How do you “size up” a customer without wasting your time or pissing them off?
You get the call, a good neighborhood, lots of equity (we have an online tax roll that displays home purchase prices vs. current sales in area,”comps” and property taxes searchable by address and owner’s name), well kept house etc. They come equipped with Architect’s plan, specs, a 3 ring binder full of clipped ideas and a grand dream. Do you ask a proposed budget? It is difficult to weed out the dreamers from the potential customers. I often hear after spending many hours on a competitive bid “Where can we save some money?”. I don’t do design build because design in my local (NE Florida) is pretty crowded already. From boutique architects that get 30K to draw an addition to mom and pop CADders who work out of the garage and have a cousin’s brother-in-law’s neighbors friend stamp or “seal” their work. I had 3 clients run out of money last year and it is always a hassle. Big jobs 200-300K always seems tight in the end. Like you steered them toward the Sub-Zero drawers and the $7000 range. Additional funding is hard to get once a project commences and rarely do the customers not find a must have item that thrashes the budget you so carefully planned. That is one reason I don’t like allowances, I like everything picked up front to avoid delays and cost overages. So again the question……HOW DO YOU SIZE UP A POTENTIAL CUSTOMER BEFORE YOU HAVE 10-30 HOURS IN A ESTIMATE? I think I have done well on “gut” instincts but it seems to be getting harder. They all talk the same game, We want a first class job, We have heard great thing from “customer X”, Such and such contractor did this wrong or was over budget……..This used to be FUN.
Replies
If you have any doubts about a customers ability to afford the work to be done run like HE%%.
A control in the above situation is a 2 signature escrow account set up for the project. It's a bit of extra effort but protects both parties. You know the money exixts and they don't pay any big unprotected advances.
One last safe guard is to strictly enforce a change order policy that requires payment at the time of change for an outside source and not the escrow.
Too few folks keep close track of the changes they make and the impact they are having on the final price.
Lots of folks living in those big houses with fancy cars in the drive have close to zero in the bank. When they need to find an extra 10 or 20k they have to borrow it.
Tell me about it, I did a 300k reno/addition, 2 Merecdes in the driveway, at closing owed $5600 for tile and cabinet extras that were change ordered and documented, the HO apologized and asked if I could lend him the money until we closed and he could refinance. THAT IS PATHETIC. House with 900K value, 7k mortgage payment, didn't have $5600 extra. Took 90 days and thret of lien to get it.
ALWAYS.. ask what they're budget is, then ask if theres any flexability in their budget if something should arise like an upgrade or just unforseen circumstances.
Remind them your end goal is to give them the value they expect for the funds they've alotted. You cant do that until you know what they plan to spend.
The reason I'm inquiring is I have a set of drawing I am working on today. Touted in the HO meeting as a "small job". Very detailed kitchen gut and brick covered patio with t&g ceiling and extesive drainage, trim and planters. Priced it out to $101,800. Drawn with high end doors and intricate lighting and trim. When I tell them it's 100k+ they are going to think I am on CRACK. That's 50% of what the house cost. How do let them down from their cloud without them telling all their friends you are a jerk. Word of mouth is all I've needed and I don't want any bad blood but I am 99% they can't afford the design. This happens all the time. Priced out a job for a Dr. recently that lied about his finances and holdings constantly crying poor mouth. Then when I alter design, layout, and specs he chops it up into 4 phases and hires a 1 truck "Handy Randy" to implement my proposal and doesn't return my calls. OUCH another lesson. I have been in construction for 20 years, remodeling contractor lately because dirt is near impossible to get with all the big boys in town now. Need to make some changes for 2006 or I'm going to get steam rolled.
I think you could resonably start off the conversation with something like:"Are you aware of how detailed these plans are, and how labor intensive some of these details are. I'm concerned about how expensive this is turning out"Make it sound like you're on their side from the beginning.
Will starve for food. Doesn't work.
First, who drew up the prints? Call him/her and ask "what budget did you design this for?" and take it from there.
If that is not possible/practical, I would call the HO and say something like "This design appears to be very elaborate and financially out of proportion with the existing house and I am concerned about your ability to recover the cost when you sell" or someting like that. Then gently work your way to asking what budget they have in mind. Don't tell them how much, just tell them you haven't worked out the numbers yet but it struck you right away as being out of whack with the value of the house. When they say $30-40k, you can say "I'm sure this design is well in excess of that, like several times that amount" and very delicately tell them there is no sense pursuing that design with that budget.
Don't waste your time counting boards and nails if it's that far off.
DG/Builder
"Then when I alter design, layout, and specs he chops it up into 4 phases and hires a 1 truck "Handy Randy" to implement my proposal"
That's not an estimate, that's a proposal, plus extra design work. Either you own it (and it therefore isn't available for Handy Randy), or you charged the customer handsomely for the rights to your intellectual property.
And no, the cost of the proposal is not refunded/eaten if the owner selects you to perform the work.
Plenty of threads in the business section on this topic.
Regards,
Tim Ruttan
Mr. Trim Butcher,
You are right, it was a proposal. That really wasn't the job I started the thread for and I referred to it mistakenly as an estimate. I personally have heard all the intellectual property arguments and I have never seen anyone effectively fight that fight. It would cost thousands of dollars and hundreds of wasted hours to attempt to prove the good Dr. in question stole my ideas and design changes. How could I prove my proposed changes were the inspiration for the Architects revisions and overall timeline of a project that I am not even capable of viewing contract documents on without a court order? My proposal was just a written outline of "if we do this, in this order, at this level, it will cost this" instead of the original grand plan the Architect devised that would have cost $400K. So he takes my ideas, goes back to HIS Architect and has him align his design with my proposal. How do I prove it? What should I charge for my proposals at this level. I have avoided charging before and have only been burned a couple times. (Above outlines the worst.)
Scott
Somewhere between $50 and $100 per hour is where I would ballpark your proposal prep fee.
A complex job might take one to two weeks of full time work to flesh out all the costs and resolve everything down to a well-prepared proposal.
That means we are talking about $50x40=$2000 up to $100x80=$8000.
And you need to get that check in hand before they see your proposal. Maybe not up front, but certainly right after the pleasantries at the presentation meeting.
Free estimates happen for simple one-scope jobs, like a roofing replacement. Something like X quantity times Y unit equals price. But not a major remodel or piece of new construction.
Here is what I have learned to do. I take my photo album along for the first meeting. During the conversations I talk about the fact that kitchens can cost between 10-100k. (your numbers may vary of course) I say that although I know everyone is concerned with getting a fair price I at least have to have a ball park to work with so I may pick out the right level of materials.
I then open my photo album back up and say "this kitchen cost 27k which included these features, this one on the other hand was only 20k and included these items, this was 38k and it included these items". Almost every time the go "wow, that much huh? Well here is what we were thinking" and I get a reasonable money conversation. Hope it works for you! DanT
I like it. That seems like a good plan. I think most HO's have no idea of what custom works costs. they watch TOH and HGTV and Extreme Makeover, etc. They get bombarded with internet info, they make a trip to an HD Expo. They want it all at the same time. There just isn't alot of realistic price info available to the public or they just are'nt looking. Those are some good ideas, thanks for the input.
Scott
Excellent approach Dan. The key is to have a nice presenation album, which I'm sure you have.
blue
The easy answer to your problem is money up front.
At the first meeting you say something like, "Mr. Client, you know my reputation and we've established your rough budget. The next step is for you to give me $500.00-$5,000.00 for designing and specifying your job. I will provide an exact price. The design fee comes off the cost of the job."
If they can't/won't come up with some money and show they want to work with you, Goodbye.
One of my mentors, a successful 50-year remodeler, has proven this method.
I'm with you Tim.
That's a Spec and cost analysis. They ain't free or for use by any others than the person that develpoed it.
There's been LOADS of discussion here about it.
E[email protected]
It's Never Too Late To Become What You Might Have Been
The reason I'm inquiring is I have a set of drawing I am working on today. Touted in the HO meeting as a "small job". Very detailed kitchen gut and brick covered patio with t&g ceiling and extesive drainage, trim and planters. Priced it out to $101,800.
If these potential clients are unwilling to pay you for the time you put into this, then that is all you need to disqualify them.
You should be reading more. Remodeling is an excellent magazine. There are others.
Eric[email protected]
It's Never Too Late To Become What You Might Have Been
I'm on it. That is one reason I am here with this discussion. I feel the everyday thoughts of the people who are in the same situations are as valuable or more as anything written on the subject. I am revising all of my policies. I have spent to much time in the field and not enough watching the overall picture.
Thanks for your input, I am going over older threads on this subject as well.
Scott
Scott,
You are absolutely correct. You need to spend more time looking at how you handle the business end. Frankly, every successful builder I have met has a system that allows him/her to ballpark a job to within 10-15% of the exact figure in less than 1 hour. Some have astonishing memories. Some have elaborate computer spreadsheets. Some have a real knack for crystalballing. Whatever works for you. But the common denominator is they don't have to waste a lot of time to tell the client if it's doable at a certain price point. It's a very valuable skill.
DG/Builder
All good stuff........
And more in the archives....
When a potential client calls me to come "look at" a project, I go to only to interveiw them.
First, I look around and see if they pass the gut test.....Do I want to earn my living here for the next ______ days.
Second, I ask what is the budget? Just like that. If they don't know, I suggest that previous projects have had an average cost of $X and where do they see themselves in that figure. I pledge, in writing, that only they can change the budget, in writing, once the budget is set.
Third, I try to get past the cost concern and point out that the most important job they have is to hire the best Contractor for the job.......someone who will have a key to their house..........someone who can be contacted............someone who won't make them feel uncomfortable in their own house. Someone who will give them the service and the product they expect. I always remind clients that they usually get what they pay for.
Fourth, I ask them to hire me.......or what they need from me to hire me.....on the spot. A non-refundable, design & spec deposit, min. $2,500 to $10,000.00. This locks me up to a relationship and schedual.
Fifth, I walk.........with a check or a thanks-but-no-thanks.
Mark, I love your approach! You are da man!
blue
I like MarkMc's approach to sales, get the check.
Mark,
Somehow I missed you post. That sums up my new plan for '06. I like it. We do high quality work. I have invested thousands of dollars in first rate tools and equipment. I am poised for greatness and all I have to do is stick to my guns. I took on a few big jobs last year that I wish I never stepped foot on. I am implementing sweeping changes in my day to day operations to relieve the stress brought on by what I can say has been just poor planning.
Thanks to all for your input. These and other ideas I am combining will hopefully put the fun back in my business.
Scott
I have nothing to add to this thread. Just wanted to say how much I appreciate what I learn from threads like this!
Dont forget you can discuss ways of lower the cost with HO as well. Give them a cost analysis of the orginal plans and some alternatives...
But the guys are right its your time you need to charge for it. Even if you refund the charge upon signing of the contract.Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Its taken me thirty years to get a good nose for smelling out people:
I like to see vehicles in the yard that arent new but reasonably maintained ,shows all their money isen't going for payments
reasonably dressed but not overly , no bib coveralls or fir coats, a suit usually i consider usually the worst
I find out what their antipated expenditure is for the job and how much they expect to get for it
i explain i use the progress payment system reasonably prompt payments or no more progress
In a number of cases when asked what i would do if i owned their house i have replied that i would spend 2 cents and burn it down ( my wwife claims i am not very tactfull with some people)
In most cases i get the job for some reason they want the place saved, you figure
one that i have been working off and on rebuilding had a 25000 pool and a crappy shed that came in higher on a appraisal tha the house
Since the i replaced 1/2 the roof sheating all the shingles , gutted the bath room ,installed a aair tub , 36" shower 3000 dollar vanity ,tiled the floor & 3' up the walls & some of the tiles were $16 appiece
next we gutted the mbr complete to outer walls and rebuilt , so far were at about 65000 and planning a addition for this summer about 130000 all from a 2 cent bid
scott... i remember those days..
i don't do Proposals unless i get paid to do them..kind of amazing how that separates the wishful thinkers from the team playersMike Smith Rhode Island : Design / Build / Repair / Restore
Take your wife along, my bride of 32 years is very intuitive when it comes to sorting who is for real and who is blowing smoke. Most of the time women can pick the winners from the loosers much better than us guys. Roger
Roger, that may be fine for a social event. But it's not very professional. If I were the HO and the contractor showed up with his wife, I would immediately think something's up... unless the wife happened to be the architect or project manager.
No, not a good idea.
DG/Builder
I have no problem bringing my wife AND my kids to meet a prospective client. I think it has a positive effect in that it is comforting to a potential client.
The first order of business is to get aquainted and both sides like to know what kind of person they are dealing with. I'll play up the "family man" role and beat out the loner every time.
Unprofessional? I think not.
Scott,
If you work up your estimates on a spreadsheet I suggest breaking the project out into levels. Input all the details of the project that you have for thise 100K price right now. Break it down into different categories of completeness in regards to level of finish detail, quality of materials, etc.
That way you apporach your customer with 3 or 4 prices at different options level.
When you sit down with the home owner you have already anticipated their concerns. Instead of responding to the question, "What can we do for 75K" with "I will look into it and get back to you in a week"....you say, "Well, I have already worked up some numbers and if we eliminate x, y, and z you will still have all of this and we can address these upgrades next year".
They will love your proactive approach and it will earn you primary consideration for getting the contract.
Edited 1/26/2006 3:49 pm ET by mcf
Scott,
Spend only enough time on the estimate to arrive at a comfortable ballpark number first. Speak to your client informing them that you have a general idea of what it is going to cost for the job, no matter who ends up building it. Usually they will reveal a budget number to you at this point, if they don't then ask for it directly. If the numbers work for them and you, now you can spend the time doing a detailed estimate for a proposal. The next thing you need to do is to financially qualify the client. In my contract it states that the owner must provide me with proof of financing before we start the job and at any time thereafter that I request the information. This technique has worked well for me for a number of years. it eliminates a lot of sh*t right up front, and you know the money is there for the project.
The CM
Edited 1/26/2006 4:23 pm ET by the cm
CM,
Thanks, that is an approach I basically use. I do a single page "Preliminary Cost Analysis" based strictly on the provided design then change it from there to get closer to the budget. Problems still come in when finances change or as in a recent nightmare when the HO decides to quit his job at the halfway point of a 250K project. Or the wife goes to a friends and sees her new Sub Zero Pro 48 and decides she wants $15K worth of refrigeration or a $7K range when the provided spec had a $3K budget. OUCH
Scott
Hi Scott--timeless question.
Any free estimates I do (VERY Rare), they get a ball park quote (if they have drawings). Is this in your range kind of thing. That's it for free. (and only 1 hour max--beyond that the meter is running).
Estimation--final pricing--that's project management.
No work for free period. Not good for my children--not good for your relationship with the wife.
I throw out a +- 20-30% of what I pick the job to be. You like my work--then lets move forward. I don't work for free though.
People respect that kind of thing nowadays. They pay bad designers 125/hour. I'm worth at least that.
ON the topic of sizing people up--figuring out whether you will get paid or not? If they want you to drop your price and do the same amount of work--Walk away. Cut your loss. You could be doing a job with profit--rather than working for free.
If they negotiate up front--they will negotiate at every meeting--and over the final bill. You will have no profit from that kind of client.
L
GardenStructure.com~Build for the Art of it!
Charge for the proposal.
Whether you take 10 hours to do it, or 100, you should not be working for free.
Your first meeting should be to get to know one another, flesh out their expectations versus their budget, see whether they are realistic or not, discuss similar projects you've done and their pricing, then come to an agreement on your proposal fee.
You really should do a search in the bus folder on Specifications and Cost Analysis, SCA, Free Estimates and almost any thread in the folder by Sonny Lykos or Mike Smith.
You will find enough information to make your head explode.
Eric
[email protected]
It's Never Too Late To Become What You Might Have Been
Don't forget Jerrald Hayes ....Quality repairs for your home.
AaronR ConstructionVancouver, Canada
Scott,
Slow up a little buddy you are ahead of yourself..
You haven't sold anything and you want to possibly eliminate them?
(it's sold when you get a signature and deposit.)
You've done the preliminary work (ability to pay) now you need to do the saleswork to find out if your prospect is viable..
Sit down with them and listen carefully to how they put questions to you.. If they are asking for lowest bid type of questions he's decided to go ahead and wants a reason to select you..
It's not going to be low price if you do a good job of selling your value to him.. The only reason price comes up is because people don't understand. As a result they fall back to that which they do understand (second grade math)
Before you give a firm figure look them square in the eyes and tell them that on an apples to apples job you will be the same price as any equally qualified contractor..
Now comes your opportunity to sell..
They will drag out the lowest quote and ask can you do it for this much..
Your answer has to be sure, or yes or something else equally as positive.. (now wait, don't get ahead of yourself and start to worry. Remember you still don't have a deal.)
What isn't said on the quote (probably) is what makes you more valuable. Insurance, Experience, recommendations, more ability, more creative, more equipment, more people,.. etc..
And if you are smart this meeting isn't about getting hard numbers but selling your value to the customer..
Once the customer understands that you have a value greater than your competitors you can talk about money AND NOT UNTIL!
If you are clever you'll do the set up now for a higher quote. Listen carefully to them and decide who wears the pants in this deal.. Sometimes it's the wife and sometimes the husband (occasionally the bank) You have to hear what is really going to make the final decision.. Is it the hardwood flooring in the laundry room? or the speed the job can be done? Whatever it is you need to make the customer feel that you are the only person who will really give them what they want..
Once they feel that way you can sell the job at a profit and know before you even do the quote that you've got it sold.
Never ever ever give a quote to anyone unless you know that you've sold the job! That quote that somebody spent their time doing should be reason enough for you to never do it.. The homeowner was willing to share it with you or judge you by it. Why let him have your quote to do the same with?
There is one other thing you need to understand how to do.
It's called shooting him in the foot.
This is dirty pool to be used only when you have someone who is determined to get the lowest price period..
If you ever misuse it it will come back and haunt you. So be very careful and select your target carefully..
Once you've spent your time with the customer and he's told you that he's going with whoever can give him the lowest price he's fair game to shoot in the foot.
( Just so you understand the phrase if you've ever shot yourself in the foot you know that foot will remain planted while you dance around on the other foot)
Give him such a low price that you know you will wind up being the lowest bidder.. (profit doesn't enter it) but remember to leave yourself outs..
Don't ever!!!!!! put a start date in place. Cover that with comments like, "it depends on who signs up first and get's me the required deposits*".(check clears) . or " subject to price rises" Subject to your bosses/ partners final approval (yeah even when you are the boss) If that's too shakey try lawyers approval.(why should he be the only one with an attorney)? Don't put everything in a quote that you know to be too low to sell at a profit..
Now comes your second (or third) visit. You have your quote and know what the job should cost.. Go ahead and give your number.. and then before you show them the quote ask to carefully go over the details..
Now listen to them. as you go over it.. Are they asking to increase or change stuff? Maybe you should give them the quote at a price too low for you to make a profit.. make your profit on the change orders.. They will brag to others how you were so reasonable and willing to accommodate their every whim Just be sure the cost of change orders is spelled out in advance.. explain it to them that your time is valuable and if a change order is done you won't be able to be as efficient and it will hurt you scheduling.
I know more than a few contractors who bid things that way. After all, they changed their minds!!
Remember, don't leave a quote for them to study! (and use to beat up other contractors with) explain that this one is too full of flaws and you need to correct it..
Don't make not selling worse by letting your competion know you.
You wouldn't show your cards in poker would you? why show your hand if you're gonna fold?
"You haven't sold anything and you want to possibly eliminate them?"
Yes .... and he has it in the right order too.
qualify first ... then sell.
don't waste valuable sales time with tire kickers.
sales 101.
as Dad has told me 1000 times ...
"you never lose money on the job U walk away from" ...
selling forklifts to GC's is different than selling yourself to a client. When U sell a job ... you have just committed a sizable portion of your life to a complete stranger ... plus materials! A forklift is a known commodity ... sell the wrong job to the wrong client and U can end up losing your business and your house.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
And I sometimes have to stop and look back to the words of my Grandfather (I am a third generation GC) "Sometimes the best and most profitable jobs are the ones you don't get.........." Words to live by.
Thanks again all,
Scott
BTW on another note..............Our local paper the Florida Times Union has a HOMES section that is 1/2" thick. Many articles for homebuyers and remodeling, trends, mortgages,DIY, etc. To make matters worse for guys like me, yesterdays edition had an article about the changing of the guard at the local HBA which is known as the NorthEast Florida Builders Association. Where they boldly announced their new workshop series "Take the Road to Higher Profit" and "Planning your way to Profit" in a paper with a circulation of hundreds of thousands to reach a small percentage of their membership. Our pricing is just approaching the level it should be and the people who run our local HBA announce these workshops and they think they are helping us!!!!????? I'll bet every HO that read it spit up their coffee and LOL. I could hear the "Thats all they need" in an echo, in a nightmare I had last night. Most HO's I see already think we are all out to screw them and think by taking 3 or 4 bids they can just hire the guy who is trying to screw them the least. Our HBA leaders probably set us back a few years. Am I wrong or was this a marketing NO NO. IMHO I think it is the equivalent of running a "How To" Date Rape class in a Church News Letter.
Maybe it just hit me wrong....................Scott
Jeff Buck,
You never lose money on a job you walk away from? Well,... modify that a bit..
You've lost the money spent listening to them.. (time is money isn' t it?)
you also, NEVER MAKE MONEY ON A JOB YOU WALK AWAY FROM. AND,... YOU NEVER GET A REFERAL FROM SOMEONE YOU WALK AWAY FROM. You never will gain from a job you walk away from..
Frankly a statement like that indicates that if you stay home on the sofa you won't lose... Or will You?
OK I beat you up a bit on that statement. If I was too harsh I apologize but it doesn't change the value of what I'm saying.
Let's see what else is wrong with the message you posted to me..
You indicated selling a forklift is somehow differant..
Well, I've not only sold forklifts for the last 40 some years. (in fact only for the last 15) I've sold intangables as well.. the process is the same.
Actually selling a house or a remodel is pretty similar to selling a forklift (telehandler) ,. Ahh, not so much now that it's common knowledge about the value of equipment over labor, but when I first started selling 15 years ago I'd show them brouchers and talk concepts.. In fact it wasn't untill the late nineties before telehandlers became well enough accepted in my market that price and value became more important than concept..
You are stone wrong when you approach a prospect as you suggest.. If a salesman tried that approach when you go in to buy a new car or truck do you think he'd be very successful?
"Mr. Smith can you afford $500.00 a month for a truck? Give me your social security number so I can check your credit rating,..."
Of course not!
He'd better start out listening to your needs and wants first!
Oh he can carefully slide in a few carefully phrased questions to get some idea but You would never tolerate someone who felt your purse first before deciding what you can afford, and neither will your customers..
You do have a valid point regarding selecting customers.. some are just bad news, but It should be a decision you make after all the facts are in and not before.
The process is and should be,
Ask
investigate
estimate
select
present
collect signature
and then you sign contract and build..
Not discard a potential customer based on if he wears a suit or what his occupation is..
frenchy..... your blanket is a little too big
i've made money on jobs i've walked away from... and i've gotten referrals from jobs i walked away from
in the first case.... they hired someone else... two years later they hired me to do it over
and i've had comments come back to me from new customers who say they were referred to me by someone who wished they had hired me instead of the guy who outbid me
you have to be able to win the job at your price so you can do the quality that maintains your reputation
and part of that reputation is honesty in all dealings..... selling is perception... we have to project the image we want to be....
the image we want them to perceive us as...
one thing young dudes and duddettes have to keep in mind
we all start out at a certain level of proficiency and certain level of reputation.... try not to think of a job as the begining , middle & end..
it's just another day in a career... ie: beware of short-term gains that end up costing you a reputation.... ten years goes by, then 20.. after a while you really do reap as ye sow.... and the kindnesses and honest dealings come back in spadesMike Smith Rhode Island : Design / Build / Repair / Restore
Fair enough Mike,
from that perspective you are correct. But an important thing occurred in the event you were called back to correct others short comings..
You somehow were able to educate them.
That's darn hard to do when they are marching thru the phone book looking for low cost..
Somehow you thought them the value of doing it right (and in spite of that they selected the wrong contractor),..
I'm just anal enough to feel bad about that. I go back and wonder what I could have said to make the difference so they wouldn't have had to find out the hard way..
Edited 1/29/2006 4:19 pm ET by frenchy
"OK I beat you up a bit on that statement. If I was too harsh I apologize but it doesn't change the value of what I'm saying."
that's OK ...
U know I start ignoring you as soon as U start talking outta yer a$$ again anyways.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
you also, NEVER MAKE MONEY ON A JOB YOU WALK AWAY FROM. AND,... YOU NEVER GET A REFERAL FROM SOMEONE YOU WALK AWAY FROM. You never will gain from a job you walk away from..
A very untrue statement- we've made a lot of money from jobs we've walked away from.
I've had several projects where, after spending some time with the client, introducing them to our firm, and finding out their needs/wants, we realized that our company wasn't a good fit for their project (due to budget, time, or whatever). These same clients have referred us to several friends and business associates who had projects in the works that were more compatible with our way of doing business. Most of these projects have been in the seven figure range, and several had eight digits.......
People may not be able to afford you, they may not be able to wait for you, or they may just not see eye to eye with you for whatever reason (or you them). What they can't ignore though is your level of professionalism in what you do, and the good clients will respect that and pass that information on to others.
Bob
howdy do yall well i was just reading all about how to deal with customers. i got a
call one evening to bid on a chimney rebuild job.Long story short- got to the clients
farm me and my 15 yr. son. with some degree of rubbernecking from us both we
approached the 200yr old + house knocked on the door which was standing open
looking inside the room from where we were standing we could see straight though
to the rear porch. a 12' step ladder and a pair of hiking boots with skinny ole legs
attached.the legs started to desend down the ladder then" lets say something that
should have had its own chistian name at birth and been encasted in a pair of shorts
followed the boots."Well me and the meat --- i mean client shook hands . we started
the bid talk and come to find out because of the remote location he had allready
called 5 other contractors ans I was the only one to show up. from that day on and
my new found ability to negotiate with naked people [you have to look them in the
eye] resulted in about two years worth of constant jobs from this group of friends.
one of the most memberal jobs i,ll ever have ..d.w
ability to negotiate with naked people
D.W.,
"from that day on and my new found ability to negotiate with naked people [you have to look them in the eye] "
Darn you!
I had to clean my monitor.
SamT
Edited 2/1/2006 12:57 am by SamT
Bob,
You may not have lost money on jobs you walked away from, but you certainly didn't make money..
Just playing the devils advocate here Bob so don't take it too seriously, But is this a case of where a little more investment of your time could have yielded a profitable return?
I don't know so briefly consider this option.. Check back in a short period of time. Maybe this customer needed to be educated as to what is possible and what isn't.. They knew they wanted a remodel or something but put an unrealistic budget on it (or whatever) once they'd ground thru the phone book and eventually learned that their expectations were unrealistic they may have sat down and reconsidered. Smaller project, bigger budget, whatever..
In addition you may now have a glimmer of a beter way to approach this customer.. Maybe their bark is far worse than their bite, but once you scratch behind their ears they are your new best friend..
just a thought.
Frenchy,
What would you do if:
Would you still try to make him your best friend?
SamT
SamT
What makes you think we are that differant?
Have you tried to sell equipment?
If all my customers were reasonable and decent they darn sure wouldn't pay me what they do.. just like you my judgement is called for constantly. Some I blow off, some I call back later, and some are signed right up..
My close ratio is higher than yours but maybe that's because I've been selling for over 50 years and full time for well over 40 In that time I've made some mistakes and they still haunt me.. I coulda sold if... I should have said,..... I should Have spent more time with her and just kinda used him as a foil,....
Oh and most of my sales are to referals and repeats which helps a great deal..
"I've been selling for over 50 years and full time for well over 40 "
How old are you?
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
He better not be counting his Kool Aid stand days....
blue
I'm wondering if it's like when I tell certain customers ...
at the ripe old age of 39 ....
I got 31 years in the remodeling biz ...
as Dad put me to work for the first time sweeping up at age 8!
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Hey! I made and sold pot holders when I was 8 so that must mean I have been in or around sales and manufacturing for 41 years. Can't wait for my next sales call to tell em that! DanT
Jeff Buck,
Cool Aide days?
Well in 1953 I made enough money (more than my father did that year) that Dad's banker suggested I get my own social security number. Ok that was an exceptional year and I didn't have anywhere near that sort of income untill 1958.
To be fair not all of that income was from selling, A great deal of income came from exploiting the neighborhood children. I went around selling lawn mowing services, sidewalk shoveling driveway shoveling, lawn raking etc.. I would collect the fee and pay the kid doing the work (usually with his dads lawn mower and gasolene) 1/2 of what I was paid..
I also got the local drycleaners to pay me for having his handbills passed outdoor to door.. I got 35 cents and hour for every kid and paid them 20 cents.. I also had 4 paper routes that I subbed out to kids.
OK it doesn't sound like much but remember comics were 10 cents each a candybar was a nickle and a bottle of pop was a dime but you got three cents back for the deposit..
In addition I sold magazine subscriptions, and Christmas trees.. I was a really cute kid and able to put this pitiful look on my face..
just like you my judgement is called for constantly. Some I blow off, some I call back later, and some are signed right up..
Whoa...You threw me for a loop there big guy.
I've always read your posts as kind-of never giving up on a sale. Even if the customer is ready to sign with a competitor, you are always ready to jump in with one more pitch.
Now you say that you have used your judgement and blown people off. My question is at what point do you personally Frenchy, decide a customer is not worth pursueing?
And how is it different from Buck, or Mike Smith, or Sam T or any other contractor blowing people off that they don't judge as being qualified?
I'm not trying to make you wrong, I am genuinely curious if I have been reading more into your posts than you mean to say.
As far as dealing with the price issue, I try to replace the word "price" in a conversation with the phrase "cost effective solution" If a customer is willing to look at a "cost effective solution", I then have the chance to educate the customer, and differentiate myself and my service, because a "cost effective solution" is nor black and white like price is.
Bowz
Bowz, the way I read Frenchy's posts was that he was just trying to explain a technique for that particular type of client. He didn't infer that it was used every time, nor did he say he sold every one.
Frenchy's approach makes total sense to me. He's trying to save the baby before he tosses out the water.
blue
Blue,
It's not just this partricular thread I was reffering to. I have always read Frenchy's posts about sales as being on the agressive side.
I'm not saying wrong or right. I've just now seen something that does not fit in with his typical comments. When there is something out of the ordinary I view it as an opportunity to learn.
Sam says it well in his post. Frenchy puts forth excellent ideas, but his point gets burried by what appears to be tunnel vision. He probably doesn't have it, but in the typed word on this forum, it comes across as that.
Frenchy's approach makes total sense to me. He's trying to save the baby before he tosses out the water.
Yes, I understand that. But in my world, I believe that customer would have already eliminated themselves by another method.
Blue, I don't want every job.
What I want is every job that:
A). I can enjoy doing. (Good people to work for, good project, nice neighbors, etc)
B). I can make money at.
C). I can leave a satisfied customer.
Eliminate one of those factors and wanting that job becomes a low priority. might have to compromise a little if things are slow. But I don't automatically compromise just to get a job, because a job that fits thiose 3 requirements has usually been right around the corner.
Bowz
PS: when I read the difference between Buck's style and Frenchy's style I try not to view either as right or wrong. It's like a couple of 2x4s in a truss arguing, as to which one is more important. Both are valid, and each has a different mission.
Bowz,
You are remarkably astute regarding my typing skills,
Frankly if I counted on my typing to sell my product I'd starve to death. I'm dyslexic which makes typing a real challenge (where'd that darn M move to this time?) often I'm so relieved that I got a whole paragraph out that I fail to reread it or spell check it..
In addition I'm at least a whole generation behind most of you (more like two generations really) which makes working with computors extremely tough..
Add my slow hunt and peck style of typing with one finger and you are right when you say that I don't always come across clearly..
My strength is in face to face conversation, Reading your body english, comparing what your eyes are saying to what you are saying and calculating what is really important to you..
U running for politics?
btw ... I'm out. This had potential ... it's going no where.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
I'm considering running for Mayor again. Not really relavent to this issue though.
Bowz,
Actaully the customers blow themselves off.. They come in not ready to buy and still in the gathering information stage and if their idea of gathering information is the kind of math we all learned in the second grade.. (this is more than that) I understand exactly what I'm up against.
Early in my career I used to chase the customers to the bottom often going extremely close to my costs just to make a sale and not to have to admit defeat.. I learned from both my father and grandfather that you can't consider yourself a salesman if you don't keep records and track information..
What I would learn from customers who bought elsewhere was the technique of shooting in the foot when only second grade math is involved and the customer isn't ready to buy.. I also learned how it could and would come back to bite you if you abused it or used poor judgement in using it..
You asked a ligetimate question about what is the differance between what I do and what they do. Here I have to admit I'm guessing, I don't know for sure but since no one has ever spoken about their record tracking methods I've just assumed they are keep informal or no records..
You have the right idea in that when a customer is focused on price to the exclusion of all else it's extremely hard to make a sale.. Experiance has tought me to ask a couple of critical questions (ask, I'll share) and use that as a guildpost as to where to go..
You'll find that if they are in the second grade math phase of purchasing they really aren't ready to differentiate between vendors yet.
There is a book called, Shut up and Sell that said more salesmen talk themselves out of sales then ever talk someone into buying if they aren't ready.
You have to accept that fact..
That doesn't mean you don't care, it means that now is not the time to engage them in a debate on something they aren't ready to consider.. Don't talk yourself out of the sale (which is all you really can do if that is the stage they are at) place yourself in a position to make the sale when they are actaully ready to buy..
You asked a ligetimate question about what is the differance between what I do and what they do. Here I have to admit I'm guessing
I'm guessing too. But I will take a shot at it, because your comment about "going to the customer" brought up a thought. I think one of the differences is that you are "prospecting" for customers, while many contractors are waiting for the phone to ring. The difference being, your method gets some of the non-buyers out of the way before a sale is even on the horizon.
Experiance has tought me to ask a couple of critical questions (ask, I'll share) and use that as a guildpost as to where to go..
OK. "What are some critical questions that you would ask, to use as guideposts?" I think the original poster was also looking for something like this.
Bowz
Bowz,
First, how you ask is actually more important than what you ask..
A good example of an open ended question is, How will you use this?
The reason is, it isn't a question that can be answered yes or no, It involves more conversation then that.. As they answer you not only listen to what they are saying but watch their body language and read their eyes..
For example if they fold their arms across their chest they subconsciously are shutting you out, they may have been saying something that may not be true or may not be complete..
Watch their eyes, for example if they look down that's an indication they aren't being forthright about their answers and maybe making stuff up.. The eyes really can tell you a geat deal. The body language and their eyes plus the way they answer open ended questins is a great predictor of what you are working with..
Plus open ended questions will force the customer to revel things about himself he might want to keep secret.
For example I never ask what's your credit score. Rather I speak about payment plans and ask an open ended question about finances.
Here I deliberately make things a little confusing. Money is a sensitive area for most people.. Few are really aware of the tax consquenses of a purchase of this size.. Providing guidance in this manner forces them to revel facts that simply asking direct questions won't get you answers.
Once they see that opening up in this area will help them you have a far better chance of making a good decision regarding their finances..
I get the impession that SamT doesn't do this.. At least in his posts he makes it seem like the customers need him rather than the other way around..
If a timid customer should ask the wrong question or contront him in the wrong manner It is my impression based on his postings thus far he will blow them off and go on to the next customer waiting in line..
Frenchy,
You asked, "What makes you think we are that differant?"
I say. . .The facts.
I merely described our business in the terms of your business.
You have a great deal of knowledge as a salesman to offer.
You keep offering it from the viewpoint of your business. We keep rejecting all of it because some of it is not applicable to our situation.
Your clients walk in the door and you have a sales call.We get a phone call and sell an appointment.
You have three(?) competitors for your product type.We have three(?) phonebook pages for ours.
You spend hours on a sale and hours on followup.We spend days or weeks on the sale and weeks, months, or years on the followup.
You make all your profit on maintenance.We lose money on maintenance.
The size of one of your sales is less than the up front cost of some of our sales.
When your client defaults, you repo and resell the product.When our clients default, we can't touch the product.
You risk a small amount of your employers money on all sales.We risk everything that is ours on each sale.
You make more money by improving your closing ratio.We risk a lot less money by improving our screening process.
What makes you think we are so much the same?
So, Frenchy, I ask again, what would you do if the client from he11 walked in. Would you still try and increase your already high risk?
With respect for your person and knowledge, but not your tunnel vision,
SamT
SamT
OK I get in my truck and find the customer. Please don't ask me for exact details, I won't share them since I believe it gives me a slight advantage with my competitors.
But while you are thinking about that consider this.. If you are established you may have a listing in the yellow pages. Chances are though if you have such a listing I long ago sold you a forklift.. since a forklift doesn't "wear out" for the average building contractor there is almost no chance of me selling you another one untill you expand enough to need another.. (That's where my repeat business comes in)
Most likely the customer I talk to has an office at the families kitchen table or the dashboard of his truck..(no budget for advertizing) He's usually fairly new to the business and doesn't know too many in the business (otherwise I'd get a referal, remember 80% of my sales are either repeat or referals)
In my market there are 18 differant dealers of forklifts who represent 23 brands. I would guesstimate that there are around 75 salesmen out trying to sell to contractors..
Rough terrain telehandlers sales are tracked. In my market I have an overall market share of 45% (#1) and in the 6000# catagory I actaully have a 65% market share.
Regarding follow up,
I am still selling to customers I first spoke to over a decade ago.
I accept the fact that you haven't figured out how to profit from maintinace. It will eventually happen but you aren't ready at this point..
I accept the fact that the dollars you are speaking about may seem greater than mine, but consider this.. How many of you do the whole complete house? Tell me aren't there plumbers, electricians, roofers sheetrock guys etc. involved? Don't you just often sub those parts out?
Risk? Haven't you read my appraoch regarding handshake deals. I'll deliver a $100,000 piece of equipment on nothing more than an agreement and a handshake.. paper work might come as much as 9 months later..
OK, there are details that differ between us, but if I could get you to step back and look at what I'm suggesting you might find in interesting approach to selling.. One that will help you become more effective.
This is free, done out of gratitude for the help others have given me here. You may not ever need to learn another thing regarding sales in which case I applaud you.. Sales Pro's are the second highest paid income group following doctors.. If you earn nearly what a doctor does, then I apologize for attermpting to help someone who is above help..
Ok you asked what I would do with the customer from he11, Up front I'll admit I'm not always succesful..The appraoch I always use is listen carefully and ask critical quailifing questions. Those answers lead me to select the next approach.. Experiance has tought me that nothing is ever sold at this point but a lot of salesmen are eliminated.
What I am extremely careful not to do is blow my chance at the next round..
I get in my truck and find the customer. Please don't ask me for exact details
Wouldn't help me.
In my market there are 18 differant dealers of forklifts who represent 23 brands. I would guesstimate that there are around 75 salesmen
There are way over ( I got tired of counting) 315 "dealers" in my fairly small market. To relate that to your market, there are 8 (EIGHT) equipment dealers, from ditch witch to catapiller in this area.
I accept the fact that you haven't figured out how to profit from maintinace. It will eventually happen
NO it won't happen. Not legally. What you call "maintenance" on a home is not my market. When I used the term in my last post to you I was refering to repairs. Repairs are a profitable part of the contract you sell. They're a warrenty item for me.
And don't talk down to me, you . . . expletive. You figure out how to make a profit from warrenty work and you'll be richer than Bill Gates when you write the book.
Risk? Haven't you read my appraoch regarding handshake deals. I'll deliver a $100,000 piece of equipment on nothing more than an agreement and a handshake
OH boy! what's that outa your pocket? Since you're #1, maybe 10%? That you will fail to recieve. And you can repo the product and resell it. Our risk can be millions. That we have to pay. Not "fail to recive." PAY!
but if I could get you to step back and look at what I'm suggesting you might find in interesting
You first bud. You step back and look at who you're talking to when you spout your stock equipment sales knowledge. Get it thru your skull.
We can not afford the risk of selling to the wrong customer.
We can not afford the risk of selling to the wrong customer.
We can not afford the risk of selling to the wrong customer.
Ok you asked what I would do with the customer from he11, Up front I'll admit I'm not always succesful..The appraoch I always use is listen carefully and ask critical quailifing questions. Those answers lead me to select the next approach.. Experiance has tought me that nothing is ever sold at this point but a lot of salesmen are eliminated.
What I am extremely careful not to do is blow my chance at the next round..
In our case that customer is never getting another chance. He is eliminated from consideration.
We can not afford the risk of selling to the wrong customer.
Frenchy, I don't know how to get you to understand that it is absolutely nessessary that contractors DO NOT SELL to the wrong customer. Your "customer from he11" is hard to sell to. Ours is dangerous to sell to.
We're not so worried about those that don't pay, We're worried about the ones that will cost us money we've already earned and spent on our families.
SamT
Sam,Your last post redeemed the discussion.Like Jeff, I thought this one was doing the Tidy Bowl Spin, but I've been reading along because the question is so important and I am still learning. You wrote;<<In our case that customer is never getting another chance. He is eliminated from consideration.We can not afford the risk of selling to the wrong customer.Frenchy, I don't know how to get you to understand that it is absolutely nessessary that contractors DO NOT SELL to the wrong customer. Your "customer from he11" is hard to sell to. Ours is dangerous to sell to.We're not so worried about those that don't pay, We're worried about the ones that will cost us money we've already earned and spent on our families.>>I hope every contractor who hangs out here reads that, and if they have not already learned from experience, then I hope they learn it from what you wrote.I can't add to anything you said, but I can tell you I learned that short little lesson the hard way and it almost ruined me.Some years back when I was still running a GC type business I ran across a husband and wife team who were well-experienced in the drastic art of beating people to death financially. They were satisfied that they got a good deal if whoever they were dealing with went out of business the day after the job was completed. And they were amazingly good at it.That's not the bad part. The bad part is I knew that there was a problem before I even signed the contract, but I thought I needed the work so I took the job anyway. I ignored the warning signs and my own better judgement.It took every legal, mental, physical, and morally acceptable resource at my disposal to save my business from these two. And it was nobody's fault but mine. These kinds of people always let you know who they are before the game begins. They assume if you are still willing to play, then you are fair game.I re-learned the imperative that if you get a funny feeling, don't ignore it. (In the world of private security, this is called "JDLR". Stands for Just Doesn't Look Right. That sense immediately trumps every other consideration, every time.)I'm here to say that it is far less damaging to lay off your crew, put your overhead on credit cards, and work for someone else until you regroup.In case anybody missed it, here, courtesy of SamT is one of the basic truths of the construction busines;<<We can not afford the risk of selling to the wrong customer.>>It's a fact, and your business will live or die by that statement.Success is not the key to happiness. Happiness is the key to success.
-Albert Schweitzer, philosopher, physician, musician, Nobel laureate
(1875-1965)
Thanks for sharing that - I completely agree. It's one of the reasons I work alone, when I'd love to expand my business, hire employees, and take on bigger projects. But we live in a litigious society, and the laws on the books seldom favor the small independent contractor. Even doing small projects as I do, I live in dread of getting the wrong customer.
One big developer that I worked for years ago allegedly told his superintendents "If you're not putting at least one subcontractor out of business every year, you're not doing your job"! They stung me for over a grand in verbally authorized change orders. I don't make that mistake any more!
A plumbing contractor I know lost everything when a developer had him hire a bigger crew, make huge materials purchases, all with grandiose promises of an overload of upcoming work - then hung him out to dry. I built a medical office once for a doctor who's wife changed the location of all the outlets three times after they were installed. Not my contract, but I was the jobsite super. I wanted to tell them where they could put their outlet boxes, but my boss said "Just do it, its holding up a big progress payment!".
A finish carpenter friend tells of the lawyer he installed cabinets for - they made him caulk every interior corner of every cabinet before they'd pay him (those cracks just don't look right!) I swear these people can't sleep at night until they've screwed somebody.
And these are small-scale headaches compared to a lot of other's experiences. So Yeah, its just as important for me to avoid the wrong customers as it is to find work for the right ones!"he...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
I'm glad you posted some specific examples of your experience, and what you have seen others go through. That's always useful.It's one thing to tell me, "Be careful." As if I knew what that meant. <G>It's another thing for someone to say, "See that dog right there? If you go near him he's gonna bite you. " Now THAT is information I know how to use.Some of the specific instances that others have posted here have actually found their way into my subcontract language. I know I can't list every little detail in a set of specifications or scope of work, but it does help to cover the general principles up front.Success is not the key to happiness. Happiness is the key to success.
-Albert Schweitzer, philosopher, physician, musician, Nobel laureate
(1875-1965)
Catskinner,
Your post proves the rule..
of course there are customers who will cost you as you pointed out.
Some really severely as your example shows.
But you cannot dismiss anyone who fails to meet up to your ideal of a customer..
Maybe we are dancing around the same thing.. I said that I never try to eliminate a customer at the first meeting.. I try to place myself in a position where I get enough information to make a decision.
Maybe in SamT's world customers say it all at their first meeting, but in my decades of experiance that almost never happens. I sell equipment worth a hundred thousand dollars or so I can't imagine you being able to "read" a customer on a deal that is as big as a house on the first meeting..
Maybe SamT waits untill his second meeting and by that time he's made his decision He's never said as much but I'm willing to give him the benefit of doubt.
There are customers I blow off as I've said but never as cavilier as SamT claims. I do so only when I realize fully not only the effects of the sale but also the consquenses of not selling..
Back in the late 90's when business was booming so much that I could literally pick and chose my customers I gave the same consideration to all of my clients..
I learned that lesson the hard way..
In the late 70's I was selling Honda's I honestly made more money selling a little Honda then I could earn selling a Winnebago or GMC motor home.. I kept a list in my desk of customers ho'd paid the deposit and when a load of Honda's came in I selected who got which car..
Yeh, I was pretty high handed about it.. I managed to offend a customer (I later found out worked for Pillisbury buying forklifts) and sure enough the market changed, I changed jobs and started selling Forklifts,
Well, I guess you can figure out what happened.. (yeh I sold him forklifts, but god did he make me work for it!) That ws the lesson I learned.. Treat very customer like they are important and never get so self important that you forget you are working with human beings who have every right to be treated with respect.
<<I learned that lesson the hard way..>>That was a great story. Thanks. <G>BillHartmann's comment was right on the money, and refines the point I was trying to make. When I contracted to build a house or an addition, in short order I was in the midst of a complex and expensive set of financial obligations with people in my community who I have to see every day amnd work with for a long time to come.So I break ground on the 2nd of the month, and get the plumbing in and the slab down by the 23rd of that month, my subs and material suppliers bill me on the 25th for work completed by the 30th, and I have agreed to pay them by the 10th of the fiollowing month.Now the homeowner invents a laundry list of problems and isn't going to pay until they are resolved. Sure, I might have contractual recourse, but that could take forever, and the only people who end up with the money are the lawyers.The complaints they invent will cost more to remedy than there is profit in the whole job, much less the value of work completed to date.I can't force them to pay me in time to meet the obligations I have incurred, if at all. The only leverage I have is the customer's desire for me to complete the job, and their understanding that they need to pay me to have that done.But let's say they figure they've gotten what they needed and their brother-in-law can finish the project now that the dirt is moved, concrete is down, and plumbing is in. So they tell me they are't going to pay me because I didn't do XYZ right. The project is not financed through a bank, so they could care less about a lien.Sure, I could take the track hoe back over there and put the foundation out in the front yard upside down before the cops arrived. But I probably won't and they know that.Bill is right. The examples that you and Sam are talking about are not comparable. If you personally (not the finance company or the manufacturer) had to buy your inventory before you sold it and were legally prohibited from repossessing it, your attitude might be a little different.Of course it doesn't work that way nor should it. For you to be able to do your job well, you need to work in a functional context, which it sounds like you do very well. I would probably buy tractors from you and we'd get along great.But for the small builder, it doesn't work that way. Small builders are as conservative as farmers for exactly the same reason. We can't afford a mistake.Success is not the key to happiness. Happiness is the key to success.
-Albert Schweitzer, philosopher, physician, musician, Nobel laureate
(1875-1965)
Catskinner,
we know that once things go bad it can be tough.. I had a contractor try to hide his equipment in his cousins barn once..
We both also know that there are ways around problems..
In the case you listed, you'd be forced to file a lein against the property.
Fortunetly cases like that are rare, painfull but rare..
If they aren't you need to stop and reconsider your appraoch..
Maybe with experiance you will be able to properly judge your clients to prevent such events from happening.. I trust my judgement a lot more today then a couple of decades ago..
Agreed, on every point.At the rate I'm going, about the time I'm too old to do this work anymore I'll have it all figured out. <G>Success is not the key to happiness. Happiness is the key to success.
-Albert Schweitzer, philosopher, physician, musician, Nobel laureate
(1875-1965)
SamT,
you sound like the gold minor who keeps throwing away gold niggets because they aren't the right shape..
As soon as you figure out that selling is a profession that needs to be learned your income will increase.
Thanks to the wonderful people who share information with me my home is progressing nicely. I don't try to fit every bit of information perfectly into my house because I'm building adouble timberframe, something nobody here has ever done.
Still I read and learn..
Are you getting my point?
Well I guess I need to explain why we are similar. MY most recent customer from He11 seemed a decent enough guy if a bit difficult and demanding.. When I delivered his forklift with his equipment (not exactly a matter of walking out to the lot and choosing it from the thousands that are sitting there), His first objection was the chipped paint..
You see the factory includes tie downs to chain the forklift down for transportation. when delivered the tie down holes had paint chips from the chains used to tie it down,
We fixed it and no it wasn't covered under the factories warrantee.
His next objection was the hours on the meter for a new forklift.. They always arrive with hours, the factory runs them to test them, then drives them out to a staging area, loads them on a semi and unloads them when they arrive.. We put a little time on them when they arrive checking them out and getting them ready for the customer and then of course we need to load it back up on a semi and deliver it..
We fixed it with a smile and no it wasn't covered by the warranttee.
His next objection was that there was a slight stickyness in the extension of the boom that normally stops as soon as the paint wears of the rub surfaces. The solution proposed was not acceptable (removing the paint from the rub surfaces for him).
We fixed it and no that wasn't covered either.
He then objected to jerky frame tilting. Instead of resting his arm on the arm rest provided and working the controls smoothly with his fingertips as it clearly states in the manual he would stiff arm the controls. In the end we modified a flow cartrage to allowed him to use such poor technique and still get the results he wanted..
Nope not covered,
He found that the new forklift wasn't quite as fast as his old one.. (at that point it had all of 15 hours on it). He wanted us to raise the governor speed. something that would have voided the engin warrantee. however to satisfy him we agreed to slightly raise it and assumed responsibility ourselves for the engine.
That resulted in jumpy controls so back out to his site we went lowered the speed back down only to be called out again for poor performance.
Same old story, not as fast as his older one..
We reprofiled the fuel map in the injector to slightly richen up the mixture while staying within the guildlines of the EPA. that made performance similar. (we also went back when the machine had 200 hours on it and revamped the profile back to original).
Then a compaint was made that one of the bolts holding the cab on "looked" loose. It wasn't as we demostrated with a torque wrench and the factory manual..
But guess what? We'd chipped the paint on the bolt heads requiring of course, a repaint!
Well, the file at the office has 19 pages attached to it. Do you really want me to bore you with all the details?
Nope none of it was covered. Not the mechanics travel time, not a replacement forklift when we brought his into the shop to solve the issues, not the time our mechancs spent solving problems outside the factory training etc.. Not the hauling back and forth. None of it was warratee repairs. Thus every dime spent came out of our pockets..
I refuse to give you my pay details but let me tell you every dime spent hurt me as well.
I'll grant that was the exception.. most aren't that difficult. But yes I would still sell him another forklift.
You see he's not only a customer but as a contractor he has friends and sub contractors. He's a loud mouthed guy who can do more damage to our reputation than we could correct with a million service calls..
In that circle I suspect I sell several forklifts a year.
I sit back and look at the big picture and decided that I'd like to be more successful next year then last and etc.. My approach is simple.
Sell a good product (build a good house) at a fair price (including profit) and take good care of your customers. Even the ones who are wrong..
The good that you do will come back to you as a reward..
Oh and you are wrong, If I delivered a $100,000 dollar piece of equipment or a quarter of a million to the wrong person and he loaded it on a ship bound for a foriegn port, It's my signature on the delivery order, They'd come after me..
In your case if someone failed to pay you, you'd just get a lawyer and in the end own the house (it's not capable of going anyplace)
Finally, you do realize that when we sell equipment we are liable for it.
Lawyers love to go after deep pockets.. sure the factory has deep pockets but they are in another state. Thus the dealership is first on the firing line.. I can no longer give forklift operator training in the field due to a decision by our attornies, we can no longer sell cusomized work platforms due to that same decision, and well, there are hundreds of things we aren't allowed to do anymore, things our customers once wanted us to do for them that are no longer permited.
Frenchy, After reading your last post I have to wonder if the difference in scale makes a difference in the extent to which anyone can profitably do as you suggest.It appears to me that you represent a well-established brand with a solid committment to quality and customer support, and you value your hard-earned reputation as one of your greatest assets.That's commendable. My dealer is the same way, he has earned my loyalty and trust, and he is an indispensable part of my business plan. We have a functional and mutually beneficial relationship. He doesn't get it right first time every time, but we get there eventually, and we both get to enjoy our work and be profitable.Sometimes there are even real problems with the machines, but these folks are like pit-bulls -- they get a hold of the problem and they don't let go until it's fixed. They have intelligent, dedicated, honest, diligent, well-trained professionals in their parts and service department who have nothing better to do than fix the problem and won't stop until they do.Flip side is while I insist on a high standard of performance, I try hard to be reasonable.This dealer has a tremendous amount of institutional support from the brand. They make a real lot of money at what they do, and they have so many organizational resources that they can afford to get it right every time. Oddly enough, that attitude extends to every customer they serve, whether it is a multi-billion dollar enterprise or one guy on one machine. The owner of the company said to me, "We are not Hardee's hamburgers -- we don't have a lot of customers, there are a lot of people selling this product, and we know that."That's all good.Here is my point -- if you are moving $30 or $50 million a year out of your gate and you are running at a 10% profit, you can afford to do some things for your customers that you simply cannot afford to do if you are grossing $375,000 a year and realizing an 8% profit.Do the math, and you see that the big guys can afford to pay a jerk to go away happy, but the little guys just can't do that sometimes.I hope that everyone would exhibit the professional qualities that we all admire, but there also has to be a reasonable limit when a customer's behaviour is unreasonable. As a small business owner, sometimes the best thing we can do from a business perspective is tell someone to go away and never call again.Success is not the key to happiness. Happiness is the key to success.
-Albert Schweitzer, philosopher, physician, musician, Nobel laureate
(1875-1965)
Catskinner,
You make an excellant point.. There is a differance in scale between the kind of guy who builds one or two houses a year and someone like me..
I didn't get to this point because I sold one or two forklifts either.. (yeh, that's where I started) but I learned and listened to others..
I never "canned" a presentation but use a custom one for each client based on what that client has shard with me. Some won't talk about money other than up front costs. Some want the absolute cheapest payment possible, some want feature and others want performance..
Aw heck! I bet there are just as many differant needs as there are people. The way to fullfill each one ijust as difficult. This guy you are blunt with, this guy you are meek to, this guy you confront and this guy,.....
I tried to find the gem in everyone rather than slogging thru it tossing away potential sales..
I dare say that thousands of times in my career people had the ability to put me out of the industry. To ruin me and the company I worked for.. Some tried very hard to do so..
You know I may be judging SamT wrong.. all he has posted thus far is about how selective he is.. Maybe he does so after a great deal of effort and thought..
I honestly get the impression that he goes out there and says it's his way or the highway. If he doesn't like your answers he's on to the next one..
I remeber those days and can promise him they will end.. all things do eventually.
Frenchy,
"all he has posted thus far is about how selective he is.. Maybe he does so after a great deal of effort and thought.. "
All I'm trying to do is to get YOU to turn your expertise onto our problem so I can systemise my sales. My biggest concern is not "How to Close" but, "to close or not to close" To plaigerize a better writer than meself.
The Devils in the Details
Detail
Fork lifts
Homes
Market
A few thousand Businesses. "Everybody knows everybody."
Entire population
Cost
~$100K
$10K-$5,000K
COGS Paid by
Salesman's Boss
Salesman
Repossession
Allowed
Not Allowed
Salesman's Risk/Price
10%
110%
Contract Prepared by
Boilerplate by Team of lawyers
Unique to sale by Salesman with advice from one lawyer plus demands from customer and Architect. Sometimes it's even the customers contract.
Price set by
Team of Accountants
By salesman, unique for each sale.
Product Type
Standard, very few manufacturers, <~100?worldwide.
Unique, 100's-1,000,000's in every village, town, and city in the world. May be thousands of manufacturers in large cities.
Product specifications by
Teams of Engineers working for Manufacturer
Engineering?!?!?!?Prescriptive codes.
Designed by
Teams of Engineers Working for Manufacturer
Customer
Product on Floor?
Yes
No. Built to order. By Salesman
Warranty paid by
Manufacturer/Salesman's Boss
Salesman
Personal Injury Liability provided by
Manufacturer
Salesman
And the Real Biggie. . .
Laws favor
Salesman.
Customer.
SamT
I might print that chart out and hang it on the wall.Success is not the key to happiness. Happiness is the key to success.
-Albert Schweitzer, philosopher, physician, musician, Nobel laureate
(1875-1965)
Catskinner,
please read my point by point refute to SamT
He only got a couple of things right..
Most of his assumptions were wrong..
Sam,
One more big obstacle to add to your list is that 50% (guesstimate) of your competitors are working at or below cost, and most don't even realize it.
Here are a few more questions I like to ask. And I am not asking them in an interagative style, I simply slide them in as I see an opening, while either on the phone, or at a client's home. I am asking while I am listening to what they are saying about their project.
1. How long do you plan to stay in this house? what I am looking to avoid is someone who is just trying to make a quick buck, and move on. My experience says that they are always looking at price. The otherr thing I use this information for is when it comes to the final cost, I am going to divide up the cost by the number of years they will remain in the house. As a function of cost per year, the client can see that they can eat the elephant one bite at a time.
2. Have they had any experience remodeling before? If yes, tell me about it. I want to find out the good and the bad. Both of which I will address as we get to a final agreement. If they have not done any remodeling, I try to take the opportunity to explain the process, and what to expect, and how I address certain aspects, like dust control.
Also if it is a yes, I'd like to know who they used and why they aren't using them again. Couple stories to relate to this question. One client's answer was "Well we always used Dave XXX, but he retired so we need to find someone to replace him."
Another wife answered, "we had used Ben XXX, but his foreman always asked my husband the questions, and I always felt out of the loop." Made the effort to keep her very much in the loop, and the project went great.
3. What is your time frame? If it is a hurry up gotta get it done deal, that is something I am uncomfortable with. I am going to ask some more questions why is it important to be done by this certain time. Maybe we can work around it, maybe not. I have to admit that not asking why cost me a nice over winter interior job a few years ago. had I asked, I would have found out that they needed to start the project within a certain time frame, in order to avoid capital gains taxes on a property they had sold. By not pursueing that question they hired someone else, and got stung. I heard about it from the people who had refered me in the first place.
4. One thing that is an immediate red flag is if they want to do the work without a permit. Probably not a concern on your larger projects, but for my smaller projects it is a red flag.
5. Another point that makes me nervous is if they ask for a cash discount. Not necessarily a point to eliminate the client, but a red flag to me.
6. You can take or leave this next point but I'll throw it out there anyway. When I am in a client's house, I look for religious symbols. If they don't have them that is OK, but if they do, and their conversations and comments don't reflect their faith, I don't feel they are being genuine.
Bowz
Bowz,
That's a good list of queries and uses.
I like it. In fact I liked it so much I saved it to my Hard Drive.
Thanks for sharing.
And it just might get this thread back on track after Frenchy and I hijacked it so thouroughly.
But yah-no, Frenchy's attitude is right on in any other sales field. You have to go for the Close at highest priority. And he is right about the richest people. They are salesmen. Think Bill Gates and Ross Perot.
What he has to say about Closing and overcoming objections is something we should all pay attention to as long as WE remember that we can't afford to close on the CFH.
SamT
SAmT
Edited 2/6/2006 8:19 am by SamT
What he has to say about Closing and overcoming objections is something we should all pay attention to as long as WE remember that we can't afford to close on the CFH
Pretty much in agreement with that. Tunnel vision from either side is not good. What sucks about this is the spoken word is responsible for something like 7% of what is being communicated. Can't be any higher for the typed word, even if we all knew how to type well.
Couple of other bits of information I like to have:
1. Have they had any plumbing or electrical work done lately and who did it. Knowing who did it will give me some insight as to the quality level they may be used to, and the price they may have paid. But be careful, as they may not have been satisfied with someone you would normally recommend. For instance if someone says they've used the plumber I have used, I don't immediately start gushing about how good they are. I have run across the situation where the plumbers work was good, but they had PO'd the customer in another way.
I am in a relatively small market so I know of quite a few of the sub-contractors. It may not work in your market.
I did have one situation where a customer mentioned a particular electrician. I had not used them on a job, but had been on jobs when I was an employee, that my old boss had used them. I mentioned that to the customer. They ended up calling the electrician, and hired me on his recommendation.
2. One other thing I try to watch is how the homeowners interact with each other, and their kids. Had a husband call his wife "Stupid" right in front of me. Now if he is going to treat his wife like that, how much better am I going to have it?
3. Another red flag is if they comment negatively about their neighbors. Maybe one side of the house would be bad, but if they claim everybody around them is a butthead, I pretty much assume that I am speaking to the butthead. And if you take the job you most likely will become a butthead in their eyes too.
Anyway, that is some of the stuff I look for. I don't think any one thing eliminates people, but after a half dozen red flags, the alarm in my gut is going off yelling "DANGER, DANGER, DANGER"
Somewhere in this info gathering process, I will bring up the budget. I am not real good at this aspect, and can't really recommend a "for sure" point where it will happen. One remodeler I have talked to a few times will not go on a sales call unless the client has a budget in mind and reveals it on the phone. I find that to be too agressive for my style, but it works for him. (He made the Big 50 in Remodeling or Qualified Remodeler in the '90s) I really like DanT's version of how it should happen.
But if I have a bunch of red flags waving, there is no sense in getting to the budget, because I am not working here anyway.
At that point I find a reason to excuse myself from the job. "I mis-understood on the phone what you were trying to have done. I'm sorry but I am not comfortable being involved in this work. Here are some names of people that may be able to help you."
Good luck with it,
Bowz
Bowz,
Those are excellant open ended questions.. never , never , never, ask a question that can be answered with a simple yes or no..
If you've done a good job you don't even need to ask for the sale.. You present your quote to the customer and tell him to press hard the last copy is his..
SamT
Do you ever read anythiong I've posted to you?
If you did you'd realize that most of that chart is wrong..
You don't know what you are talking about!
Customers?
Everybody knows everybody?
While that imay be true regarding repeat and referals. it is most definately not true regarding new and start up companies..
Nor is it true regarding the whole population are customers for your business.
Only those currantly in the market or considering the market..
Second, most contractors specialize, that is they do decks and add ons or multimillion dollar homes, but they don't do both..
I assume you mean costs and not cogs, I pay my own costs..
Reposession. Foreclose.. while I'll grant one is more complex both still aren't easy. Both usually require the services of a lawyer..
Salesmens risk?
I don't know what planet you live on but if I am responsible for the theft of a piece of equipment I'm on the hook.. while I'll grant you there may be some salesmen who don't have that responsibility but those are usually junior salesmen with close supervison and they are on salary and or draw against commisions.
Boiler plate team of lawyers?
My handshake?
Price set just as your price is set by the market.
I assume you have a cost to build a simple three bedroom rambler on a nice flat lot.
You don't change your price because they are black or white or a young couple or old couple..
Your price is based on costs plus profit and overhead..
As is mine!
OK, If I were to grant that most home designs are simple variations of the same theme, I'd still have to grant that ICF's, SIP's, Heck even haybale homes are differant.. Most contractors do specialize.
I hope you aren't going to get petty about if a board is cut at 84 1/2 inches or 32 1/4 it somehow makes a big differance.. I think that most carpenters know who to build a room even if it's an unusally measurement or differant roof pitch..
I will grant you the next two points, except that often the house is designed by an engineer (called an architect) somtimes even with the aide of a structural engineer.
And I would say that the majority of spec homes built are built from standardized plans and only field modified for local markets.
Product on floor? Well I could get cute and make a comment about spec houses, But that's petty..
Sometimes contractors do accept equipment that is on the floor.
Usually they have specific wants and needs.. It's up to me to get them the piece they want when they want it..
I wish you guys wouldn't wait untill the Friday afternoon before you start to order equipment.. You don't so I have to go into my dance and solve your schedule problems.
The floor costs of having a lot of equipment sitting around would quickly make us uncompetitive.. I need to match just about any competitors price on an apples for apples deal. If I have a bunch of floor costs involved I can't and I'd lose the sale..
Conversely If I need to haul a piece of equipment in from another state those costs too would quickly make me uncompetitive. (there isn't a single contractor I know who can't add and subtract)..
Warrantee?
Read any manufactors arrantee. None of them include mechanics travel time or the cost of having a part flown in special to repair the piece of equipment..
A great deal of warranttee requires the equipment to be brought into the shop where they have the equipment it takes to take apart a boom or solve a complex problem. At that time if you've spent a great deal of money with me would you be happy if I left you without the equipment you bought while I fixed it?
Of course not! You want a replacement piece and that replacment and hauling one in and the other out isn't covered by warrantee either.
Other than parts at cost and our labor at internal rates we pay for all warrantee repairs ourselves and those are costs that I spit with my employer 55/45% It's not uncommonn to lose all of your commision plus in a single series of problems..
Liability?
I'm off the hook?
You don't know what you are talking about!
Laws favor the salesman?
I repeat, you don't know what you are talking about!
If it's not written on the contract and signed by the buyer it's not enforceable. I don't care if it's a house, a forklift, or a gum drop!
franly if you need to go to a lawyer, you've already lost and it's the same with me..
I have the same legal costs that you do. Last time I heard lawyers didn't work cheaper for equipment dealers than building contractors..
When I worked for Caterpillar they had a whole team of in house lawyers, as I'm sure some of the bigger home builders do as well. Medium to small players like you and I can't afford that..
Bye-Bye.
Sleep well.
Have a good life.
SamT
you guys ought to take it outside.
Sam,
I love that chart. That sums it all up. Thanks. I have a sticker on my speedometer in my work truck with a dollar figure that represents my overhead per workday. I look at it everyday and adjust it often.Im putting that chart to my visor!!!!!
Scott
"Risk? Haven't you read my appraoch regarding handshake deals. I'll deliver a $100,000 piece of equipment on nothing more than an agreement and a handshake.. paper work might come as much as 9 months later.."Try YOU paying for the unit UP FRONT and then you selling it. And if they don't pay you can't repo it.Just wait until they try to sell it and if there is any value left in it to collect what is owed you (and agin YOU not your employeer).
Bill Hartmann
Didn't you read?
they can load it on a frieghter and take it out of the country. (try doing that with a house)
Yeh, someone could trash your house and you'd need to replace some sheetrock and and maybe do a little repainting.
I doubt I'll ever meet the contractor who would custom build a house without any down payments or progress payments..
Sam, you've very clearly laid out why it's insane to be in the building/remodeling business. I use the term loosely....
blue
Frenchy,
When I first started to read your post, it sounded like it was well thought out and reasonable.
By the time I got done with it I see you advocate the typical "bait and switch" tactics as other lowlives. You also advocate lying (tell them you need to talk to...) and hiding info (take the paperwork back) and more.
That's the kind of crap that gives salespeople a bad rep. I lost a lot of respect for you on that one. I would never pull any of that and never let anyone work for me that did it. If I were that unethical, I wouldn't be bragging about it either.
Don K.
EJG Homes Renovations - New Construction - Rentals
I don't know Frenchy, It sounds like you do. I started this post and got some good ideas and supported some I already had. I also don't agree with those tactics. I do however leave out itemized prices. I give an overall number total and put $ amounts on allowances and tile options. I have heard of others who line-by-line each item. Demo, framing, house protection, paint, trim, etc. I have never done this as it seems to open the door for "My wifes, sisters husbands uncles friend is an a/c guy and he will take of the AC and I can save $870" I don't feel this is unethical, do you? This way if it turns into a competitive bid I tell the potential customer in a personal note or meeting that unless they have a construction or related background it will be impossible to differentiate between the bids without 95 pages of specs. Does that make me a bad person? I have always tried to keep my integrity. I recently did a rehab on a house that was owned by the brother of the owner of a large cabinet co. The particle board crap he installed was of half or less the quality of what I would install and for equal money. Because of my non-itemized proposal. I tried to sell my version but they thought they were saving money. I should have passed but I made good money on the work I performed. That one wont go in the picture book.
Scott
Scott -
My exposure to Frenchy is through about a year of reading posts. He's a salesman of telehandlers, with some experience at selling - that's obvious. As far as interpretation of his skill/ethics, that's a decision for everybody to make on their own.
You say you don't give an itemized estimate or proposal. I don't have a problem with that. Obviously, it works for your clients too. Do people typically come back to you and ask for itemized price breakdowns? Do you give them anything detailed before the job starts?
You also talk about not wanting to get long detailed lists of what is going into a job. I'm kind of the opposite. Those long detailed lists don't scare me because they lay out responsibilities clearly for all sides. Same thing with a good set of plans. I have a background in construction litigation and I have seen many times that the parties to an agreement didn't really understand each other. Granted all the paper in the world doesn't stop crooks and cheats, but if the agreement is on paper, it takes a lot of the "he said, I said" out of the picture. Written specs are normally clear and everybody understands them, or should. If you get/write a good set, and they are on the computer, it's easy to recycle them from job to job and doesn't take much time.
As far as sizing up customers, I have learned to trust my instincts. Then again, I'm not quite a kid any more and I've learned what I need from a customer for me to be happy. If they are argumentative and demanding, I don't waste my time. If they are ignorant, and I know I will have to educate them some, that doesn't bother me (within reason). Others have said you have to pre-qualify them from the money standpoint and that is true too. I like the way McDesign put it. "What's the budget?" That's straight up enough - but not nasty. (I don't think I could ever tell anybody to burn it down and start again. That's not my personality.)
Good luck to you. You will learn some tricks if you hang around here. Most of them will be good ones.
Don K.
EJG Homes Renovations - New Construction - Rentals
Don K,
No I write a very detailed spec I just don't line by line each components pricing. I give a grand total price and not a price for every category in the specs.
Example: The first page of a 12 page spec, job range 200-300k completed 10/2005. Changes from first to second draft are yellow.
1. Permits
§ All required permits, and the filing of a notice of commencement.
<!----><!----> <!---->
2. Demolition
§ Remove steel structure and roof over carport.
§ Remove shed roofed storage at south wall
§ Remove walls in dining area and prepare for new framing per plans.
§ Remove all bath fixtures and walls at small bathroom on west end of house.
§ Remove all cabinetry and fixtures from kitchen.
§ Remove window and partial wall at kitchen per plan.
§ Remove all cabinetry, fixtures and doors in existing master bathroom.
§ Remove walls and doors at closet next to master bath.
§ Remove walls, doors, and shelving at master closet on north wall.
§ Remove south facing window at master bathroom.
§ Remove east-facing window at master bedroom and prepare door opening.
§ Remove windows at new kitchen-prepare for door opening.
§ Remove exterior brick as required by plans.
§ Remove all carpeting.
§ Remove all of concrete drive on the south side of the house to the corner nearest the street (Approximately 1300 S.F.). Also remove brick pavers.
§ Shoring and house protection as needed.
§ No provisions are made in these specifications for the removal of any existing hazardous materials contained in the existing building or site.
§ Dining area layout to stay as built. No soffits and ceilings in these areas are to remain.<!----><!---->
§ Den area plywood ceiling to remain.<!----><!---->
<!----> <!---->
3. Site Preparation
§ Owner to have designated trees removed
§ Owner to remove/protect any affected landscaping that is to be saved.
§ There is no allowance for new landscaping, landscape repair, work to or installation of any sprinkler system or fence/deck repair.
<!----> <!---->
<!----> <!---->
INITIALS___________________
DonK
Please go back and reread that, Especially the first sentence where I cautioned that if misused it would back fire on you..
Time wasters already have taken from you.. they took your time Time is money!
I have many decades of experiance learning when someone who's is asking for the lowest proice means that and when they are simply asking for enough information to properly evaulate things..
Hiding things?
I don't think so. I told them up friont what my number was.. I simply refuse to give them my quote to use to beat up other contrators with..
Think back, how many customers would bring out a lower quote and use it to get you to lower your number? Or use the quote of an inferior contractor to get you to do the work at a lower price?
I gave them my business card and they are free to write whatever they want on the back of it, my price included..
Bait and switch Not hardly, They wanted an unrealisticly low price. ( in a lot of cases price is all they hear because they don't have the knowledge or judgment to properly evaulate anything else) If a customer wants a too cheap forklift from me and price is all he is listening to, I then will sell him one at that price if worst comes to worst.. But he will get what he paid for.. Well that's not always the truth, I have refused to sell equipment to people because I see them as potential trouble not because the profit isn't what I want. If a someone wants a too cheap unit and accepts the consquences of a too cheap unit I'll go ahead and sell even if the profit isn't where it should be.. I refuse to sell when they want to pay a too cheap price and expect a good unit for that price..
I rarely shoot in the foot and then only fools who won't affect my reputation.. If you know that the cheapest a deck can be built for is $X dollars but that the deck won't be one the customer is happy with then you are in that position too.. The guy isn't listening, all he hears is price so now you give him what he wants..
If he comes back I can attempt now that he's finally ready to buy and ready to really listen regarding value to educate him and teach him value. If I fail to do that he will buy a cheap unit (or in your case a cheap deck etc.) from whoever is willing to place price first.. The only time I shoot someone in the foot, is when they go around doing second grade math first.
I can buy a forklift for $X dollars, is yours cheaper? What's your cheapest? About once or twice a month I get that kinda question usually followed by a request for a quote.. I don't mind that as long as the person either has bought enough telehandlers to have a good judgement regarding value or is willing to learn enough to evulate the value of each. (kinda hard with 170 units in stock and most of them out on rental)
What's really worse is the guy who asks for a demo
Any demo costs me about $500.00 There is the frieght involved in hauling a 20,000 pound piece of equipment around, the cost of cleanup and the use on the forklift..
Things are even worse because most equipment is out on rent, so I need to bring out a replacement piece, haul that one back in clean it up and service it, haul it to the customer and etc..
So I know how to listen to customers and properly qualify them. If I were as caviler as you suggest I wouldn't be the top salesman.. Nobody would ever buy from me and they darn sure would refer me to their friends.. (80% of my sales are by referals or repeats )
frenchy-
Without going into it all again, neither money or being top seller really impresses me in general. I know somebody in my family that can sell like crazy, and makes great money. He's always bragging about it. I also know him to be totally a totally dishonest, lying, cheating thief. (Not that I have any strong opinions. <G>).
I'm not going to change your mind on your sales techniques and you're not going to change mine. We are going to have to agree to disagree on this one.
Don K.
EJG Homes Renovations - New Construction - Rentals
DonK
If a cop were to stop you for speeding or something what sort of attitude would you display towards him?
Most of us would be polite and reasonable, right?
If you come at him with a billigerant know-it- all attitude what sort of experiance would you expect?
Your post smacks of exactly that sort of attitude. Maybe you've purchased something in the past, regreted it and then blamed the salesman for yor purchase.. I don't know.
Perhaps you failed to read where I get most of my sales, Referals and repeats.. Not likely to be successful if I were as you claim am I? I do know that I enjoy my relationship with my customers because I wanted to be a teacher (actually was one for a time) Much of what I do is educate and inform customers.
(that's actually a sales technique)
If you go back and read my post regarding handshake deals you'll find that I make it extremely easy for anyone who isn't satisfied with the purchase to return it.. My most effective sales technique is to get the forklift to the user and let him use it as long as he'd like before he signs the paperwork. (not as foolish as it sounds)
Successful people learn from other successful people. If your sales approach is always successful then by all means don't listen to other approaches.. If not learn from those more succesful.
That's one of the great points about this forum.. I've learned a great deal from others on this forum and I feel compelled to return that help..
Frenchy, you'll never sell me on a major remodel or building project with an approach like that!"The only reason price comes up is because people don't understand."There are a number of other reasons price comes up, including:
- Discovering the ballpark range for a project
- Discovering the lower and upper limits based on different particulars, to assist in setting priorities for compromises to one's original vision
- Looking for some way, any way, to get the basics of the job done given a fixed upper limit to the amount the customer is willing to pay
- Discovering a contractor's willingness and ability to come up with creative, less expensive, equally (or more) appealing alternatives to the initial proposal or request
- Looking for a sucker contractor that can be manipulated into working for little or no profit, or at a loss
- An attempt to make an apples to apples comparison among different contractors (don't kid yourself, some contractors are more efficient or less greedy than others)The thing is, there's a fine line between trying to make the apples to apples comparison and looking for a sucker of a contractor -- where does less greedy turn into willing to work for free? where does more efficient turn into shoddy workmanship? And hard as the customer may try, it's very difficult to actually get an apples-to-apples comparison since new information turns up with every contractor interview.I agree with you 100% that the first part of the interaction is going to be about selling yourself, your abilities, your value, etc., and waiting to discuss price until you've discovered what the customer values and until you have communicated that you have it in greater measure than your competitors."If you are clever you'll do the set up now for a higher quote....
Whatever it is you need to make the customer feel that you are the only person who will really give them what they want....
Never ever ever give a quote to anyone unless you know that you've sold the job!"But in many cases, how you deal with economizing is part of the picture, it *is* what "you need to make the customer feel that you are the only person who will really give them what they want" -- and you simply won't sell the job without the actual quote. The idea of thinking you can use your sales pitch as a way to start jacking up the price just really rubs me the wrong way.I referred above to customers looking for sucker contractors who can be manipulated into charging less than they need to earn a living, but the whole last half of your post strikes me as suckering customers by low-balling your price and making a killing on change orders. For the record, I consider both to be bad behavior.Rebeccah
Rebeccah,
I accept your corrections, I should never use absolutes. I don't believe in them myself and my approach is always fluid based on input.
However I request that you go back And carefully reread my original post.. read the part about use with caution, it will come around to bite you.. That means most people deserve straight up information.. However, Some come with the idea that a low price is most important and then are surprised and upset when the quality and performance is inferior..
As they march thru the yellow pages looking for the cheapest they aren't really doing as you suggest. They are tuned into second grade math and not ready to listen or learn. To those people only is it ever right to "shoot them in the foot"
Once they've been thru the yellowpages they'll have a list of contractors who they will consider.. I'll bet none of the better contractors are on that list. Now they are willing to listen to your suggestions and information regarding insurance, experiance reliability and such..
If you are such a company you now have a chance to present your case. Your first chance to sell rather than just be an accountant..
If you'd insisted up front at the first go around on providing the customer what they really need rather than what they were really asking for you won't ever get a chance.. They will dismiss you and many others who they consider uncompetitive.
Why didn't I carefully explain that up front, well I did say it but you missed it. I could have gone on and on carefully explaining the conditions and such but My only excuse is my poor typing skills. Oh, and time.. How many want to carefully read every post in depth and consider it? too often They are just skimmed and a quick assumption made.
Same with sales.. If you briefly listen to the customer you will nearly always (see I was just gonna say always) miss a bit of information that may be critical..
Low balling the price can work to the benefit of the owner as well. If he can be disiplined enough to accept what was planned he stands to get a house for a price that could be lower than other contractors who build into their bid the inevitable change orders.
Profit is absolutely needed in anything.. how the contractor makes that profit is dependant on a variety of things and any one approach can be fair under one set of circumtances and unfair under another.
I eliminate the competition in a simple way. I tell anyone that in an apples to apples deal I will meet anybodies price.
I tell them to drag out their lowest quote and I will match it..
(Often their lowest is higher than what I would have sold it for but rarely someone can be a little under my price, it that case I sell for that price..
What that does is stop them from shopping.. Heck if you know a gallon of gas is the same price no matter where you buy it at how many places do you go to getting prices?
(Maybe gas is a poor example lately <G>) the real profit comes from that can of pop and cigarettes.
I've been selling forklifts for well over 20 years now (15 SELLING TELEHANDLERS TO CONSTRUCTION) only rarely does the sales department ever make a profit.. profit comes from parts,service and rental..
Once you own a particular brand of forklift that's where you get the parts and service from..
One thing that isn't often mentioned by those who should maybe know better--- is that people vary, a lot, and that what works with some people won't work with others. There are no rules which apply to everybody. Go with your best guess. If it works out wrong it won't necessarily be your fault.
John
John
Just a thought:
It's always easier to loosen up on contract restrictions and conditions than it is to tighten them down once the ball starts rolling. We all come into contact with people who we don't understand, either because of their personality, circumstances, lifestyle, whatnot. When you're not comfortable, introduce a larger cushion for the unexpected and relax it later once you're more familiar with them, if at all.
Along those lines, if you want to avoid cheap cabinets or whatnot when the end gets near, write in a bottom limit on those allowances, or require them to commit up front.
Scott,
Glad you started this discussion.
And to PeteVa, BobKovacs, BillHartmann, Bowz, and especially SamT and Jeff Buck, thank you for all that you have posted here.
There was not much here I didn't know already, but hearing it again from someone else just made me re-think a job I was about to take on, and now I don't think I will.
I know my price was good (maybe even a little low) and the GC and the homeowner are still acting . . . well . . . as George Thorogood said, funny. ("Yeah, everybody funny. Now you funny too.")
For all appearances it ought to be a great job, there is a BUNCH of money on the table, but every time I get around these guys the warning bells go off for no apparent reason that I can identify.
I think I'll pay attention to them.
Thanks, guys.
Success is not the key to happiness. Happiness is the key to success.
-Albert Schweitzer, philosopher, physician, musician, Nobel laureate
(1875-1965)