Sell Well

“Would you like a cup of coffee?” The way you answer that question might land you a new client — or lose you one.

Some people might consider saying “no” to be a rude refusal of hospitality. For others, a “yes” might be interpreted as a willingness to put them to unwanted trouble.

Knowing how to respond requires a willingness to uncover the meaning behind client questions to discern what they really want, according to remodeler and consultant Joe Dellanno, president of My Design-Build Coach in Arlington, Mass. For example, clients might ask when you can start, when what they really want to know is when you will finish.

Helping clients identify the underlying problems they have with their homes and coming up with the best ways to resolve these issues is the foundation of a consultative sales strategy.

This approach may take more time and customization, but the consulting that occurs during the sales process can save time and trouble after the contract is signed, and those remodelers who employ it insist the effort is worthwhile.

A couple approached Dellanno last year after firing their first design/build team. The two wanted a house to accommodate their young son who has multiple sclerosis. The original team had designed a home that was ADA-compliant, but that had appliances that would block the child's path when open and a walk-in closet in the boy's bedroom that would be difficult to maneuver in a wheelchair.

The clients really wanted a home that would help the boy feel less handicapped, Dellanno says. And he won the job because he spent more time exploring with the couple how design choices might affect their son.

“The most effective way to do consultative sales is to help your clients discover the answer and not to give your opinion too quickly, but to draw them out so they feel like they are part of the process,” he says.

“You will make more sales when you educate the customer about everything they need to know to make a wise choice. And, you will make [those sales] at your price,” says Mike Gorman, author of If I Sell You I Have a Job. If I Serve You I Create a Career!

He has heard from many remodelers who complain about bidding on a job and having the potential client show them the door while another contractor who names a higher price walks out with a signed contract.

“When we educate [customers], we increase their need, which helps the customer understand why they need to spend more money,” says Gorman, who launched his seminar and coaching business after 20 years as a contractor.

Greg Antonioli, president of Out of the Woods Construction in Arlington, Mass., can attest to this. He used to run around visiting houses doing free estimates, spending anywhere from 5 to 20 hours on each prospect in drive time, presentations, and estimates. For every six to eight presentations, he was signing one contract.

“About seven years ago, I realized that not only did this method not work for us, it didn't work for the client either,” Antonioli says. “They still didn't understand what they were paying for.” So he started to incorporate more consultative tactics, and soon saw results. Today, Antonioli's process involves:

• Conducting the first meeting in the office. The controlled environment without the interruption of children and phones helps prospects focus, plus it indicates that they are serious about the project.
• Asking questions about prior remodeling experience. This helps uncover the prospect's decision-making process and what has pleased or annoyed them in the past.
• Identifying primary concerns and prioritizing them. Are the prospects most concerned with budget, schedule, invasion of privacy, sound, or dirt?
• Spelling out the company's process. Antonioli explains how his business runs and the level of project management offered. “We clarify exactly what will happen at each meeting and what decisions will be made when, so [our clients] aren't surprised down the road.”

“This takes the mystery out of working with us,” Antonioli says. When he finally makes a visit to the house, where he talks scope and budget, the potential clients understand what's behind the numbers.

This process has led to much greater profitability. Antonioli says he now signs construction contracts with one out of three people who sit at his desk and he has almost tripled his income. He has also cut down time spent in free estimates from 5 to 10 hours each to about 2 to 3 hours.

“The objective is selling in a profitable manner. That involves demonstrating to potential clients how your business adds value to their homes,” says Mack Hanan, who coined and trademarked the term Consultative Selling and authored its bible, Consultative Selling: The Hanan Formula for High-Margin Sales at High Levels. Too many remodelers compete on price, which brings down everyone's margins — and profits, Hanan says.

“The No. 1 way to ensure a margin,” Hanan says, “is by relating it to the value being delivered — not to other people's prices — and to show that the price that includes the margin delivers a greater value even than a lower price, and therefore is fair.”

He advises remodelers to keep abreast of the averages in their markets for estimated appreciation from specific projects and to compare them to the cost. (See REMODELING's 2007 Cost vs. Value Report at www.costvsvalue.com.)

The extent to which the financial cost can be perceived as less than dollar-for-dollar is related to the likelihood of moving buyers into that comfort zone of committing, according to Hanan.

The essential consultative selling equation is when the homeowner realizes, “I'm receiving 100% in lifestyle values at 30% to 40% of the cost,” he says.

Bruce Borden, owner of Walden Design Build in Toronto, uses a consultative approach to train his potential clients — before they even meet him.

Borden's approach, dubbed “plansmart,” begins at his Web site, which offers a wealth of educational materials. Under a “Resources” tab are reports on “Avoiding the Nightmares,” “Calculating the Cost,” “The Most Common Mistakes in Renovation,” “Move or Improve,” and “Preventing Cash Problems.”

Next comes required reading. Borden sends potential clients a booklet, Understand, Before You Build, with sections on “Why Effective Pre-Planning Directly Translates Into Less Money Spent Building,” “What No One Will Tell You About Selecting Your Contractor,” and “The Secret to Keep Things Under Control.”

Even referrals filter through this process. “It's what generates 100% of the work we do today,” he says. Profits have doubled in the five years since he instituted “plansmart,” Borden says, and he's able to manage a larger volume of work with less overhead, fewer staff, and less client hand-holding.

“We want to work with clients who match what we are all about, and weed out those who don't. If you are going to spend six to eight months working with someone, you want to know that you are working with the right people,” Borden says.

The “plansmart” process is geared toward grooming the right people by giving them a greater sense of what is feasible in a renovation project. “Understanding helps people make good decisions,” he says. And that requires becoming a consultant who can turn people into expert renovation clients.

Many remodelers would rather just say, “What would you like?” Dellanno says. “Being a consultant requires being a more sophisticated communicator who can listen, talk, investigate, ask disturbing questions, and be able to answer them.”

So, how does Dellanno advise you answer the coffee question? “You reply with a question of your own,” he says. “Are you going to have some?” The answer will tell you whether you should say yes or no.

Loring Leifer is a freelance writer in Shawnee Mission, Kan.

Tips for Incorporating Consultative Techniques

• Educate potential clients about the remodeling process. For most, an extensive remodel is something that people may only go through once in a lifetime. As a consultant, you need to make them feel comfortable with it. Describe the process, advises author and consultant Mike Gorman. Show copies of contracts and payment schedules, discuss start and finish dates and what to expect in terms of noise and disruption.
• Identify needs before materials. You should focus the initial discussions on the owner's problems with the house, not on your services. “Remodeling is taking a house that is there and eliminating what doesn't work. It could be lack of space, repair issues, home comfort issues, or not enough light,” says Bruce Borden of Walden Design Build.
• Demonstrate dollar value. Before you show up, find out the tax-appraised value of the house. What's the expected value of a new kitchen or a new bath? Before you sign a contract, you need to know the owner's equity and the current resale price. “Then you can calculate the value added by the remodel,” author Mack Hanan says.
• Talk about financing. You should be prepared to discuss the merits of financing, whether or not your company offers this as a service. Tax advantages and timing may make it advisable, even for wealthier clients. “Studies have shown that people will spend 30% more when they finance a remodeling job, even those who easily can afford to pay cash,” Gorman says.
• Be prepared to say no. “As a consultant, your job is to help clients arrive at the best way to adapt their homes to meet their needs,” consultant and remodeler Joe Dellanno says. “That might mean helping clients understand why something they've requested may not be a good idea.”