Just think: If price were the only factor in a builder’s purchasing decision, a roofing contractor could fire all its salespeople.
Along with fast food, we could have fast roofing. Prices would be posted next to a drive-thru lane complete with garbled speaker, where contractors shouting their order would hear, “May I offer you a side of nails with that roofing bundle?” Homeowners could call in roofing orders for installation later in the week just like they dial for pizza. And walk-in clients could have it their way by ordering their unique color preference and aesthetic design.
Yes, the cost savings from eliminating outside salespeople would provide a wonderful lift to your profitability - if price really were all that mattered. My hypothetical roofing world now presented, let me assure salespeople that they can be a valuable asset to employers and customers … if they work to provide measurable value to the client. That process must begin with the salesperson first realizing that he or she is the frequent cause of price objections. Why? Because too often a salesperson’s work ends up creating a reverse auction.
A typical auction begins with a seller providing a product and buyers bidding up the price. A reverse auction occurs when sellers bid to earn business, literally begging the homeowner to buy by providing ever-lower prices for the roofer’s goods. They say, “I have an offer for $12,000 … do I hear $11,500?”
A bid is a commodity-driven request that’s presented from the seller’s perspective which provides nothing more than a list of materials and corresponding prices. The recipient of the bid benefits from convenience to compare prices to the seller’s competition, but never really knows the real total cost of doing business. Is this the way you want to do business? If not, then stop bidding and start proposing.
A proposal is vastly different than a bid. While a bid is nothing more than a price list, a proposal is an offer that speaks to the client’s objectives by illustrating the benefits to the client. It clarifies the value of the seller’s service and even quantifies the total cost of doing business. It describes the complete service by detailing the tangible value of products, scheduling, delivery, service and other resources such as warranties, punch list procedure and after sales service.
Your ability to reduce price objections during the heat of battle begins when you prepare high-quality proposals before the battle. The bid becomes a component of the larger proposal and differentiates you from your competitors. Structure a proposal to include the following:
• Reiterate what you heard. A proposal should summarize your understanding of the client’s vision. It could include various bullet points that list, for example, the client’s reason for needing a new roof, design objectives, energy issues, scheduling issues and production goals. It should demonstrate your interest in being a real part of the client’s project.
• State how your products and services address the challenges. Of course, your proposal must include a list of materials and pricing. But it can also include details on scheduling deadlines and key jobsite contact with mobile phone number. It should even include intangible considerations such as caring for pets and children during construction activity. As you might expect, this approach probably will demand that you schedule an appointment to provide enough time to illustrate the details of your work and the benefits to the client.
• Describe the total program investment. The word “price” is frequently interpreted as a necessary evil and a line item that every business must control. An “investment,” on the other hand, is viewed as a deposit for future returns on assets. If you do not define the benefits of an investment in you, your client certainly will not.
There is a big difference in saying you’re a consultant to your clients and actually being a consultant. The key to helping your clients begins when you stop negotiating a lower price with your employer and start providing tangible return on an investment to your clients. Stop bidding and start proposing.