It is more difficult now to sell a major remodel or design/build custom home than any other time since I sold my first custom home in 1990. Do you feel the same way?
To attain the highest possible prospect conversion rate, examine the mind-set of today’s clients. Compare a composite profile of your typical A prospect now and reflect on how he differs from your A prospect before the market peaked in 2005.
An A prospect finds my company online or through a referring client or architect. He owns his home or site and he has a clear vision of his dream home design, or better yet, he has complete construction plans. He also intends to commission his project as soon as he decides on his builder.
Previously, A prospects were well-informed, knowledgeable and focused on quality, schedule and price, often in this order. Today, prospects’ characteristics have changed significantly; They are a new breed. Their focus is on price, getting good value for the best price possible, the builder’s financial health references and price. There is little sense of urgency. In fact, the opposite is true. They feel time is on their side and they embrace doing thorough research for its own sake as well as a hedge against building too soon. They are worried that in the near future the value of the goods and services they are buying today will be available at a lower price next season.
To acquire the best possible price, prospects are securing bids on the component costs of a custom job — both the materials and the labor! It has been common for a prospect to come to a sales meeting with a binder of written bids for multiple job phases. Before 2005, this type of line-item research was rare, and it generally was restricted to windows, appliances, sometimes kitchens and occasionally landscaping. Recently, I have met with many A prospects who have secured written proposals on almost every major phase of the job, including masonry, siding, roofing, plumbing and heating, electric and labor. The willingness of trades and suppliers to bid directly to the consumer is yet another twist on the roller coaster of custom build sales.
Basic supply and demand rules of capitalism explain, in our case, why more builders are competing for fewer jobs, and it means that the market value of builder services has declined. It also indicates that most builders will suffer a lower closing ratio, less revenue, shrinking profits and losses. How are you responding to these circumstances? What new efforts are you making to remain profitable?
A few suggestions: Be sure your website is as good as it can be. Attend networking meetings regularly. Join a group that is focused on referring to one another. Look beyond your local builders’ association into ASID or AIA meetings.
Closely and with great diligence, analyze your sales process to look for flaws and to fortify your strengths. After you establish credibility with your prospect, be selfish about conserving your valuable resources, your time and overhead costs. Speak bluntly about the key financial considerations of working together. First, determine the ballpark cost of completing his job; Tell him your conclusion. He may tell you that he “knows” it can be done for much less. He has so many bids to prove himself right. Educate him as much as you can without completing the detailed bid first. Secondly, work with him to see that his budget and his scope of work goals align reasonably with your ballpark budget of project cost. If you are miles apart and he will not compromise by modifying scope or increasing budget, it’s time to stop investing time with him. Finally, discuss how much you expect to earn for building his job. Your goal is to make the most efficient pathway to determining whether or not you want to work for what he is willing to pay.
To acquire the best possible price, prospects are securing bids on the component costs of a custom job — both the materials and the labor!