Interactive Planning Builds Profit

Every salesperson and business owner in the kitchen and bath industry shares a common goal: make more income in less time. In 1976, I developed a marketing system that accomplished just that. It enabled me to grow the business from one store with three salespeople to four locations with 14 salespeople, more than quadrupling the sales volume. It also enabled the firm to increase its gross profit margins from 35% to 51% in both affluent and working class markets.

Below are the secrets to its success.

The system
The marketing system we used evolved from one simple question: What will it take for a prospect to retain me on their project? I kept turning that question over in my mind for several months, until the answer came to me.

Through a "Fundamentals of Selling" course, I had already learned how people buy. Whether the purchase was a bottle of aspirin, a car or a kitchen, I was taught that everyone must progress through the following five buying decisions:

1. There is a NEED.
2. The PRODUCT fills the need.
3. The SUPPLIER of the product is satisfactory.
4. The PRICE is right.
5. NOW is the right time to buy.

By putting myself in the prospect's shoes, I realized that two of these factors were critical to receiving a project commitment in a relatively short amount of time. First, I had to come up with the right plan and design ideas for the prospect's needs (i.e. the "product"). Second, the plan and ideas had to be affordable.

More importantly, the plan and the price had to be presented in a unique way that generated a greater perceived value than what the competition offered. I needed to stand out from the crowd.

Instead of using the traditional method getting measurements, preparing plans and making a presentation I adopted a new marketing approach. First, I gave prospects a good reason to always come to my showroom initially (we would eventually accomplish a lot more together at their house). The purpose of this showroom appointment, which lasted 1-1/2 hours, would be to:

  • Educate them on the Intangibility Factor in kitchens and bathsthat brand name products are only as good as the people who work with them.
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  • Present our company philosophy of doing business.
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  • Tour the showroom and make preliminary product selections.
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  • Understand the steps in design-retainer-order process via a "storyboard," so they were comfortable making an informed buying decision.

Second, I expanded the home consultation visit to two to three hours, and decided to take two major risks. After interviewing the prospects for an hour using a four-page project profile form, I developed one possible conceptual layout with them on the spot. This was done without taking detailed measurements, and any conceptual sketches remained my property until I was retained. Once retained, it was understood that two to three preliminary plans would be developed to scale so that the pros and cons of each could be analyzed together.
Most prospects were thrilled to be involved in the conceptual planning process, and said so. In fact, they were so thrilled that they were eager to find out what the initial conceptual layout might cost.

That's when I took a second risk and interactively created a "budget analysis." Using budgeting numbers for several different brands of cabinetry, counters, appliances, etc., as well as for installation, plumbing and electrical that were all contained in a "Client Information Catalog," we would develop a project budget together in about 20 minutes.

If the overall budget total came in at $42,670, it was understood that the figure was accurate within +/-8% (or $39,300 - $46,100), and I would need to be retained at 8% of the low end of the budget range (or $3,140) to commit the time and resources to developing the best design and cost options within this target budget range. The retainer agreement stipulated that the fee was non-refundable, was applied against the purchase price, and the finished drawings would be released upon the signing of an agreement to furnish the project.

Why it works
Let's look at this marketing system from the prospect's viewpoint. First, they spent more time with me upfront compared to the competition a distinct, "bonding" advantage so they might naturally feel more comfortable with my ideas. Second, they didn't have to wait two to three weeks to get a design concept and a price, so they believed and said I was "more professional" than others. Third, they enjoyed participating in the development process, and better understood why the costs added up as they did. Fourth, they knew it was my practice to develop cost-saving options of 10% to 20%, so ultimately they could package the project just the way they wanted.

Attention, openness, collaboration, accountability and flexibility these were cornerstones of the marketing system. As a result, prospects seemed to view me more as a consultant leading them through the design process to get what they wanted. I just wasn't another salesperson trying to sell them a new kitchen.

From my perspective, I invested about one-third of my usual time to generate more than three times the sales volume. My closing percentage on "qualified leads" grew from 35% to 75%, and my gross profit percentage increased 16 points. The benefits were so amazing that I soon applied the marketing concept to other kinds of projects.

The delivery of information is the key to this system's success. That it is done interactively clearly generates enormous value in the eyes of the prospect. That the marketing system has been applied successfully in a number of markets around the country proves its effectiveness.
To learn how you can receive detailed information and forms to develop your own interactive Project Budgeting System, contact me. Please note that you must be a SEN member to receive this information.

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