“Listen, we were bidding like crazy before we lowered our prices and weren’t closing enough work. Now that you’re telling us to raise our prices, I’m concerned I’m going to have to go back to bidding twice as much work just to get the same number of projects.”
In my experience helping construction companies close more sales and increase profit margins, the above statement is not unique. It can simply become difficult for business owners to wrap their minds around the idea that raising prices can actually help land more contracts. The sales process is multi-faceted and about much more than just the price.
Construction companies should strive to be different and see pricing wars as not a strategy for landing the next job, but rather an opportunity to deliver a great experience and value to customers. Unfortunately, playing the pricing game can be a downward spiral that leads many construction companies to price themselves out of business. Consumers become accustomed to paying such a low price that it almost becomes a demand and causes business owners to ultimately scramble to survive. They are forced to keep their prices at a point where they are actually losing money.
It is important to remember that sales is a process and not a singular event. It isn’t something that begins or ends with a telephone call or quick conversation via email. You simply don’t tell a customer the price and sit around and wait for the phone to ring. In Chapter 2 of The Profit Bleed, I emphasize showing people the genuine value of working with your business and the ability to solve their problems.
Before you can do any of these things, you have to understand why people buy. From a neurological perspective, we are uncomfortable with change and do everything we can to maintain the status quo. Therefore, we are more motivated to buy from someone who makes us feel safe than we are to buy from someone who is using some type of manipulation, such as the pricing game.
But how do you make someone feel safe? In the contracting business, clients are coming to you with a problem. They may need a new home built, their office remodeled, or an addition to any number of things. The list goes on. The most successful contractors are those that are able to understand why their clients have this problem. Why do they need a new home? Why do they need their office remodeled? Why do they need this change?
“Since our initial motivator to change is avoidance of pain, you’ll first want to find out what caused pain to your customer. You’ll explore that pain to better tailor the solution, to better understand what your customer will most value.”
The process of understanding what your client will most value begins with asking questions that build trust and confidence can be found on page 42 of The Profit Bleed. For instance, asking “what about your current kitchen isn’t working?” opens a window into the heart of their problem. When you actively listen to their response, you’ll gain a better understanding of their “why.” What is motivating them to make this change? When you are able to give them an opportunity to express clearly what isn’t working and listen intently, their problem becomes a tangible issue you can solve. You have now officially become a problem-solver and someone they feel safe around.
However, making a client feel safe, and closing more sales doesn’t begin or end with asking questions that build trust and confidence. While establishing trusting relationships lays the groundwork for a sustainable business, every client needs a customized sales process that takes into account all of the ways that your company can provide value. Managing expectations, screening for the right fit, and standing out from the competition all play integral roles in the success, and profits, of every construction company.
When it comes to sales, my mission is to help contractors understand the complexities of the sales process and how to implement a structure that lets them have more control in this part of their business. While it isn’t necessarily an easy task to carry out, a well-designed sales strategy will build long-term trust AND will set you apart from the competition.
In the end, the effort is worth it – because as so many of my clients have seen, it will have you…
- Close more sales
- Make a solid profit on every project you bid
If you’d like to know more about how to create a sales process that works, check out my book, The Profit Bleed. For a limited time you can get it for free, just pay shipping and handling. And when you check out take a look at the bundle of resources I offer – it includes an outline for a sales process you can easily customize for yourself.
Warmest,
Vicki
p.s. if you found this post valuable, will you please share it with someone you think would get value from it too?
p.p.s. If you want to learn more about the key numbers to look at in your business to help you make a consistent profit and increase cash flow, then check out my book, The Profit Bleed.