The purpose of a design agreement is to get a commitment from your client to design the project so you don’t have to do the design for free. How do you keep the design within the budget?
It’s not unusual to find a contractor who sells by deliberately underpricing or underbidding jobs and making up the difference with change work orders.
A business owner in the UK asked a question that illustrates that remodeling sales challenges are the same regardless of your location.
Getting a commitment from potential clients is critical if you want to save yourself a ton of time and work putting together an estimate that won’t go anywhere. You have better things to do with your time.
Budget doesn’t need to be a major worry during the design and build of a project if you handle it properly during the sales call.
Sales is about communicating and interacting positively with others. Those skills make life easier in any delicate conversation.
I want to share a recent phone conversation with a contractor concerning a problem they were having with a client.
From a contractor: “I am definitely going to do a better job in pre-selecting my clients after this one.”
A contractor sent us an online article written by a real estate investor with the purpose of educating you on “how to develop a fair relationship with your contractor.”
A guest article: How do you avoid going out on sales calls to look at jobs for folks who obviously do not qualify to purchase from your company?
Is there anything you can do about the sales you miss?
“The #1 reason I lose jobs is ‘your price is too high.’ What am I doing wrong?”
It’s time to catch up on some spare topics I have lying around. These aren’t earth shaking but they can and will impact your bottom line.
Give clients options when you quote the work they want done.
What do you do when your partner is listening to someone who knows nothing about construction, but still thinks they knows what’s best?
We’re aware that homeowners also visit our website. This letter is from a first-time homeowner who’s ready to buy, but his builder isn’t cooperating.
The last thing I want to do is cause a family problem, but apparently I did with one family.
Flaky contractors make us all look bad. But not all advice given to homeowners to protect themselves from fraud is good advice.
Avoid losing money by recognizing some of the games that building owners play to avoid paying.
When something seems amiss, don’t stop asking questions. A contractor shares his experience on a recent sales call.
Clients are changing, and if you want to stay in the game and make something more than a living, you’ll need to change with them.
You should stop providing free estimates. It’s called free consulting, and you won’t be successful giving away your time. (Guest Article from David Lupberger, Remodel Force)
We discussed design agreements last week; today we’re going to look at them from another angle. The first step is setting the budget with the client.
A contractor we’ve known and worked with for many years sent us a note about his experience working with a new architect. Ideally, the architect would have been working with the contractor from the beginning so he could have educated the client as well.
A good guy we know was recently working with a potential client when he ran into some concerns.
It’s smart to specialize on the work that makes you the most money. It’s even better if you know contractors who can pick up the leads outside your specialty.
If they called you, doesn’t that mean they need or want the work done?
The topic is uncomfortable but if you’re involved in residential sales, you’ll see family disagreements. It helps to know what to do.
Many contractors who write us are having a problem with their business, and in many cases, it’s because the contractor has lost focus on what’s important.
Should you let a client work on the job they’ve hired you and your company to build?
Since the end goal for both the architect and the contractor is a satisfied client, how about working together from the beginning?
It’s amazing the things a potential client can think of to get you to lower your price.
The one question too many salespeople stumble over is the budget for the job. They are worried that it looks bad to ask.
Is transparency the way to go when selling? Be careful who you listen to.
We recommend setting goals every year, beginning the process about now. If making a profit is one of your goals, Michael outlines practices that will help.
We were recently asked about an online service designed to make it easier to handle sales calls.
He’d signed an agreement with a client six months earlier for a bathroom remodel. Now the client wanted to cancel the job.
Is it appropriate to build the job a homeowner wants and is ready to pay for, if the home value doesn’t support the project?
A survey outlines the challenges homeowners say they’re facing when they remodel or renovate their home. It’s valuable info, because it tells you what they need help with. It’s your job to show them you can provide that help.
A recent Houzz survey confirmed what you need to know if you’re in sales; it’s not all about price.
What do you do when a potential client waits until the proposal is together to request itemization on the project?
Getting a commitment from your potential client is a critical step to making the sale.
An objections book is a history of your sales calls. It includes everything you said and did, right or wrong. I have only met two or three others in my thirty-plus years of direct selling who took the time to compile a book, but each one became outstanding in their profession.
A building owner challenges our statement that contractors shouldn’t itemize their estimates.
We’re looking at three scenarios that require a quick judgment call when you’re in front of a client. Handling these scenarios correctly protects your time and lets your client know how you do business.
In our book, Profitable Sales, A Contractor’s Guide, we discuss the need to set the client’s budget for a project. One of our clients sent a note recently that explains why setting the budget up front is important.
I’ve been around the construction industry long enough to know that it isn’t always rosy. When a recession hits, construction is one of the early victims.
If you’re doing service work, make sure your client knows what to expect before you start.
I’ve been reading advice in a few construction magazines on how to sell to millennials, and I don’t understand the fuss.
Potential clients always have a budget for their job. They have at least a rough idea of what they can afford or expect to spend on a project.
Some business relationships turn out badly; with experience, you can identify and avoid them.
It’s always appropriate to ask a potential client where they will be getting the funds to pay for their project.
Generally speaking, when potential clients don’t want to make a commitment but want to keep your paperwork, they intend to shop it around.
Too many homeowners believe they need three bids for their project. The intent, of course, is to compare proposals so they can make the best decision.
Some clients want the lowest bid for their project, and nothing else matters. It’s your job to try to educate them.
The first step toward making a sale is making a good first impression. That happens when you return your phone calls and show up to your appointments on time.
Does subcontracting raise the price of the project?
One-legged sales calls. Frankly, this is much to do over a problem with a fairly simple solution.
Are you bidding on jobs, or are you selling them? There’s a difference.
What you do has value. Respect your time and your knowledge.
Sometimes a potential client expects you to work for free. That’s not a smart route to take unless you have a lot of money in the bank and time on your hands.
On a sales call, if you’re speaking and your potential client is thinking “so what?”, you’ve lost them.
When your client wants a lower price, something has to change. It shouldn’t be just your price.
Given how valuable leads are, once you get one, you need a sales procedure to help make the sale.
It’s cheaper to ask questions than pay for mistakes. A coaching client is trying to fix the problem created by an former salesperson’s expensive omission.
Can you be too professional? A contractor shares the story of a sale that he was told he lost because he was dressed too professionally and responded to questions too confidently.
Sometimes a client requests an emailed proposal, and we’re sharing one possible response to that request. But when it’s physically impossible to present a proposal in person, there are ways to increase your chances of closing the sale from a distance.
When I think about major influences on my sales training, I think of Tom Hopkins. He was an outstanding salesman who become a gifted sales trainer, and I still receive and read his newsletters.
A design agreement is nothing more than an agreement to work with the client to design their project. That’s not the final goal of a remodeling contractor; your business is about building projects.
Mark Buckshon writes a construction marketing blog and a few months ago he told the story of a commercial contractor who was dealing with a bully.
A referral fee is what you pay to the person who provides you a lead. A sales commission is what you pay a salesperson to close a sale.
A potential client wanted to get a bid on some work at her home. Our coaching client was pretty sure the lead was dead, and wanted to know if she should have done anything differently to have made the sale.
If salespeople know the business owner will back them up and pay them fairly, they’re motivated to produce profitable sales. If they aren’t motivated to make sales, the business is in trouble.
Real or fake outrage can be a client’s attempt to elicit an emotional response from you to get what they want. It often puts you in the position of questioning yourself and your company, not dealing with the subject at hand.
I’ve long been an advocate for paying salespeople on straight commission. Not everyone agrees, not even all the experts, but in my experience straight commission is the best way to go.
Sometimes a prospective client wants you to fix the work done by another contractor. That was the situation a friend of ours ended up in recently.
Every once in a while, your phone will ring and the potential client on the other end will tell you they want a bid today. What should you do?
Never let your final payment exceed 2% of the sales price. And your contract should include a finance charge clause for payments not made on time.
“My spouse is too busy so I’m handling all the details. When I get all the info I need, we’ll talk about it and select the contractor we want.”
Sometimes they request you use employees instead of subs, or work on a T&M basis. Clients don’t understand how the construction world works. It’s your job to educate them.
A major mistake contractors make is to tell a client they can’t start the job for 3-4-5 months. “We are backlogged, can’t possibly start your job before then.”
What if you agreed on a price, now customer wants all receipts for material? Without a clearly written fixed price contract, it's a problem waiting to happen.
Cutting your price to get a job is a money losing approach. Over time, you won’t be making a profit and you’re only working yourself into debt.
My clients are constantly chiseling me down, everyone makes money on the jobs except me.
Many of our website visitors aren’t contractors, they’re clients looking for help with a Cost Plus project gone wrong, or wondering if their contractor is overcharging.
If you're a remodeling or new home contractor, how can you get clients to make their selections before you write the contract? Make it easy for your client.
What’s the average cost per square foot for a remodel? Average contractor markup? Average contractor fee? There is no average anything in construction, and here’s why.
When you go on a sales call, are you there to see how much money you’ll make on the job, or to help them get the remodel or new home/building or specialty work they want done?
Address their fears so they feel safe purchasing from you.
You’re on a scheduled sales call when the doorbell rings and in walks another contractor. Or you’re in the yard talking to the Owner and up walks another contractor.
From time to time, you will go out to see a potential client about doing work for them and they’ll ask if they can choose their own subs for their job.
Ten Cardinal Rules for residential construction sales.
You don’t have to be competitive. You have to be profitable. If you aren’t profitable, your business won’t last.
Don’t worry about what “the other guy” is charging.
“Your price is too high” means you haven’t done your job as a salesperson.
Cancellations happen, even with the best of salespeople. Clients have all kinds of reasons to cancel an agreement, and you need to be prepared.
One of our coaching clients has been fortunate to do work for some very well known people. We discussed using that information when he promotes his business.
We have to share this video, sent to us …
One of our coaching clients recently asked me if I thought that advertising in a “high end” magazine was a good idea for his company.
During class, a question came up on how to deal with contractors who let their insurance and sometimes even their licenses expire. "How do you compete with that?"
I received a note from a contractor. He took a call from a potential client for a job he quoted 9 months ago. They want to do the job but at the same price.
Here is another example of a client taking charge, I received this one last week. After a nice brief conversation, I asked the potential client to email me his address.
If you have salespeople, their job is to bring in profitable work. If you are paying them anything other than straight commission, where is the motivation to sell?
Round up at least three separate sources of financing for your jobs. If you can safely refer clients, it can be easier for your clients to obtain financing when needed.
These three actions will give you an unfair advantage over other contractors. You’ll make sales because you’re building trust and confidence in your company and in you.
Got a note in the other day. Does it sou …
On sales calls, do you actively look for "add-ons" that will boost the overall sales price of the job and in turn your total sales volume for the year?
I read an article where the author talked about passing savings on to clients. This sounds well and good, but place it low on your priorities when putting a job together.
I read this comment on a forum recently: "We're a customer service company that just so happens to be really good at painting houses."
Construction (with the exception of new homes) is a service business. Your focus can't be on putting pieces together to build a job, it has to be on your clients.
I heard this a dozen times during the day: "Well, this is Podunk, USA and things are really bad here. We can't charge those kind of prices, we would not get any work."
I wrote a Blog post for another company recently stating that I didn't think it very smart to negotiate the price of your work. A reader agreed with me and said:
I'll bet you have a computer in your home – maybe even a few computers. So do most of your clients.
Wandering through construction forums, I've recently read posts commenting on the markup that sales people should be allowed to use.
This potential client had a house built using the “lowest bid” contractor. The builder cut corners, leaving out little details like collar ties on the roof rafters.
A buddy has been working with a potential client for a couple of months and is rapidly reaching the point where he’s ready to send them to the competition.
I listened to a local radio station piped through the phone system as I waited on hold. The ad talked about wasting money and a guy said, "Honey, the toilet is plugged."
Someone asked me recently if I thought a salesperson for a construction-related company should help provide leads, and how many. Yes, they should help provide leads.
If you employ a salesperson to help you sell something, you need to pay them for their services. I am a firm believer in paying sales people by commission
Most contractors I talk to believe their neck of the woods is different. They believe their clients are more difficult to sell to than anywhere else in the country.
He had made a proposal to a group and they were asking him to come back to yet another meeting and explain again what he was going to do.
Earlier I posted a question asking what you would do if a customer called and didn't want to pay the sales commission on a job. I asked for your thoughts.
The best remodeling salesperson I ever worked with told me more than once that sales is three things: Attitude, attitude and attitude.
Many in this business go out on a sales call and wing it. They long ago decided to just let the sales call go wherever the customer wants it to go.
In two separate conversations this week, contractors trying to get new business in the door told me they’ve been taking any job that comes along and it’s paying off.
While reading a magazine, I was struck by all the advice given to contractors on how to sell their services. They all stated that price was at the top of the list.
I read an article in NARI’s magazine abo …
Many homeowners want work done on their …
I was looking through the November issue of Remodeling magazine the other day and was reminded what a great tool the Cost vs. Value report is.
She got a call from a guy about cleaning 300 feet of his driveway. When she told him her minimum trip charge ($300), she heard the famous, "Your rates are too high!"
I have noticed several posts recently on forums and blogs from contractors trying to sell the way they did years ago.
Yesterday I mentioned that too many contractors were in too much of a hurry to talk about budget.
Too many contractors are in a hurry to talk about budget before they gain the trust and confidence of the customer.
I was reminded again recently of the need for in-house training on what it takes to pay the bills in a construction related company.
Let's talk about your sales presentation. I want to talk about an item that may be biting you during a sales presentation to your potential customers. It's your language.
Ladies, gents, this young man is going to do just fine. He conducts himself like a professional, and was willing to walk away from the job rather than take a loss.
Someone recently commented that the smart people in this business sell Value rather than quality, service or any of the other things we often hear are important.
In an earlier blog post, I said lowering your price is financial suicide. If you can’t cover your overhead and make a profit, you’ll be out of business AND in debt soon.
About a week ago I talked with a construction company owner who told me his customers weren’t responding to his presentations well.
Recently I've been made painfully aware of a problem some contractors. That problem is focusing on themselves and their business, instead of the customer.
I had an interesting phone call the othe …
Somewhere between the initial budget and the final design, the job got away from you. Why?
Alfred E. Neuman used to say, “What, me …
One of our goals is to improve the image …
The contractor presented a design agreement with a $3,000 fee to design the job, 1/2 of the fee would be credited back when a contract was signed for the final job.
Once again I feel compelled to share a new, fresh, one of a kind idea with you. Stop working for free. Remember, you heard it here first.
I read an article telling general and specialty contractors to give itemized estimates. Oh joy. It talks about goodwill, trust, comparing estimates, and other tripe.
I believe a majority of the conflicts I …
Talked with a coaching client about promoting his company, he’s investigated purchasing an extended warranty program for his remodeling work.
If you are in business, you are in sales. No rationalizing, you are in sales. If you don’t sell something at a profit, you are going to go away.
If you’ve been in construction sales very long, you’ve met potential customers who ask for an estimate, but after a lot of work you learn they were just shopping.
Often we get phone calls from contractors worrying about what a customer will say when they present their price for a job.
Be happy when a customer tells you NO. That is one less NO you need to get to the next YES.
A coaching client was working with a potential customer who wanted a remodeling job on a cost plus basis instead of a fixed fee contract.
Devon and I were at an association social recently and had a great time. I spent time with a banker who works with many remodeling companies around the area.
If your employees consistently take longer than you estimated, you need to change your method of estimating. The human body can only work so fast.
One of our coaching clients called and asked, “My customer has requested an itemized bid so that they can compare bids between contractors. How do I handle it?”
Respect your time – get paid for the work you do.
Design agreements, letters of intent – get paid for written quotes.
Just a quick reminder. Be sure to put a limit on the length of time your proposals are valid. That time should be a maximum of 3 working days, no more.
A contractor called, wondering about the markup he should use on items from specialty contractors. If he applied his markup, it might raise the job price too high.
One of our coaching clients asked about a sales contest. In my opinion, a contest that has the salesperson competing with themself is the best way to go.
As a relatively new contractor, how do I win over prospects that are “looking for quotes” – homeowners who are “getting three bids” for their construction project