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3 Mistakes that Will Kill Sales

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Dear Friend

What is great about the summer months is the longer days. I've been working hard, but also "playing" hard – visiting with family and friends and enjoying each other's company. If you’re like me, however, you typically find your conversations with family and friends turning, at least briefly, to work.

A recent get-together was no exception. During the conversation, a friend of mine was talking about their recent remodeling project and I was reminded of a great topic on which to share my thoughts. Read this month's feature article, "3 Mistakes That Will Kill Sales," and you'll understand why I am compelled to share this topic with you.

Thanks for your input on our new design! We’re pleased to know that this new design is working for you. Let us know if you would like to see any other changes to the format, or different topics covered in upcoming issues of Building Business Ideas.

Mitch Lapides, Executive Editor
HomeTech Building Business Ideas

Mitch Lapides

 

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3 Mistakes that Will Kill Sales
Previous Building Business Ideas articles have focused on how to market and get leads for your business (see Develop a Winning Marketing Program, June 2006 and The Power of Referrals, April 2007). Now that you have leads, are you sure you understand your sales process and what it takes to build a business for continuous sales? And, do you understand that what you do during the sales process can dramatically affect future business? Let's first take a step back and define what we mean by the sales process.

The Sales Process
You may not realize it, but your sales process starts with the first conversation you have with a prospect — and this can simply be an exchange on voice mail. Your sales process continues to exist in all subsequent conversations. And, if you're lucky enough to get work from the prospect, your sales process does not end until well after the work is completed. In each of these different phases, you are imparting information about yourself and your company, setting and managing expectations, and you are making an impression. Always remember, every interaction you have with your client affects your image and how your prospects and customers perceive you.

Sales Killer #1: Ignoring requests for estimates
Does the following sound at all familiar? You have taken time out of your day to visit the site of a potential new customer. While on site, you meet with the homeowner, discuss the job and different options. Maybe you discuss specifics on materials, timeframe, etc. Most of all, your conversation is general and you are gathering information to prepare an estimate. When you get back to your office, you’re overwhelmed with existing paperwork, estimates to complete, and managing your existing jobs and staff. You suddenly realize that the job you just discussed with this particular homeowner isn't really within your scope, or you don’t have the resources to take on the work, much less quote on it. So, what do you do? You ignore it, and move on to the more pressing issues on-hand.

Sound a little familiar? If it does, what you've just done is miss a sales opportunity. Not only have you taken time out of your day and essentially "lost" those hours to productive work, you've now just completely dismissed any work from this homeowner and anyone they may know. Most likely that homeowner will get their work done. And, when asked by their family and friends for remodeling referrals, you can bet that that homeowner will tell their family and friends NOT to call you since they never heard back from you. There's a marketing statistic that says every person knows another 250 people. That's a big impact — positive or negative.

If you take time out of your day to gather information for an estimate, you must either follow up with an estimate in a timely manner or inform the homeowner that the project is one you need to pass on. Or, if you want the job, tell them so but that you need an extra week to pull together the estimate because you want it to be right.

By following-up on your estimating efforts (your site visits), even if you are declining the work, you are communicating with the homeowner that you are reputable and responsible. And, chances are this homeowner would refer you to family and friends as someone to call for projects. Note that they may have solely based this recommendation on the experience of you being responsive! If declining the work for yourself, following-up with the names of someone who might be able to do the job instead of you will go even further. Be sure, though, to tell them the types of work that you do, so they still remember you for future projects.

Sales Killer #2: Mis-managing expectations
No one wants to be yelled at. And we all know that customers are most often emotionally involved in the projects we do for them. Customers will most likely get to the point of frustration — and take that frustration out on their contractor — because they are expecting work to be started or completed within a specific timeframe, and it is not. Why is this?

Often times we like to tell customers what we think they want to hear, versus what will realistically happen. Rather than disappoint a customer with the truth, we are telling them that work will happen when we know it will not. By doing this, we are setting false expectations. And customers will react to this.

If you are mis-managing expectations, you can be sure that customers will communicate their disappointment to their family and friends. A true future-sales killer is the customer that projects their disappointment in mis-managed expectations to the entire job. Rather than say that your work was great, they will be more inclined to downplay your work because they were so disappointed in the project experience. When asked by their family and friends about you, they could respond "Well, the work was OK but the entire project was a nightmare. They never showed up when they said they would and disappeared for days and I didn't even hear from them!"

A kitchen remodel typically leaves a customer without a means for feeding their family for an extended period of time. An addition typically means the rest of the homeowner’s house is filled with dust and debris.

• Be honest with both yourself and the customer if you cannot start a job when you initially thought you could.
• Be honest with both yourself and the customer if you will not be able to be on site for a period of time.
• Accurately set and manage expectations and both you and your customer will be more relaxed and happy about the work being done.

And, your customers will let their friends and family know how great the experience — and work! — with you was.

Sales Killer #3: The punch list
The punch list can be a difficult thing to manage because it often means that we need to pull someone off a bigger job or schedule to have a sub-contractor return to a job that they considered complete. But, by not putting forth this last effort to finish the items the customer is asking us to complete, we are festering disappointment with our customers.

The other important item to factor in is the cash-flow impact the punch list has on our business. Often times customers will hold their last installment until the work is complete — and if they punch list is not done, in their opinion, neither is the work. This last check can impact how timely we pay our sub-contractors, ourselves, or fund our next project.

Finish the punch list in a timely manner, get paid in full and avoid having your customers say to their family and friends: "I had to hold their last check because they just didn’t finish the job." This statement alone will make people wary about doing business with you. If they can’t get you to finish the job without the threat of not paying you, can they actually trust you to do the job at all?

A little bit of knowledge goes a long way. Now that you know about these three mistakes — you should make sure you know how to avoid them!

There's a marketing statistic that says every person knows another 250 people. That's a big impact — positive or negative.

 

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We have compiled an easy-to-use and track Punch List Tracking Sheet. Make sure you avoid Sales Killer #3 and get the punch list complete with this simple tool.
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Additional Resources
Managing Expectations (paperback)

Create Reports, Printouts w/Specific Estimate Items

Create reports or printouts for subcontractors, tradesman and suppliers that include specific estimate items.

With the HomeTech ADVANTAGE software, you can print selected items from your estimate to create reports or printouts that include only the chosen estimate items.

• When estimating, obtain "hardened" quotes from subcontractors for specific items in your estimate.
  
• During construction, use reports to list the project responsibilities for a specific subcontractor or supplier.

To find out how you can take advantage of this business efficiency feature, click here.

Read more on this month's tip »

Remodeling Industry Facts and Figures
Home improvement expenditures rose to a record $228 billion in 2006, $6.2 billion higher than the previous record — set in 2005. New construction expenditures declined by $28 billion in the same year. As the inventory correction in real estate sales proceeds and house prices soften further homeowners are expected to spend less liberally and borrow less against their equity. When they do, both consumer spending and remodeling activity will slow.

The typical lag between a retreat in new construction and a cutback in improvement spending is about six months although the lag may be longer this time around given the enormous amount of equity cashed out in 2006.

Source:
The State of the Nation’s Housing 2007
Joint Center for Housing Studies of Harvard University
June 2007, page 6

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