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Every hardwood flooring contractor and installer I've ever met boasts how their quality and service is superior to the competition.
But, after you present your proposal and the excitement settles down, what really matters to customers? Price ... or, so you would think.
Customers Will Pay More
It's great to take pride in your company's awesome service and quality workmanship. Thinking you're better is one thing, but getting paid more than your competition for better quality is another. Ask yourself this question: Do your customers pay your company more than your competition for the same work?
To get paid more, you must offer more. Getting a flooring contract is normally based on bidding a lump sum for the minimum required per the project plans and customer's specifications. Most wood flooring companies want to sell quality over price, but when preparing an estimate or bid, most don't consider including more than the minimum required. Why? They've got to be the low bidder to get the work.
Imagine living in a world where construction project owners, developers, builders and homeowners actually pay more for quality work and excellent service. I took an interesting survey while speaking at a Construction Owners Association of America (COAA) convention. COAA is comprised of organizations and companies that regularly engage in building major construction projects as the owner or developer. During my presentation entitled"Profit-Driven Leadership," I asked the attendees to tell me how much quality and service matters when selecting contractors, subcontractors and suppliers. The results were intriguing.
Quality and Service Matter
Ninety-five percent of the owners surveyed stated quality and service matters when selecting their contractors, and 89 percent said they would pay more for better quality and service. I found this astonishing. Asa general contractor, when I bid or propose on most projects, the contract award is based primarily on the lowest bidder, as quality is already determined by the project plans and specifications. The survey showed the following:
How much more will these owners pay for quality workmanship?
- 36 percent will pay 1 to 4 percent more
- 36 percent will pay 5 percent more
- 18 percent will pay 10 percent or more
- only 10 percent will not pay more.
How much more will construction owners and developers pay for good service?
- 38 percent will pay 1 to 4 percent more
- 29 percent will pay 5 percent more
- 17 percent will pay 10 percent or more
- only 16 percent will not pay more.
Are You Selling More Than Price?
Most wood flooring contractors and subcontractors are proud of their quality work, reputation and personal service. And, today's financial demands, project complexities and tight schedules often require project owners to look for more than a low bid. However, if they aren't aware of the added value or quality workmanship you offer, your customer has no choice but to evaluate and select based on price.
The bottom line is that four out of five say they will pay more for better quality and service. How much more and when depends on each customer and each project. In order to sell quality over price,you must determine specifically what your customer wants on every project for which you submit a bid. Focus on the important issues that make a difference by asking before you bid, and then address them in full detail in your proposal. Here are seven solid ways to sell more than price:
1) Get in Front of Your Customer
Wood flooring customers buy perception of value and trust. If you are perceived as a good installer who provides quality, on time work, you will easily get on lots of bid lists. And, if your price is right and your bid is accepted, that should also result in lots of competitive work to install. Remember: Success is determined first by your reputation and then by price.
Wood flooring is a people business. Companies that realize they are selling trusted relationships make lots of money. To sell quality work instead of price and increase your share of profitable work,you've got to develop trust with customers. You have a perception of value with new or repeat customers. Your goal is to turn them into loyal customers by developing deep trust.
At first, the purpose of your bid or proposal is to get in front of your customer. Then, as you start to do quality work for them, you can get to know them personally by taking them out to breakfast,lunch, industry meetings or ballgames on a regular basis. Take your top 10 customers out at least every two months. The only way to create trusted relationships is to spend face-to-face time with customers in a fun or relaxed atmosphere. Building trust takes lots of quality time.
2) Be the "Select" Bidder
Leading wood flooring contractors are known for being the best at something. Some are known for project types, or difficult jobs, or fast-track schedules, or creating complex designs, or detailed and quality workmanship. People will pay more for the best. To be the best, your customer must know what you specialize in. Let them know, and tell them again and again. Use press releases, articles,photos or brochures. Send them something often—at least every three months. Why is Nordstrom known for customer service? They tell us all the time.
When you're known as the best in your market for the type of projects you specialize in, your company will get the first chance to propose, and the last chance to match the price needed. Experts get the great jobs at their price. Generalists get the leftovers when their price is the cheapest. What are you known for? What are you the best at? Do your potential customers know? If I visited your town looking for the type of quality work you specialize in, would your company get the only referral?
3) Get on the Right Bid Lists
Before you sell quality over price, determine what type of work your company wants to do, and for what type of customers. At my company, Hedley Construction, we determined our best customers were developers who needed full-service construction and development project management, from initial concept and feasibility, to working drawings and permits, to construction and completion. These customers need what we offer, and they don't mind paying for full service. Eliminate customers who just want a low bid and don't give you credit for extra quality and professional service. Create a "bid-grid" to help you determine if and what you will bid. Include these factors:
- repeat business potential
- profit potential
- project type
- project location
- project size
- project profit
- competition.
One excellent strategic decision our company made was to stop trying to beall things to all customers. When we developed our "bid-grid," we decided to:
- stop bidding—only negotiate
- make it a goal to work primarily for repeat customers and try to convert them to loyal customers who will use only us to build their projects
- specialize in a limited number of project types
- only work within a 60-mile radius
- target a minimum project size
- only work on projects with a minimum profit margin •propose on projects with only two or three competitors.
With this narrow focus, we now concentrate our efforts on the right projects and customers with whom we can create trusted relationships.
4) Offer More Than Low Price
As a builder, we bid and price out several jobs every month. For each project, we receive about 100 subcontractor bids for the 30 sub trades usually required. On average, less than 15 percent of these bidders ever call us to present their bid,review their proposal, discuss their bid,or even to meet with us for any reason. When we don't hear from our valued subcontractors, we assume they don't have more to offer than a low price based on the minimum required per plans and specifications. And when they finally do call, they only ask: "How do I look?" which translates to "Is my price too high?" or "How much do I need to cut?"
Every project has different needs. Sometimes price is the only differentiating factor, but you can't know what really matters to your customer without asking before you bid. On most projects, price is not the only determining factor. On many projects, subcontractors are weighed heavily based on specific factors such as schedule, quality, safety, professionalism,technical skills, cleanliness, financial capacity, manpower or responsiveness.
But, when all we get is a faxed or handwritten bid proposal, we don't know if they intend to help us meet our project goals.
Before bidding every project, ask your customer:
- What do you want most from us?
- What are your most critical problems?
- How can we help reduce your risk?
- What will help you award this contract to us?
- What else can we do for you?
Include solutions to these questions in your proposal and presentation. Always try to deliver your bid in person, and present it in a visual and convincing way so your customers will see and believe your company has the answers to their problems. Use photos of the project site and similar projects you have worked on that depict similar challenges and concerns. Also use samples, a proposed schedule, material brochures, or flip charts with lists. All these tools will enhance your professional, proactive image.
5) Be a Squeaky Wheel
Estimators are more than price givers. They are in the sales business and need to spend lots of time with customers. Be in the right place at the right time by paying more than one visit to your customer's office or home during the bidding process to show you want the job more than your competitor does. Stop by, ask lots of questions, offer ideas on how to make their project better, provide alternative suggestions, and look for ways to help your customer.
After the bid presentation, follow it up aggressively and in person. Estimating and preparing the bid is only half the work. To sell more than low price and present your quality workmanship, you must do more than fax in your bid. Keep in mind that bids don't sell, people do.
6) Know That Your Price is Not Too High
Be confident in your company and what it has to offer. When customers tell you your price is too high, always answer:"No, we're not too high," then patiently wait for them to speak the next words. They will always tell you something you can comment on in a positive or creative manner. If you respond before waiting to hear what your customer has to say, you start an argument you'll lose. Let them talk first, listen, and look for ways to offer suggestions to improve your position.
Ask them the same questions we discussed earlier, and look for ways to help them reach their goals and use your company to build their project. You may have to give and take a little on price to get the job, but without a conversation, you have no chance.
7) Always Ask for the Order
Most bids and presentations end without the presenter asking for the order. When you don't ask, the answer is "No!" Get in the habit of asking these tough questions:
- Will you negotiate?
- Who else is bidding?
- Who have you used for wood floors?
- How will you review the proposals?
- What is the selection criteria?
- What is the most important selection criteria?
- If all else is equal, what are the chances we will be awarded the job?
Selling quality takes persistence, discipline and determination. The tendency is to get caught up in the price game. The first question is always "How much?" People buy price once and live with quality forever. Your job is to remind them of this over and over and not let them forget what you have to offer. Never assume by doing good work you will get the next job at your price. Try implementing theses even ideas, sell more than price, and see your bottom line improve.