In this edition of Big50 Bites — our audio series on the biggest issues facing remodelers today — we are deviating from our regular format to celebrate the release of our exclusive 2016 Cost vs. Value report. Here we share commentary from five of this year’s Big50 honorees who explain how they use the report as an effective business tool and why it is important for their operations.
First up, we hear from Bill Wolf owner of DreamMaker of Grand Rapids, who talks about how the report can establish credibility:
“Many people want to get two or three or maybe more estimates on a given project. And when you have [the report], it’s like another estimate already. It gives them an idea of a range in their category, like the high-, low-, or medium-end, and your geography. It narrows it down nicely and gives a realistic estimate of what it might take to do that project, and some of the items involved. So it’s a very helpful tool as another estimate that other people can look at, rather then getting more and more estimates which sometimes does get more confusing. It’s like a third-party validation. So it’s not you yourself saying, 'This is a good estimate, we worked hard on it, it’s accurate'; it's a third party that lends a little more credibility to that number.”
David Mulliken, founder and CEO of Atlanta-based Infinite Home, ensures his clients are informed of the data by emailing the report to prospective leads:
“We’ve used it to help establish a cost expectation with clients. We’ll sometimes e-mail out a digital version to a prospective lead we are working with. I think it does a good job of communicating realistic cost expectations so we don’t have to come and do that ourselves. It helps us kind of set the bar for reality, because a lot of people don’t truly understand the cost of remodeling work coming in. But then it also helps us to help show what the return on investment is from a monetary standpoint. And then all we have to do is fill in the rest with the emotional lead and also supply for them. It’s been a really useful tool in that sense.“
Sometimes the data alone is not enough — it’s the presentation that truly matters. John Bartrom, CEO and founder of Kansas City- based Jericho Home Improvements, explains:
“When we [as customers] buy something, especially a larger purchase, we have to be price conditioned. If we go into a store thinking something is going to cost $200 and it costs $800, the chances of us making that purchase are very, very small. But if we see something on TV about how this thing costs $1,100, $1,200, and they have it on sale at this store for $700.99, then we can go, 'Wow, that’s really a great deal, let me take advantage of that.' [It's] the same thing with Cost vs. Value. Customers have to be conditioned to how much things cost. So as we’re going through and spending time with the customer, and answering their questions. We have a very specific laid-out selling process that helps us accomplish all our goals, and helps the customer get to the point where they can make that decision. I think the biggest challenge for most business owners in the remodeling industry is not price conditioning correctly and not using this report in a way that can maximize their sales potential.”
Not every remodeling firm will benefit equally from the report. Some, like Mihalko’s General Contracting in Western Pennsylvania, are in such a niche market that the data often doesn’t lend to a sales pitch. Even still, the report is critical to conducting business, says the owner’s daughter, Chelsea Mihalko:
“Where we operate and do business at is a very, very rural area. We work with a lot of older demographics, and people not up on all the city trends as we’d like them to be. So it’s a little different, when I go into the [Mid-Atlantic] Cost vs. Value. You show a lot of major cities, Pittsburgh being the closest to us. But even in downtown Pittsburgh, it’s still so different than where we do business because we don’t really venture into the city at all. These numbers [in the report] are a little difficult to use with customers, because how could you sell them on [vinyl window replacements] if they are making 60% back? As far as [the] actual tool, it’s more an internal thing we would look at versus sharing it with customers. [...] In the remodeling industry there is not a lot of data and I’m glad that you guys do collect it. I do like reading this and I like looking at the trends and things that people are interested in. It really does help, especially with the curb appeal and things like that. For me looking at it, it’s good, I like the data — but as a selling tool it would probably actually hurt us.”
Other times, the data is exactly what’s necessary to target a very specific demographic — and it also helps legitimize the industry. Listen as Mike Damora, general manager for K&B Home Remodelers and regular blogger for REPLACEMENT CONTRACTOR, a sister publication to REMODELING magazine, gives his take:
"In the home improvement business, nobody wants to talk about price; that’s a big scary thing. If used properly, [the Cost vs. Value report] puts it right out front so you can discuss and give this information to homeowners right up front. Most contractors operate on the premise that the homeowners an idiot. That’s just how it is — you know, the drops, the 'buy now and you get a discount' type of tactics that [are] rampant in our industry. If you want a job for $10,000, you better do a $20,000 presentation and show them a price for $15,000 that — for today only, because of added circumstances — you can get for $10,000. It’s like buying a used car, and I feel that homeowners no longer resonate with that. What Cost vs. Value helps do is establish credibility — that these are industry norms of what reliable contractors, legitimate contractors, charge for these types of improvements.”
Listen to all editions of Big50 Bites so far here—and stay tuned as we present even more interviews from your peers.