One trend I noticed during the recession was far more remodelers resorting to being in competition. Due to a “competition mentality,” these businesses were selling themselves on price to get the job. To sell projects, they either had to offer the lowest price or, if their bid was the same as another remodeler’s, they would discount the price or throw in freebies to entice the buyer.
I fear that too many of these remodelers will continue to maintain this competition mentality even as the economy recovers. It may sound harsh, but these business owners win business by being the loser in what could be viewed as a reverse auction. That business model is the path to eventual failure.
Not Like the Others
Rather than fall into this competition mentality, other businesses have adopted a “differentiation mentality,” differentiating themselves by defining how they do what they do; not selling on price. By offering and doing things differently from other businesses, these companies may actually eliminate most of their competition.
I discovered this difference early in my remodeling career. With a goal of creating an employee-managed business — one that would run without me but would still generate a significant net profit — I needed to find ways to make my company stand out from other businesses. I decided to not think of those businesses as competition because that would mean I would always need to be better than them. Instead, I sought to be different so that my business would easily stand out in my market. We asked our customers to write testimonials that described personal examples of what we did that mattered to them, and then we heavily marketed what they said. I called this our “third-party endorsement strategy.”
Today, with the Internet, it’s much easier to get out the message about how your business is different. Also, because of the Internet and how consumers use it, unless a business sells strictly on price, it must define its difference. Consumers have the ability, using keyword searches, to find a remodeler that is the best fit for their needs. They can also find customer reviews about remodelers to evaluate if the company is capable of giving them what they want. Remodelers can take advantage of third-party endorsements through online customer reviews to prove that their differences are real and are worth the price to the right prospect.
—Shawn McCadden founded, operated and sold a successful design/build company. A co-founder of the Residential Design/Build Institute, he speaks at industry events and consults with remodelers.[email protected]