Consider the mindset of the prospect who is shopping for a custom home builder. He has a vision of what he wants. He knows he will compromise that vision to some degree to adjust for the reality of his budget. He is preparing to make the largest single buying decision of his personal life. He is willing to spend a large portion of his personal savings and/or he is prepared to borrow a large sum of money that he will repay with interest over 15 or 30 years. He probably has never been through the process before … or if you are lucky, he has had a custom home built before and he knows what to expect. Whatever his profile, he has been told at least a dozen times to be wary of builders.
I sell custom luxury home services using open-book construction management. By sharing my actual hard and soft costs to build one or more of my most recent custom homes, I find that my prospect is more willing to candidly discuss their dreams and their true budget objectives.
In the previous business cycle, I offered prospects the option to enter into a Professional Services Agreement, which for a fee — ranging from $2,500 to $7,500 — we would complete a detailed estimate of the costs to build their home. Approximately 150 to 200 hours of team estimating time is necessary for plan review, bid procurement, report preparation and presentation time. However, in a buyer’s market there are too few prospects and too many hungry, qualified competitors to spend precious prospect time selling the concept of paying to prepare a professional estimate. So we provide this service and request they commit to attend one presentation meeting in my office.
Recently I invested considerable time and resources in trying to turn two prospects into clients: Bob and Mark. Both had successful careers as corporate executives. Each owned their home site and hired an architect to complete their dream home before contacting me. They had a story to tell … each with some key information as well as some obvious omissions. My job, like yours, was to figure out what information was missing and what critical information was provided that would persuade them to select me as their builder.
Bob, a former CFO for several public companies, was a serious, stern man. He told me he was considering four other custom builders and that budget and great insulation were critical. I retained an award-winning green builder to consult on his plans and on the day of the presentation I decided to offer a $15,000 management fee incentive discount.
Mark works for an international food distributor. He found me on the web and lives in my hometown. He told me he spoke to five builders, but after a few weeks of talks and meetings he said my main competition was a builder from his neighborhood who was asking half the markup that I proposed so in response I offered to reduce my proposed builder management fee from 20 to 14 percent.
Bob became a client and during the course of the job told me that my final competitor lost out because he was $2,000 higher than my estimate. The last-minute discount won me the job!
Mark understood that I had a longer track record and more experience but he hired his neighbor. He felt that if I had the job that I would be unhappy with the reduced fee.
It is a repeated axiom in sales that “Buyers are liars” and if this is true, what are prospects? Is a prospect like a caterpillar on its way to becoming a butterfly, merely in the larvae stage of lying?
I do not believe that most prospects lie. However, most prospects will share only the information that supports their goal; finding the best builder who gives them the greatest value and best opportunity to maximize their dream home. If you can meet these criteria with the information provided then you will turn your next prospect into a buyer, and not a liar.