If you survived the recession, you should congratulate yourself. Plenty of kitchen and bath firms did not.
And here we are in 2011, supposedly in an emerging recovery, yet closing jobs is still very difficult. So, what can we do to enable our sales designers to be more effective? How can we possibly get our fair share of jobs when prospects tell us that five to six of our competitors are 30-50% below our price?
Of course, the “crazies” always come out during bad economic times. These are folks who love the hunt, and will only take action if they smell a real deal. Don’t waste your time with them. Instead, market the value of your company so you attract better quality leads.
The ‘FUD’ Factor
It’s been well-documented that the most powerful human emotion is fear. This is known as the ‘FUD’ Factor – standing for Fear, Uncertainty and Doubt.
Now I would never suggest that you apply the FUD Factor in your kitchen/bath design practice. You must never, ever trash the competition – it will hurt you and haunt your firm. But you cannot be so timid as to shy away from wielding this very effective weapon.
The right way to implement the FUD Factor with qualified prospects is from an educational context. I have always advocated positioning yourself as your area’s foremost information resource on kitchens and baths. The use of Storyboards, Cabinet Comparison Displays, Consumer Seminars, Consumer Booklets and Interactive Budget Analyses all contribute immensely to establishing this position.
If you’ve done a good job of informing your prospect of the right way to buy a kitchen or bath, weighing the pros and cons of one design concept, product or service with them versus another, no doubt they see you as a consultant.
That’s a great position to earn! It can become your platform to perform a “civic duty” of giving advice when a prospect says they’re going to do business with a competitor who is 40% lower than you in price. When you’re perceived as a trustworthy consultant, consumers are more likely to accept your objective comments as truths.
Marketing experts agree that it’s virtually impossible to differentiate the quality of a service. The only way a service can be differentiated is through its delivery...or presentation to the prospect.
Few salespeople have the talent to pull off a great explanation on the spot of why their kitchen may be 40% more than competitors. Then again, even talented actors like Meryl Streep need to rehearse their roles many times to win over the audience. Why should it be any different for sales designers trying to close a kitchen or bath project? That’s why owners and sales managers should develop scripts to deal professionally with these kinds of difficult scenarios, and then make certain that their “actors” rehearse their scenes to have the greatest chance of securing the desired outcome.
While you’ll want to tailor these for your own firm, what follows are some suggested scripts.
Script #1: Prospect Received a Price 50% Lower Than Yours
“David, please beware of the low-ball contractors that are operating in our marketplace today because so many people have lost jobs with the decline in new home building.
“Look, doing a kitchen remodel is like having open heart surgery. You want the best surgeon available because you may not have a second chance! It’s not uncommon for some contractors to deliberately give out a low bid. Then when the tear-out has been completed, and the customer is most vulnerable, they come up with high-priced change orders. Is that a risk that you want to take?”
Script #2: When Competitor Lowers Price by 25% to Get the Job
“So you’re saying, Mr. Dobson, that this company will drop its price 25% if you sign their agreement by Saturday? Look, we have worked together for weeks on your project, and I would love to have your business. But we are in no position to match that reduction. I know nothing about the financial health of the company you are considering, but I would suggest you ask a lot of questions before you make a commitment…even for an offer as enticing as the one you describe.
“All of us in the remodeling field have been through tough times of late. Just be aware that steep price reductions, or a willingness to take a deposit substantially less than the customary 50% in this industry, are two key signals that a firm can be in serious financial trouble. As a precaution against you and your family getting hurt in this deal, let me give you a form that will help you test this company’s stability. If they’re unwilling to give you this information, you probably won’t have the peace of mind to go forward with them – at any price.”
Script #3: When 5-6 Competitors are 40-50% Below Your Price
“Okay, so what you are thinking, Lisa, is that these other guys’ prices must be right and mine must be wrong because I’m the only one so high, correct? I checked all my numbers before we sat down, and I know that the final price I have quoted is correct for the services we have planned, my overhead and the modest net profit our company needs to stay in business, so we can service your job in the future.
“All of us in the remodeling field have gone through tough times of late. Just be aware that most contractors are not good businesspeople. That’s common knowledge in the kitchen/bath industry. They don’t know what their true costs are. So they don’t know how to price their jobs properly. In this economy, a contractor will do anything to secure work just to stay busy, not realizing he could be out of business in months, collecting money from Peter to pay Paul.
Now imagine for a moment how this could play out with your project. You sign the deal and give the contractor a deposit. Weeks go by with no word. So you leave a message. A call comes in, but it’s not from him. It’s from the cabinet manufacturer who has your cabinets ready, but needs a lot of money to deliver them. You just realized that the contractor is out of business, your deposit is lost and it’s going to cost thousands more to find people to complete the job. Not to mention a lot of aggravation to endure as well.”
Duty, FUD & Delivery
These are the three takeaways you must remember when dealing with low-priced competitors. First, if you’ve developed a good relationship with a consumer, you have a duty to make them aware of what they may experience when they risk doing business with a low-priced firm.
Second, the FUD Factor is your most powerful tool in raising people’s awareness of the downsides of accepting the low-price bid. The best way to use that tool is to paint a picture of what might happen…just do it generically without singling out any particular company.
Third, the quality of your execution – your delivery – will determine how successful you are in getting the sale at your price; hence, the need for practicing the scripts in advance of any presentation. Having additional tools as part of the delivery will buttress your key points. Fine tune your scripts, practice the delivery, use the tools available and you will be rewarded with jobs that heretofore you never would have closed.