Why is it that selling is not most full-service remodelers’ strong suit?
Remodeling: Many full-service remodelers have lost a significant chunk of sales in the downturn. Specialty contractors seem to be doing better. Why?
Phil Rea: You used to be able to make a living returning calls. No more. And it gets back to sales. I was just on the phone with a specialty contractor who last year had the best year he’s ever had since he went into business, in 1985. He called me to see what kind of sales materials I have. I don’t get those calls from full-service remodelers.
RM: Why is that?
PR: They haven’t had to sell in the past, because there was so much money out there. Today you’ve got to be a salesperson. Take the specialty contractor. He always charges more. I think once upon a time full-service remodelers would look at specialty contractors and say: Hey, they’re ripping people off. I say: If they’re selling and you’re not, then do something about it. Learn to sell your wares. A lot of full-service remodelers would rather go buy a new table saw than invest in sales training.
RM: When it comes to marketing and selling, what’s the biggest challenge for remodeling contractors?
PR: I think what’s been the challenge — certainly for our clients — is that not only do they need to get business but they need to market where they didn’t before. And … they often don’t have the funds to market like they did before.
RM: How should they address that problem?
PR: The Internet is the way to do that. It has leveled the playing field. There are lots of ways to market there and it’s less expensive today than it’s ever been and it’s more targeted. I know who’s looking at my website but I don’t know who is looking at my Yellow Pages ad or my direct-mail piece. Today you need to reach people at their computer and their cell phone.
What I suggest is that you get every e-mail address you can find. I had a client the other day saying, “This e-mail program is working great, but I only have 50 e-mail addresses.” I said: You go to church? How many members does it have? She said, 14,000. I said, how many e-mails are in the church database and newsletter that are free for the taking? Are you and your company on Facebook? Their fastest-growing demographic is people 62 and older. These tools are essential today.
Sales System: Imperative
RM: It’s easier to sell repeat or referral prospects than people you connect with through your marketing. Does a remodeling contractor who’s now selling to marketing leads need a selling system?
PR: Everybody needs a system. Imagine walking into the dentist’s office and the dentist says: Well, let me figure out how to treat this bad tooth. Or how about if you went to an attorney and he said: Tell me what you want me to do.
A salesman walking into a house has to take control. The word manipulation means “to work or handle skillfully.” The minute I go in with no agenda, I always default to the homeowner’s agenda. My system says: Let’s get it on. I don’t wait for people to call me. Stay in your comfort zone today and see how well that works.
RM: The remodeling sales approach typically involves multiple visits before a construction contract is signed. What would you suggest a remodeling company owner do to help secure commitment on that first visit?
PR: They have to come up with a plan or a vision. Say to the homeowner: If I could do X, would you …? What has to happen is I have to take the other players out of the market. What I have been working on is an exclusivity agreement, an agreement to work only with me for a certain period of time. I don’t know if remodelers will have the nerve to do this. But I tell people look, 2008 and 2009 were horrendous for our business. Things are much better and I need to make up for two years of lost time, energy, and money. If this doesn’t fit, I understand, but I have to assess how I’ll use my time and to do that I have to know the people I want to work with. So if I can come back with a design you like and a price I hope you like, can we do business?
And the people who are shopping, you’ve got to close them on that first visit. Convince them that you’re the one. Otherwise, you’re competing on price.
RM: What’s the biggest mistake remodeling contractors make when trying to sell a five-figure job?
PR: The biggest thing is they don’t ask for the business. You need to say, in so many words: I want your business. What do we have to do to do business? If I’m in there to sell a job, I want to say No to the homeowner rather than having the homeowner say No to me. Point blank: that’s the biggest thing.
Bowing Out of the Bidding Wars
RM: Homeowners are not above pitting one contractor against another on price to get the lowest-cost job. How does a remodeler stay out of that game?
PR: The first thing is you can’t buy into it. And you’re either going to be Nordstrom’s or you’re going to be Wal-Mart, you can’t be both. Secondly, we are letting the homeowner sell us. They don’t know how much what we make costs because we don’t have model numbers. They don’t know our labor costs. And the third thing is, there are people out there with money. I just bought a Range Rover for $85,000. I asked the salesperson when they could drop it off. He says: I have five deliveries on Saturday. Salespeople can find the people with money. They have that confidence. It all boils down to being able to sell your product.
RM: What will instill confidence in that owner who is managing himself?
PR: I am a so-called expert, but I’ve got 30 books stacked up on my Kindle and 15 of them are on sales. We have to continue to educate ourselves. If you haven’t gone to a sales school, you need to go. You may need personal coaching. The guy who doesn’t have that environment with other salespeople to get him pumped, he’s an island, waiting for the phone to ring. There are still people buying and people working and people who have money.