~~ Contractor Best Practices Newsletter ~~
by Ron Roberts
The Contractor's Business Coach
Volume 2 - issue 32
August 8, 2007
Tip of the Week:
Take one client to lunch every week. It will pay big
How to Beat a Lower-Priced Competitor
Sam Simon, the editor of www.ForConstructionPros.com sent me an email the other day asking me to write an article for his readership. As his site is Cygnus Media’s online outlet for its construction magazines and he has a distribution list of over 40,000 contractors, I was happy to accept the offer.
I’m going to let Sam tell you about this week’s topic:
"The topic I would like you to cover is how to beat a lower-priced competitor. I’m looking for an article that touches on things contractors can do to show off the value of their business so it doesn’t just come down to price, and other practices to compete against a low-ball competitor."
Beating a lower priced competitor is something all contractors struggle with and it is a problem that will never go away. There will always be a low-ball competitor lying in the weeds waiting to steal your work.
The way to beat a lower priced competitor is to help your prospect realize your services better meet his needs. This is referred to as "selling." You’ve probably heard of it.
Most home owners and novice developers do not have the construction experience necessary to make a fully informed buying decision. They just haven’t been burned enough times to realize that contractors come in all shapes and sizes and many will rob them blind if given half a chance.
When you’re selling to your prospect you need to help them fully grasp the vast array of problems they could run into. Help them sort through the possibilities, separate the problems that are minor annoyances from those that are unacceptable outcomes. Help them get in touch with their feelings about the construction experience. Help them understand what they care about.
Find out what they care about. Find out what their priorities are.
Help them quantify the value of meeting those priorities. Help them understand that to receive the type of service they value costs money. Nothing in life is free. No low-ball contractor is going to provide the quality of service the prospect desires. Expecting one to is unwise.
Over the years, I have heard several friends and neighbors brag about the great deal they got on a construction project they’re doing BEFORE the project starts. My unstated thought always is: "Well, the work’s not done yet so don’t get too excited. When the work’s done, you’re happy with the results, and you got a great price, then we’ll celebrate your good fortune."
Here’s an example. A friend of mine found a painting company that agreed to paint her house for about half the price she received from three other painters. She was just so bubbly about her great luck in finding this painter.
Well, the painter took over eight weeks to finish. It should have taken two. Several times she came home to find her painters swimming in her pool instead of working on her house (she had opened that Pandora’s Box by inviting them to use they pool whenever they needed to cool off). They never completely cleaned up their overspray and the house needed painting again within four years because of the prep work they didn’t perform and the low quality paint they used.
Here are some questions to ask your prospect to help them better understand their wants and needs. Basically, you are trying to find their hot buttons.
* Are you worried about the neatness of the work?
* Are you worried about how long your contractor will
take to finish the job?
* Are you concerned about the quality of the materials that go in - both the initial look and the length of time they maintain their appearance?
* Are you worried about your contractor leaving a mess?
* Are you worried about overpaying?
* Are you worried that the final product may not live up
to your expectations?
* Have you fully protected themselves from liens and liability?
Once your prospect has laid out his cares and concerns, respond with "What have you done with the other bidder to ensure you’re going to get the quality of service you
Let them answer that question then respond with:
"Well, you have taken the steps most people in your shoes
take but that often isn’t sufficient to ensure a happy
outcome. May I offer some free advice? Go back to your
low bidder, lay out your expectations and demand they be clearly addressed in the contract complete with a clause for guaranteed satisfaction."
You and I both know one of three things will likely happen next.
1. Your prospect will say "You know, I like and trust you.
The job is yours."
2. They will take your advice, go back to the low bidder and discover the company has no intention of living up to the new terms since they include a financial penalty that the contractor is bound to suffer.
3. They will ignore your advice, go with the low-ball contractor, and live to regret it.
When your prospect tells you that your price is too high, don’t start bad mouthing your competitor. Don’t tell your prospect that the other contractor is unreliable, does poor
work, or will drag the project out.
If you are disrespectful of your competitor, your prospect will tune you out. But if you paint the picture of what they’re getting into by going with Mr. Lowball and you successfully get across the point that they are pretty much at the mercy of the contractor they hire, you’ve got a good shot at landing the work.
On final note, do yourself a favor and checkout Sam’s website, www.ForConstructionPros.com, it’s loaded with great articles and information.
Until next week, good luck with your business.
The Contractor's Business Coach
P.S. Share this with your contractor friends. They will thank
you for it.
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WEBSITES TO FREQUENT
World Sweeper.com contains several articles written
to help contractors run profitable businesses.
For Construction Pros.com is the online presence of
Cygnus Media. Cygnus publishes several construction
magazines. Bookmark their site and check it monthly
to find helpful articles.
This website contains an abundance of great articles
and helpful tools to help owners improve their business
Shouldn't I pimp my own site? :-)