I met a salesman in the Midwest recently who had e-mailed his contacts declaring he was soliciting their business and seeking "an opportunity to bid on upcoming work." One contractor not only rejected the request but also said he did not want to hear back from that salesperson.
Salespeople who focus on the terms "bid" and "quote" are in effect admitting they have little to offer other than price. They're treating the transaction as little more than an auction for the lowest price.
Instead of providing bids and quotes, try this instead: Deliver proposals.
Bids basically are an itemized list of materials with a price. Proposals, on the other hand, include such features as delivery promises, product lists, scheduling details, and, yes, payment terms.
Delivering a bid alone implies that builders regard price as the driving motivator. Proposals provide builders with an offer to increase their profitability. And given the choice, builders and contractors gravitate toward salespeople and organizations that help them achieve profits.
As I note in my book, Strategic Sales in the Building Industry, home builders don't think twice about the price difference between a nail gun and a traditional hammer. A nail gun costs many times the price of a hammer, but the difference is meaningless when builders consider the dramatic reduction in labor costs and dramatic rise in profitability that a nail gun creates. In other words, profit trumps price.
There are three ways that the builder can achieve profit with your product: price, cost, and markup. Price certainly is an important consideration in the business transaction, but it is not the only factor by which your clients choose a supplier. They're more interested in the cost of doing business–the sum of total installation costs. This includes price, delivery costs, service costs, goodwill, and labor.
It is up to you to calculate the total installed cost of your product. For example, Joe, a sales leader in New England, calculated the cost of callbacks on the exterior wood trim for a garage and sold his client on the value of a synthetic trim board that was four times higher in price, but would yield a 20% savings per trim package.
Then there's markup. Brand name products help sell homes, which is why every well-known brand of product is typically priced higher than the lower-volume competitors. But brand is not the only factor that produces increased markups. Helping your clients differentiate from their competitors is a powerful way in which you can help them achieve success. When one builder noted that his products were selling slower than his competition, Royce, a salesman in the Midwest, suggested his client put laundry rooms on the second floor of their homes because that's what the competitors were doing differently. The builder took the advice and later started buying products from Royce because of his credibility as a sales leader.
Rather than succumb to the short-term pressure of recession-driven, price-oriented transactions, strive to build long-term relationships with clients based on your consultative sales ability.
Stop bidding. Instead, begin the process of calculating the total cost of doing business. Your conversations will change and builders will be more anxious to have you on their teams.
Rick Davis is president of Building Leaders, Inc., a Chicago-based sales training organization. 773.769.4409. E-mail: [email protected]