Sales and Marketing
Question: I am a great tradesperson but really have a hard time selling work. I do really good work that should sell on the merit of the job. I work hard at going over the job with the customer and seem to have a hard time getting them to understand what is in my estimate. I also don’t want to be pushy. Do I really need to be able to sell my jobs or over time will my quality sell me?
Answer: There are a lot of myths about sales and marketing. We seem to assume that just because we build a better mousetrap, people will automatically buy it. This assumes several things, such as the person wants a better mousetrap and they understand how yours is better than the one they already use.
There are a couple of interesting words in the above question. You mention a problem selling my estimate and my job. It is not your job but the customer’s job. Right or wrong, the customer has an idea of what his problems or issues are. A good salesperson is nothing more than a problem solver who finds out what the customer’s needs are and fills those needs.
In fact, a good sales person is a good listener, not a talker. This is just the opposite of what many people think. In our sales training classes, we use psychologist Dan Kohler to teach active listening. We have a cassette tape of this titled Business Listening on our Web site, www.proofman.com, for the price of $29 plus shipping and handling. I don’t mean to give a commercial, but I doubt that you can learn active or business listening from an article. You need to really practice the concept. However, we can at least give it our best a shot and offer a few pointers.
Active or business listening is listening with a purpose or goal. It is not idle chatter. Professionals such as police officers, emergency personnel, doctors and psychologists use active listening to help people in need. It is an easy but structured process. Some of the basics are:
Restatement: When the person says something to you, repeat what they say to confirm that you heard them.
A customer might say something like, “That’s a lot of money.” You might reply, “So you feel like this is a lot of money?” The customer will now reply with more information, such as they have other estimates or their spouse said they could spend only a certain amount.
Questions should follow a broad approach much like a funnel. You start with very broad information by gathering questions and getting more and more specific as the process builds.
At the beginning of an estimate or meeting with a customer, you might tell them a little about yourself and then ask for some broad information with very broad questioning. Something like, “Tell me a little about the type of job you were looking for.”
As you gather information, you can begin to ask more specific questions. For example, a customer might tell you that he hopes to sell his house and wants to fix it up prior to putting it on the market. You might reply, “Help me understand what you mean by fix it up.” All you are doing is gathering information. As you get further into the sales process, you can start to conclude the process with comments like “suppose” or “what if.” “What if we could fix your house in a way that you feel will help us sell the job? Are there any other issues?”
Selling is gathering information. You gather information through active listening and by following a very structured process. It doesn’t happen by accident. Buy a tape or attend a seminar. Active listening is a very inexpensive way to improve your sales process. Don’t paint your own portrait and wonder why the customer does not want to buy it and have it framed. Solve their needs, not yours.
Question: I really am struggling with my business. How much should an owner make or earn out of a business?
Answer: My comment is usually a $100,000 minimum, but we have lots of contractors who make much more and some who make much less. This is not near as unreachable as many people think. But answer some other questions:
- How much does a good foreman that is employed for you make?
- Would you work for someone else and do the same thing for the same pay?
- What are your living requirements?
- What would you have to pay someone else to do the same thing you do?
If you are making less than what you would make for someone else, or you could not find anyone else to do what you do for your pay, maybe owning your own business is an ego trip and not a reality.
As a contractor, you work too hard to not make a decent living. Life is short. Be profitable. Of course being profitable does not automatically mean you will be happy. But people, who say that it does not matter or it is really not necessary to have money, have not tried poverty on for size. Money just gives you choices.
Stop stealing from your family by working yourself to death. A couple of dollars more an hour can have a huge impact on your business. I said $100,000 a year, but it really does vary. For a person with 10 employees, I think that is a minimum goal to shoot for.
Question: One of my lead employees is making less money than I think he is worth. I am paying him $15 an hour. From what I can tell, I would have to pay $18 to replace him. I really am making more money on my jobs since I put him in charge. He has been here two years. He does not complain, but I would be hurting if he left. Should I give him a raise?
Answer: Yes, why wait? You must pay a competitive wage, if not, employees will end up working somewhere else. Does this mean you have to pay this person $18? Certainly he or she deserves more than a cost of living raise. It is always better to stay ahead of the marketplace. It is also better to offer an increase before the employee asks. Also, note that he or she is doing a good job and the targets are coming in on their jobs. This is not you being a nice guy but rather you using economics to protect your business. Half the contractors out there ended up going into business themselves because their employer was slow to give them raises.
Many contractors claim to pay merit pay, or in other words, the more you are worth, the more I will pay you. While many contractors claim to pay based on merit, what they really do is pay based on seniority. This can be dangerous. If you are not careful, you set up a scenario where the bright up and coming people of your organization will leave and go somewhere else.