From New Jersey to Florida, Michigan to California and Seattle, remodelers describe their clients the same way: hesitant, indefinite, vague. They have no sense of urgency. They are Internet savvy, researching more, and know their product prices. They want as much remodeling as they can get for as little money as they can spend — and they are going to interview 27 competitors to get it. How are remodeling companies changing their sales processes to reach these new consumers, meet their shifting expectations, and get them to say yes?
A few years ago, many remodelers had gotten off the job-bidding wheel. Now they’re back on it. “There is a lot more competition, and the economy has forced people to do things they would not have done before,” says Dave Mattson, CEO of Sandler Training, in Owings Mills, Md. “It’s last man standing: ‘I’m going to price things insanely low to keep my guys working. You’ll go out of business before I do and I’ll eventually make it up.’ It’s insane, but it makes sense when you’re emotionally involved in the process.”
To combat this competitive attitude, you have to be better organized and have repeatable processes. Bill Tanasse, owner of Key Builders, in Lansing, Mich., has spent the last several months investing time in his sales strategy and working on his sales process. “Clients know there is value to be gained out there, and you have to be sharper. At every juncture, I present myself as a professional. Every process has to be crisp.”
While competing on price can be a death spiral, the distance between price and value has narrowed. “They are attached at the hip,” says Karen Zieba of Zieba Builders, in Long Beach, Calif., who has always “tried to sell value and not cost” to her mostly high-end clientele. Now, she says, “We have to offer good cost in order to get anyone to believe they’re getting value. They need to see they are getting Zieba Builders for what they were going to pay some ‘one-off guy.’”
Selling value in this economy might mean changing your marketing strategy and showing clients that you’re willing to work with them in new ways and that you are knowledgeable about products.
While most remodelers are now willing to take on smaller jobs, many companies that never made the margins on those types of jobs are having difficulty marketing their talents. “I don’t want to change my image in the marketplace,” says Sunny Zimmermann, owner of Zimmermann Associates, in Lakeland, Fla., who knows that the perception of his business is that it’s expensive. For Zieba, too, positioning her company is proving to be challenging. As Zieba Builders takes on smaller jobs, she sees her client base shifting from sophisticated consumers for whom quality always trumped price — “They didn’t care what it cost if they got what they wanted,” she says — to more middle-class clients “[who] don’t need the fancy stuff or the extreme appliance package with some obscure product from Istanbul.”
Zieba is targeting different neighborhoods and is sending out small batches of brochures created in-house. She’s trying to position the company as “someone you can trust; your neighborhood contractor; a member of the community; and family-centric.” She is also leading with offers of discounts on cabinetry — something the company hadn’t done before.
It’s a fine line to walk, since marketing materials can be costly. And what happens when the recession subsides? Which clients do you pursue? Which image do you maintain? “We’re at a crossroads,” Zieba says. “What will the economy do for us? There may be more money, but there’s a lot more risk in a premium market.” And she enjoys working with the more midlevel clientele and would like to be able to maintain that market base in the future.
Glen Lumia, president of Creative Design Construction & Remodeling, in Northvale, N.J., has expanded his geographic radius and increased his warranty to five years. He has increased spending on marketing and is doing both “old and new things”: direct mail, door hangers, client parties, educational seminars, donating design services to schools, appearing on radio shows, doing more home shows. He has changed his “package” price, the creature comforts that were built into his base bids. “We’ve peeled back standard features,” he says. “For example, a standard kitchen package includes a double garbage roll-out, lazy Susan, roll trays, tilt blanks at the sinks, three-step crown, undercabinet lighting.” Now, Lumia allows clients at a “challenging price point” to pick items à la carte. Although it’s more difficult to make margins, it brings down the base bid, and clients can always add on.
Lumia is also more open to allowing clients to supply their own materials, such as appliances and tile, but draws the line on plumbing fixtures since the company warranties them. Tanasse doesn’t normally allow clients to do part of their job, but recently finished a project through drywall and, for a consulting fee, is “helping to steer [the clients] in the right direction as they finish it.”
Zieba says that her clients aren’t asking to do parts of their projects, but she does find that she is working harder to seek out products and materials at lower prices for them. She has even found herself abandoning some of her usual vendors. “I recently bought [a shower door] from a new vendor because I almost felt I was being cheated [by the old vendor],” she says.
The Internet has made everyone a crackerjack researcher. “You have to be knowledgeable of the marketplace and keep up to date with the newest products and their costs,” says Tom Barber, owner of Barber Construction, in Roscommon, Mich. “But you have to do a lot of educating. [Clients] go online but they’re skimming things. They don’t have the details to make a good decision. You have to help them make a good decision.”
Ultimately, any sales process must combat the inertia that is gripping nearly all consumers. “The biggest challenge for [remodelers] is to create urgency,” Zieba says. And there are good reasons for homeowners to invest in their homes.
“I emphasize that commodity prices are low. There is real value to be gained right now in the industry — labor prices and material prices are at record lows,” Tanasse says. “You couldn’t pick a better time to do this project.”
Individual remodelers need to work on telling their story. “We got caught in our comfort zone. We became successful and the economy made us successful. Now we have to go back to the things we used to do to survive and thrive earlier on,” Mattson says. “Just saying, ‘The value of my workmanship sells,’ doesn’t work anymore. Thinking, ‘I don’t have to do all that stuff I learned at [sales training]’ doesn’t work anymore. Sometimes you have to go backward to move forward.”
—Stacey Freed, senior editor, REMODELING.
This is a longer version of an article that appeared in the February issue of REMODELING.