FREE CONTENT

How to Win the Job

Your salesperson should spend the most time working on sales with the easiest-to-close, most promising leads. Screening to find those leads is the first part of an effective sales system.

September 03, 2009
September/October 2009
This article originally appeared in the September/October 2009 issue of Home Energy Magazine.
SHARE
Click here to read more articles about Archive
Marketing, sales, and estimating are the three most important components of our building performance business for generating cash flow, but they are often the components most ignored by home performance contractors. The words “marketing” and “sales” are not synonymous. Marketing is what gets the phone to ring; sales are what happens next. An estimating system for determining price and generating specifications either streamlines the path to the sale or creates a bottleneck. When these three systems perform well, we are still often faced with the challenge of managing a steady flow of profitable business. When these systems don’t perform well, we may get stuck with jobs that suck all of our energy away and leave us with no time and no money.

No Marketing = No Sales

Marketing should be an ongoing system, continuously putting your name in front of the prospect. A marketing system doesn’t function well when it is controlled by an on-off switch. Like an air conditioning system that can maintain comfort when the thermostat is not being fiddled with continuously, but takes time to reach the comfort level when the system has been shut down for a while, most marketing systems don’t have a rapid or predictable response time. For home performance contractors, the following marketing strategies seem to deliver the biggest bang for the buck:
  1. Make job signs and truck signs eye-catching; locate them artfully.
  2. Ask for referrals. Trust is usually contagious.
  3. Give it away to get it. Freebies to the right people garner attention.
  4. Mine past customer lists. Repeat customers bring a higher level of trust than new customers will. Include a two-year service contract with every contract the customer signs. Leave your name and contact info on everything you install in the home.
  5. Write letters. Write to contractors, home inspectors, Realtors, and others who deal with homeowners and follow up within a couple of days.
  6. Write press releases. They cost nothing, other than a little time and effort to type and mail, and they will make your company look much larger than it is.

The words “marketing” and “sales” are not synonymous. Marketing is what gets the phone to ring; sales are what happens next.
Screening Saves Time

A salesperson should spend the most time working on sales with the easiest-to-close, most promising leads. When there are need, ability, and trust, the more likely a signature will seemingly drop from the ceiling onto your contract. Screening leads for these qualities is the first part of a sales system—a process that will guide you most efficiently to your objective: the sale. Only after you have screened the leads do you proceed to setting the appointment, enhancing trust, educating the prospect, defining and refining the way to meet the prospect’s needs, and finally presenting the proposal in exchange for a signature and a check.

If you are among those who are swamped with calls from prospective customers, realize that you are in the driver’s seat and must be choosy about how you spend your time. Contractors are not required to provide more than the courtesy of a return phone call unless there is some reason to believe that the caller is truly a prospect who is likely to pay off. The lead capture form is an invaluable script of carefully crafted questions designed to stimulate a conversation that may lead to a sale (see p. S36).
    
Efficient Estimating

A quick and accurate system of estimating avoids the bottleneck.  No matter how efficient the marketing system is at producing good leads, and no matter how well the sales system works, an inefficient estimating system can cancel out all of the advantages provided by either. A realistic goal is to estimate and create the specifications of many jobs while you are in the customer’s living room, making the one-call close possible. If there are unknowns in the equation (such as the proper size of equipment) that can only be determined after more-detailed study, price the worst-case scenario and explain to homeowners that they will save money if the hardware can be downsized.

Streamline the Estimating Process

Just as you know how much time it takes to complete a blower door test because you have done it repeatedly, so you need to know how much time it takes to estimate accurately. That question may be tougher to answer unless you have an estimating system in place. The secret is in the system. For any system to be useful,
  • you need to be able to duplicate it,
  • the results must be measurable, and
  • the process must be simple to perform.

The accuracy of the estimate is the measure of the results. However, the best estimating systems will provide a cost figure that is either equal to or higher than actual costs in order to ensure profitability. The simpler the process, the less time it takes to perform.



 
    
Organizing the Estimate

Whether the estimate is done by the technician in the home or by a specialist in the office, use the unit cost method of estimating. This method removes the emotion from the estimating process by substituting verifiable unit costs for each item of labor, materials, and trade contract work included in the estimate. It allows you to view each project as a set of components, each with its own fixed cost. A simple remediation project may involve many skills and lots of different products. However, if each activity is viewed individually, it is simple to assign a predetermined value for materials and labor per unit of measurement.

Computer systems simplify the estimating process by identifying each construction cost by a unit of measurement—linear foot, square foot, pair, each, and so on. These computer systems are easy to use. They are available at conventions, trade shows, and seminars; or you can learn to use them by conferring with competitors and reading trade publications. You may choose a system developed and monitored constantly by professionals whose job is to keep you in business by providing correct cost figures. Currently, I prefer a database put together by RemodelMax. When you combine this database with an estimating system called ClearEstimates, you have a quick and easy way to generate the costs for the project, as well as specifications (with product images if you like) and contract language. See a demo of these tools at www.mikedelivers.com.

If you choose a system created and managed by others, the database should be specific to the type of business that you engage in. Building performance contractors should, however, be able to modify and customize the system they use by adding more items that are unique to their operations.

A well-built list of tasks arranged in the order in which they occur enables the estimator to build the job mentally as he or she is preparing the estimate. Once the job begins, it becomes the checklist, helping the contractor to minimize errors and omissions.

Determine a Fair Price

Instead of lower prices, try to establish fair prices. Fair prices are based on the true cost of doing business. Start by taking a look at how much it costs to operate your business, and be realistic. The remodeling side of home performance contracting is truly one of the most inefficient businesses, because almost every job is unique.

Understand that to estimate costs accurately, you must know what portion of every dollar generated by sales is needed to pay the cost of operating your business, and what portion and how much is left over for the sticks, bricks, and labor to build the job. You should also allow for some profit, over and above your daily salary. The cost of operating your business is known as overhead. To determine your overhead, look back over the last twelve months and identify how each dollar was spent during that time. This exercise is not as overwhelming as you might think. Get out your Big Chief tablet and your #2 pencil and organize two columns, one headed Overhead and the other Job Cost. Every check you wrote last year goes in one column or the other. If there’s a balance remaining that can’t be allocated to either column, it might be profit. Is this is a balance remaining from the total of checks you wrote? If so, why might it be profit?  Now divide the total in the overhead column by your total sales income for the period that you analyzed. The result is the percentage of your total income necessary to support your overhead for that period. For example:

$30,000 in overhead divided by $100,000 in sales gives an overhead percentage of 30% (30,000/100,000 = .30 or 30%). For more on pricing see my article “Pricing for Profit,” p. S50.


Where to Start

The starting point of any estimate should be the cost of the plans and permits required to build the project. To apply the concept of unit cost to this part of the estimate, we’ll look at some cost items, starting with the plans and the proposal.

How to Use the Lead Form

Date: Helps you identify good times to call in the future.

Name: Helps to determine who in the household is the decision maker by who placed the first call. Try to speak with all decision makers in the home.
Address: Contact information is vital!

Type of Work: Is the caller a good fit for your business? By describing their needs in response to this question, the caller may give other useful information as well as need and urgency.
How soon to start work? This open-ended question is designed to elicit information about need and urgency.

How long owned home? Vital in determining ability to pay. Should the caller indicate that they don’t own the home, the value of the lead would change drastically.

Referred by: Helps identify common ground. Also it helps analyze the effort put forth by the caller to find a source to satisfy their needs.

Interested in: cash or financing? This question defines the caller’s ability to pay. Research indicates that customers spend thirty to forty percent more money when the project is financed.

Best time for appointment? A lot can be gleaned about the decision makers from this question.
How long have you been considering this? Sheds some light on where the caller is in the buying cycle, and need and urgency.

What remodeling done before? Does the caller has an idea about the process involved in remodeling?
Time is money. This means that you should get paid for estimating and creating proposals. Therefore, you need to include the cost of preparing the proposal in the estimate. This also applies to the cost of the audit (or inspection), a key issue for home performance contractors. Charging for audits is part of screening; if the audit cost is too low, you will get too many unqualified audits. Or you can use other screening. Or both. The key is getting enough of the audits to turn into jobs. You can reduce your audit cost by putting part of the audit cost into the job, but be careful to reflect that you will not turn all your audits into jobs. A related issue is the use of the report. Too big a report and you make audits more expensive. Too small a report and you lose your positioning as a consultant. Since you may not sell to every qualified prospect, build a cost into every estimate sufficient to recover the cost of making all of those presentations which did not result in jobs sold. There should be a charge built into each proposal estimate for the cost of creating plans and for taking and arranging digital photos. Each estimate should reflect the cost of preparing those plans for jobs sold, as well as the cost for those plans that were rejected by the homeowner.

To use the unit cost concept to figure these charges, you might establish fees that are applied to each of these activities and include as well charges based on a percentage of the selling price. This method would establish a minimum charge for simple jobs. However this minimum charge would increase as the cost of the job increases, since a more expensive job necessarily entails a more complicated plan.

There is no activity in home performance contracting so complicated that it cannot be shrunk down into a unit of measurement, such as square foot, cubic foot, linear foot, each, each pair, each plus per square foot, and so on.  You can delegate yourself right into free time by installing various systems, including estimating, to run your business.

How Does This Fit Together?

A lot of homeowners are open to understanding the costs and benefits of a higher-quality job, but only if we are willing and able to educate them. Depending on whose research you read, as few as 10%–15% of consumers use cost as their primary deciding factor. I would like to propose that most people will rely on price as the deciding factor only when they lack other information that would help them to decide which contractor they trust with their expectations.

If we could educate prospects to understand what goes into a good furnace or A/C system, a good window or insulation installation, they would know what to look for should they undertake the burden of collecting bids. At the same time, they might be less inclined to do so. How do we do that?

Ten Steps to the Dotted Line

To summarize, if you take the following steps, using some of the techniques described above, your path to the ink on the contract will be as efficient as your work—and as efficient as you intend your client’s home to be:
  1. Return the phone call promptly.    
  2. Spend some time with the prospect on the phone.
  3. Make an appointment, but only after getting a commitment from the prospect to pay for testing.
  4. Keep the appointment to the minute.
  5. Build trust and rapport.
  6. Spend time educating the prospect about your company.
  7. Explore the house with great interest and take copious notes.
  8. Estimate the cost of the project on the spot.
  9. Present your proposal; deliver the price (or budget).
  10. Collect a deposit and cement the sale by assuring the customer that he or she has made some wise choices.

Now Imagine the Outcome

In order to generate the names and phone numbers, and to separate the tire kickers from the repeat customers, you need a well-planned and executed marketing program—and that program must be in continuous operation. You won’t sell to every prospect, but at the very least, the contractor who properly educates the prospect raises the performance bar for the next contractor who delivers a proposal.  

Mike Gorman is the author of If I Sell You, I Have a Job. If I Serve You I Create a Career! (Lakeland, Florida, TechKnowledge, 1997). He delivers seminars and provides telephone and on-site coaching regarding sales, marketing, and estimating, as well as systematizing the business. His background as a remodeler provides his platform. E-mail Mike at mgbok@aol.com; phone him at (800)218-5149; or visit his Web site at www.techknowledgeonline.net.           
  • 1
  • FIRST PAGE
  • PREVIOUS PAGE
  • NEXT
  • LAST
Click here to view this article on a single page.
© Home Energy Magazine 2014, all rights reserved. For permission to reprint, please send an e-mail to contact@homeenergy.org.
Discuss this article in the Marketing Energy Efficiency group on Home Energy Pros!

Comments
Add a new article comment!

Enter your comments in the box below:

(Please note that all comments are subject to review prior to posting.)

 

While we will do our best to monitor all comments and blog posts for accuracy and relevancy, Home Energy is not responsible for content posted by our readers or third parties. Home Energy reserves the right to edit or remove comments or blog posts that do not meet our community guidelines.

Related Articles
Email Newsletter

Home Energy E-Newsletter

Sign up for our free monthly
E-Newsletter!

Harness the power of
HOME PERFORMANCE!

Get the Home Energy
e-newsletter

FREE!

SUBSCRIBE

NOW!