a couple days to think it over, out of habit.

I think a lot of the people who are seeing themselves as salesman, sell more of a manufactured product. Maybe closing fast, is the best approach for them.

In my situation, Id come across like a quack, if I tried to get a commitment on the first meeting.

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You're right NormW. You've commented on a few on my posts so you've seen that meeting the customers needs, providing them with quality product and service, and establishing a good relationship is all the most IMPORTANT part of my process.

(I knew as soon as I said 1 Call Close in these threads it would kick something off!) Lol

This theory is really reserved for my industry. It can be done and the customers needs are always paramount.

Don't get hung up on the inflated price thing. Ever see sticker price on a car? Ever buy one for that? Ever haggle at a flea market? Ever negotiate the price of a flat screen at the furniture store.

It's buying psychology.

Law of Authority - I'm a professional, I know what I'm talking about, and you can trust me.
Law of Scarcity - This isn't available for ever. "Going out of business Sale!" "Wednesday. only!" "I can do this but I can only fit you in for this Thursday"
Law of Contrast - "Remodeling Magazine says Mid-Range windows are $1000. Upscale $1500. I'm in this Mid-Range pricing at $10,000. Here's a bid from Sears for $1500.00 for the same size project."
Law of Reciprocity - I'll scratch your back if you scratch mine. "Buy today and we'll DOUBLE your order!" "No Interest for 18 months on purchases over $399" "Get this project moving and. I'll do it for $7500."

So a one call close is a combination of all those elements that appeal to the psychologival process of buying.

Our company has been in business for 30 years. I've been in this industry for 10 myself. My recommendation is..(Law of authority) I'd love to do this but our calendar is really unavailable for the most part. (Law of Scarcity) You can see there are other contractor who can do this for around the $10K to $15K according to my (verifiable) 3rd party info. (Law of Contrast) but if you'd be willing to get this moving forward I'd be willing to do the job for $7500. (Law of reciprocity).

This coupled with the rest of the demo is a slam dunk. The buyers improvements needs are met. They're psychological buying needs have been met. And everyone is super excited!

I'm gonna challenge a general contractor (tile, flooring, remodels) to get with me and let me try to put a demo together using these theories. I'd like to see how they transfer over to other trades....



But you're right NormW. People get bent up a little because they know it doesn't work for their trade and probably would come across crazy. However, has anyone ever tried it? Yeah, That'd me a tough one!

davinci said:

excellent BDiamond. thanks
you obviously do a one day close . how do you handle the references? most homeowners want references,how do you close in one day if they want to check references?

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I carry a list of EVERY project our company has done in the state, listed by city, then zip. That way they can see the jobs we've done of people closest to them. (Law of Social Proof). I also have a monster stack of testimony letters I cam pull out. I have pictures that correspond with the list and the letters. I have the BBB Honor roll award certificate. I have 3rd party literature that mentions us.

If a homeowner says they want to check our references before they sign anything I say, "Betty. If you called any of the numbers I give you what to you think they'd say? They'd say they loved us. Would anyone in their right mind give you a reference that would have something negative to say?. Of course not. Here are the letters people have written. You expect to see any bad ones in their? Of course not. The fact that we've been in business for 30 years, have jobs up and down every block of this city, and have an A+ rating with the BBB should speak to our integrity. If you don't trustme based on the two hours we've spent together then I would suggest maybe I'm not the right guy for you. But if you do based on all this info sitting on the table I think we'd be a great fit. Can I go ahead and write this up now and I'll leave you with of these addresses to cruise by. When you feel like it?

DavidC said:

Lest my rants go misunderstood, I agree with what you said completely NormW, and most of the advice given by BDiamond. No problem with the one visit closers.

My fear is that dropping the price, specially at the rate suggested, without altering the specifications sends the wrong message. Your ability to do so suggests (to me) that something is amiss in your process. You've apparently built in the ability to buy a sale on occasion, which doesn't serve the customer well in my mind. But that is your business and not mine.

I worry that you put the word out there that this is the way to do it and somebody takes your advice, cuts his price to make the sale and proceeds to lose their a$$. Or is your advice to pad every sale for the eventuality?

It's great you are taking the time and effort to help out when asked. Maybe I'm just stuck on a missed detail.

Good Luck
Dave

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I agree Dave. That still is a concern when I answer these question. I need that disclaimer "Do Not attempt this at home!"

I don't encourage anyone to just start chopping prices to get business. I've seen the contractor that short bids every job. Gets the job, but little costly mistakes, wrong orders, etc take him out. It's always better to have that decent margin, charge what your worth, and stick to your guns.

You EXPECT the homeowner to get other bids. So you sell YOU. You're integrity, service, expertise, etc. Because in the end 2x4 and sheet rock is what it is.

However, we are selling a need. People NEED windows when they're rotted out. They NEED siding when it's falling off the house. However, it is one of the most procrastinated home repairs EVER!

Pricing is all perception. You can't risk manipulating numbers because materials can be priced by a homeowner. The only $$$ you can manipulate is your labor charge and if a finish carpenter is getting $65/hr one guy can't charge $105 and then drop to $65 if they sign today. It doesn't hold muster. You HAVE to be within an industry range to seem credible.

I don't. I can get 3 bids for my house for windows and I'll get a range of $3500 to $15000. And the windows will ALL LOOK THE SAME! That's a lot of room to play with. There are too many variables.

See there are 3 "grades" Builder grade, Mid-Range, and upscale. Then in THOSE categories you have Low, middle, and high pricing.

So we carry one window...an upscale by industry standards. So all literature and googling suggests we are in a $1350 per opening range. Qualified Remodeler Cost vs. Value 2009. So the "Perceived value" by the homeowner is to obtain 10 upscale windows will RANGE around $1350. Maybe $12000-$15000. We come to market as an upscale provider on the low end of the upscale market.

Let's say the windows are smaller and that's why we're at $10,000. Maybe the middle is $11,500 and the high end is $13,000.

The customer wants to get some other "upscale provider" bids. I could probably sell these windows at $10,000. If I did the owner would make me the CEO because we'd be RICH! My goal is to sell at $7500. I know companies that sell at $12K-$15K. Because they have created perceived value in their upscale market. Low volume BIG margins. So I ride on the perceived value of other companies and offer a comparable product and price. People don't balk at $10,000. Some are even very impressed. I'd probably get calls back! So PERCEIVED VALUE rules the day.

But wait! I can't do your project because I don't have the availability after this week. I'm disappointed. They're disappointed. I know you want to get other bids. You did say you really thought you liked everything huh? Well, I don't quite have the time to do this unless I could get the windows ordered this afternoon. If I was willing to basically cut into our profit margin to get this going might you be interested in working with me? I'd rather have the volume cause it sure helps with our pricing through the distributor. You did say you were happy with everything correct? If you'd allow me to get some pictures, maybe a referral from you before I leave that would really be helpful. Can we work together on this?
They have an accepted perceived value and now I've justifiably lowered it. They don't know what windows cost us and what we pay for labor. They don't know what margins we have. They do for you though because you break all that stuff down. Window companies don't.

So if a homeowner perceives I have a 30% profit margin (which they accept) dropping 25% makes PERFECT sense. We make $700 and got the job. They saved $2500 from what they expected was going to be a $10K-$13K job and they don't have to sit through a bunch of window demos.

As you said, "A fair price is when everyone is happy." They feel they got a break and we made a decent margin (better than $700 for sure).

The window industry doesn't have the transparency that GC stuff does.

So yes, it would be disaster for the wrong tradesman to do this. It would be disaster to divinci or welterweight to do this without understanding ALL the components of creating perceived value and the right buying atmosphere.

It is tough to make sense of it. Good points though. My goal is to help everyone sell themselves, services, and products better because that has to happen first before we can make any money.

No if you could me learn how to make these posts shorter I'd sure appreciate it!!