Over the past 30 years, we’ve watched a lot of contractors become millionaires. Regrettably, we’ve also seen too many hard-working owners end up with very little to show for years of long hours, sleepless nights, and never-ending stress. What allows some owners to consistently build wealth while others struggle some weeks to make payroll?
After working with thousands of contractors, we’ve discovered the single biggest difference between success and failure is the business process that management follows. A process is a particular method of doing something involving a number of steps. Every task everyone in your company routinely performs is one part of a process, effective or not.
W. Edward Deming is the business genius who taught top Japanese management after World War II how to improve sales and production by improving quality.
After 50 years of statistical analysis, Dr. Deming found; if the most important 15% of a process is implemented correctly, the desired outcome of the remaining 85% is practically assured. For contracting business owners, the desired outcome is net profit.
What is the most important 15% percent?
Your accounting process? Your installation process? Supervision? Purchasing? Sales process? Or something else?
The answer is your sales process. Without selling, there is no need for accounting, installing, supervision, purchasing.
The sales process you should use depends on the customers you choose. Contractors who choose to stay busy selling lower-margin solutions to entry-level buyers typically use a price-focused sales process. Unfortunately, it’s impossible to always have the lowest price because, no matter how low you go, there’s always someone willing to sell for less.
Even worse, a price-focused sales process breeds discounting and lost profits. Because every dollar lost through discounting comes from net profits (if there are any left), the discounting sales process immediately erases your bottom-line profits.
You can maintain your margins and eliminate discounting by following a sales process that justifies your price with exceptional value and complete trust. When your customers are spending serious money on unfamiliar home improvements, the most important thing they are looking for is someone they can trust. High trust always trumps low price.
Do your people struggle with your sales process?
The most vital step in every process is implementation. Your consultants will struggle with any sales process that tries to change their personality or beliefs. If your sales team is required to memorize manipulative scripts or use pressure sales tactics, they will resist executing the process. The easiest sales process to implement is one that makes your consultants and customers comfortable.
Can you manage your sales process?
One of the biggest mistakes well-intentioned contractors make is sending their sales team to multiple different sales training programs. The problem is you cannot manage your sales team effectively until everyone is using the same sales process.
Effective sales management requires a simple, repeatable process as well as continuous measuring and coaching to improve individual performance. Any sales process worth implementing should provide management with tools to increase net profit by:
Increasing closing ratio
To close more sales use tools to help your buyers discover and demand the benefits only you can provide. When you customers want your company, people, craftsmanship and you …
There’s no way your competition can’t compete.
Improving average sales price
When you give buyers the benefits they want most, you inherently make more premium sales, adding incremental sales like essential accessories and must-have warranties. Incremental sales don’t add overhead. Once overhead has been accounted for, the additional gross profit for that job becomes net profit. This often overlooked opportunity can add tens of thousands of dollars to your bottom line every month.
Buyers are six times more likely to believe referrals than any other form of advertising. In our new world of online reviews and social media, the personal referral is everything. It’s the big red light over the goal that tells the whole world you exceeded your customer’s expectations. When your sales team focuses on generating referrals, everyone subconsciously adjusts their attitude and actions from making a onetime sale to creating a lifetime customer who is anxious to tell friends why they should to do business with you.
Do you need to update your sales process?
Is your sales process easy to implement and manage? Are you seeing the closure rate and average sale you’re looking for? If not, it may be time to change.
When you are ready to change to a better sales process, take a look at multiple delivery methods. Today with web-based virtual technology, immediate implementation is much easier. For even better results, you might consider face-to-face training that maximizes self-confidence and perfects sales skills. Using both virtual and live to deliver the same sales process through your entire company drives immediate impact and long-term implementation.
Perfecting your sales process is a proven path to better profits. You may be thinking; “Now is not a good time, maybe later. W. Edward Deming warned what can happen when you hesitate too long to change to the best process when he said; Change isn’t necessary because survival isn’t mandatory.